President Hufeld leaving German finance watchdog BaFin over Wirecard affair

Felix Hufeld, the president of the German financial supervisory authority BaFin, will step down as part of an ongoing reorganization linked to the collapse of payments company Wirecard AG, Finance Minister Olaf Scholz announced Jan. 29.

The Wirecard case has shown the need for a reform of the German financial sector supervision to make it more efficient, Scholz said in a statement. In the coming week, the finance ministry will present the results of an investigation at BaFin it had commissioned in the autumn of 2020, Scholz said.

The finance minister, a candidate for German chancellor in the general election in October, has previously called for a speedy reform at both auditing and financial regulators in Germany.

Wirecard filed for insolvency in June 2020 after failing to prove the existence of €1.9 billion in reported funds on its books. BaFin's role as the company's supervisor has been called into question many times since the affair was uncovered, given that the regulator had stepped in to defend Wirecard against allegations of accounting fraud as reported by the Financial Times. The close connection between Wirecard and some of BaFin's staff had also raised questions.

BaFin recently reported an employee to the German authorities for suspected insider trading in connection to Wirecard, Reuters reported Jan. 28.

Calls for BaFin's president to resign began soon after the Wirecard affair started to unfold, though Hufeld repeatedly stated he had no intention to step down. In a Jan. 29 statement, Scholz said Hufeld and the finance ministry have come to the unanimous decision that BaFin needs new leadership.

Hufeld has been working at BaFin for the past eight years, six of which as the authority's president. The finance ministry has not announced a successor.