Download
1 / 29

Long standing commitments - PowerPoint PPT Presentation


  • 247 Views
  • Uploaded on

1 st Bank of Greece Workshop on Economies of the Eastern European and Mediterranean Countries The Global Financial Crisis and SEE: Lessons for macroeconomic policy and financial stability. Session II : Preserving financial stability: the supervisors’ perspective. Charalampos Vogiatzis

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'Long standing commitments' - Angelica


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
Slide1 l.jpg

1st Bank of Greece Workshop

on Economies of the Eastern European and Mediterranean Countries

The Global Financial Crisis and SEE: Lessons for macroeconomic policy and financial stability

Session II : Preserving financial stability:

the supervisors’ perspective

Charalampos Vogiatzis

Athens, 14 May 2010


Slide2 l.jpg

Preserving Financial Stability:

The Supervisors' Perspective

Presentation

  • Supervisors, financial stability and the current crisis : exploring the topic

  • Greek banking groups: a crucial factor for the stability of the region

  • Bank of Greece Response as home and host supervisor

  • Cross-border Cooperation

  • Addressing concerns for Greek fiscal crisis implications

  • Conclusions

2




Slide5 l.jpg

Preserving Financial Stability:

The Supervisors' Perspective

Presentation

  • Supervisors, financial stability and the current crisis : exploring the topic

  • Greek banking groups: a crucial factor for the stability of the region

  • Bank of Greece Response as home and host supervisor

  • Cross-border Cooperation

  • Addressing concerns for Greek fiscal crisis implications

  • Conclusions

5



Slide7 l.jpg

Greek Banks in SEE & CEE.

At the end of 2009

  • 24 banks

  • 2.897 business units

  • 38.811 employees

  • Total loans to customers in New Europe €47.3billion

  • Profits exceeding € 390million


Slide8 l.jpg

Market Share

(% assets)

35,0%

29,0%

28,0%

30,0%

26,5%

25,0%

19,8%

20,0%

16,3%

15,9%

15,0%

10,0%

6,4%

4,6%

5,0%

2,1%

1,6%

0,0%

Albania

Bulgaria

Romania

Serbia

FYROM

Turkey

Ukraine

Poland

Total New

Total SEE

Europe

Greek Banks’ market shares

in host countries

SEE entities significant both for domestic markets and the Greek groups.

8


Slide9 l.jpg

Meeting financing needs of local economies

  • Greek banking groups credit expansion in the region 3.8% during Q1 2010 (total loans at end of Q1 2010 € 49.1 billion)

9


Long standing commitments l.jpg
Long standing commitments

  • Despite liquidity squeeze funding from parent institutions remained unchanged (€ 18 billion)

  • Increase of local deposits by 4.7% during Q1 2010 without increasing deposit interest rates

  • Loans to deposits ratio improved but still high (163% at end of March 2010)

  • Funding to cross border entities is not considered as a liquidity source for parent institutions


Slide11 l.jpg

Supervisory concerns

  • Economic conditions in Eastern Europe have been deteriorated since Q4 2008 but in many cases things seem to be stabilised

  • Positive effects from IMF intervention

  • Less foreign capital flows

  • Depreciating local currencies and relevant implications for foreign currency denominated loans and equity participations

11


Slide12 l.jpg

Supervisory concerns

  • Reduction of import demand from the rest of Europe due to the crisis implications

  • Implications of fiscal crises in home countries

  • Asset quality deterioration on the back of the worsening operating environment

  • Slow down of credit expansion

  • Decreased operating income and profits

  • 12


    Slide13 l.jpg

    Preserving Financial Stability:

    The Supervisors' Perspective

    Presentation

    • Supervisors, financial stability and the current crisis : exploring the topic

    • Greek banking groups: a crucial factor for the stability of the region

    • Bank of Greece Response as home and host supervisor

    • Cross-border Cooperation

    • Addressing concerns for Greek fiscal crisis implications

    • Conclusions

    13


    Slide14 l.jpg

    BoG supervisory response

    For entities in SEE….

    • Active support of the European Bank Coordination Initiative.

    • Encourage banks to keep their SEE subsidiaries well capitalized.

    • Monitoring of fundamental figures on a monthly basis.

    • Suggestions to promote further their risk management practices and internal control systems in the region.

    14


    Slide15 l.jpg

    BoG supervisory response

    ….and for the Group

    • Pre-emptive action to increase the loss absorption capacity of Greek Banks (Tier I> 8%).

    • Testing the resilience of the banking sector under IMF assumptions.

    • Frequent on-site examinations (e.g. adequacy of loan provisions)

    • Close monitoring of Greek banks' liquidity positions and contingency funding policies.

