The business models, services and legal forms of foreign institutions in part differ considerably from each other. Yet all of them have an essential commonality: They hold a majority of foreign ownership and are a part of an international established group.
Thanks to the group affiliation, they can operate in Germany with a streamlined business structure and can specifically tailor their business organization to the requirements of their clients. This specialization allows the foreign insitutions to produce their services efficiently – whether in banking, funds or leasing/factoring.
As legal entities foreign financial institutions select subsidiaries or branches. This has not only corporate and tax law reasons, but it is decisive for the question of the supervision, as their business activities are kept under surveillance by state positions.
If it deals with a branch of the European Economic Area, in that case, the domestic authorities are responsible with the exception of a few business areas. For branches of foreign financial institutions outside the EEA or (legally independent) subsidiaries the supervision, however, takes place as with German institutions. BaFin as well as the Deutsche Bundesbank (Federal Bank of Germany) are responsible when a bank is concerned.