    15


    Slide16 l.jpg

    Preserving Financial Stability:

    The Supervisors' Perspective

    Presentation

    • Supervisors, financial stability and the current crisis : exploring the topic

    • Greek banking groups: a crucial factor for the stability of the region

    • Bank of Greece Response as home and host supervisor

    • Cross-border Cooperation

    • Addressing concerns for Greek fiscal crisis implications

    • Conclusions

    16


    Slide17 l.jpg

    Home host cooperation

    Strong Home/Host co-operation before the crisis….

    • Bilateral MoUs

    • Governor’s Club meetings

    • SEE Multilateral MoU.

    • Joint Inspections

    • Exchange of findings reports

    17


    Slide18 l.jpg

    Home host cooperation

    ….and in the aftermath of the crisis

    • Bilateral meeting of Governor’s and Heads of Banking Supervision with the participation of banks’ top management.

    • Speed up the settlement of Colleges of Supervisors

    • Arrange Joint Risk Assessment issues on an horizontal basis.

    18


    Slide19 l.jpg

    Home host cooperation

    ….and in the aftermath of the crisis (2)

    • Exchange of visits of home and host supervisors

    • Comprehensive communiqués

    • Immediate provision of information for urgent issues - teleconferences

    • Participation in EU programs

    19


    Slide20 l.jpg

    Preserving Financial Stability:

    The Supervisors' Perspective

    Presentation

    • Supervisors, financial stability and the current crisis : exploring the topic

    • Greek banking groups: a crucial factor for the stability of the region

    • Bank of Greece Response as home and host supervisor

    • Cross-border Cooperation

    • Addressing concerns for Greek fiscal crisis implications

    • Conclusions

    20


    Slide21 l.jpg

    Addressing concerns for Greek fiscal crisis implications

    • Unlike other countries, the challenges facing the Greek commercial banks do not originate in the banking sector.

    • This is a fiscal crisis that have negative effects on the banking sector unless it is forcefully addressed in the coming months.

    • Greek commercial banks proved sound and resilient

    21


    Slide22 l.jpg

    Addressing concerns for Greek fiscal crisis implications

    • Credit risk higher but not accelerating

    • More conservative credit policies and higher provisions

    • Market risk exposure contained

    • Liquidity position under pressure but manageable thanks to ECB

    • Effectivestate support plan

    22


    Slide23 l.jpg

    Addressing concerns for Greek fiscal crisis implications

    • SE Europe more of an opportunity than a challenge. Greek eentities in the region well funded and capitalized to reduce contagion risk

    • Intensified on site examinations

    • Communication with top management and treasurers of banks almost on a daily basis

    23


    Slide24 l.jpg

    Addressing concerns for Greek fiscal crisis implications

    • Banks required to develop a new strategy for the new era

    • Involvement of Board of Directors

    • Exit plans

    • Increased frequency of reporting

    • Improve systems and controls

    24


    Slide25 l.jpg

    Addressing concerns for Greek fiscal crisis implications

    Joined IMF-EC-ECB plan:

    • Credible plan of € 110 billion which addresses funding needs of Greece for the next crucial years

    • Political will to implement the strict austerity measures.

    • Stability fund with €10 billion available to further boost banks’ capital if needed

    • Regular reviews of the Greek banking system by experts of the three institutions


    Slide26 l.jpg

    Addressing concerns for Greek fiscal crisis implications

    In addition

    • ECB decision for the eligibility of Greek Government Bonds

    • Expansion of state plan by € 15 billion

    • ECB decision to intervene in public and private debt markets to ensure liquidity in financial segments that are dysfunctional.

    • EU package of € 500billion plus IMF contribution of 200-250 billion


    Slide27 l.jpg

    Preserving Financial Stability:

    The Supervisors' Perspective

    Presentation

    • Supervisors, financial stability and the current crisis : exploring the topic

    • Greek banking groups: a crucial factor for the stability of the region

    • Bank of Greece Response as home and host supervisor

    • Cross-border Cooperation

    • Addressing concerns for Greek fiscal crisis implications

    • Conclusions

    27


    Slide28 l.jpg

    Conclusions

    Europe needs a fundamental overhaul of its financial stability architecture that allows its citizens to enjoy the benefits of financial integration and protects them against the kind of twin fiscal-financial crises that are currently afflicting several member states. The reform of the supervisory and regulatory framework that is currently before the European Parliament is very important, but takes us only half the way. It needs to be matched by an integrated EU crisis management and resolution framework.

    Dominique Strauss-Kahn

    Brussels, March 2010

    28


    Slide29 l.jpg

    Preserving Financial Stability:

    The Supervisors' Perspective

    Thank you!

    Charalampos Vogiatzis

    Deputy Director

    Bank of Greece

    Department for the Supervision

    of Credit and Financial Institutions


    ad