Update world financial crisis and gdp projection 2009
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Update: World Financial Crisis and GDP projection 2009. Drs. A.G. Romero Presentation CBS, KvK, and BNA June 9, 2009. Returns, volatility, and length of crises in months. Interagency Supervisory Capital Assessment Program.

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Update world financial crisis and gdp projection 2009

Update: World Financial Crisis and GDP projection 2009

Drs. A.G. Romero

Presentation CBS, KvK, and BNA

June 9, 2009


Returns volatility and length of crises in months

Returns, volatility, and length of crises in months


Interagency supervisory capital assessment program

Interagency Supervisory Capital Assessment Program

  • “Stress testing” coordinated by the IMF for the 19 largest banks in the U.S. (May 2009)

  • These 19 banks hold two third (2/3) of all assets of the US banking system

  • Stress test focused on 3 major areas:

    A. Capital adequacy

    B. Effective liquidity management

    C. Effective risk management


A capital adequacy

A. Capital Adequacy

Results stress tests IMF(May 2009)

All US banks need $75 billion

  • Bank of America: 33.9 billion

  • Wells Fargo:13.7 billion

  • GMAC:11.5 billion

  • Citigroup: 5.5 billion

  • Regional Financial: 2.5 billion

  • Sun Trust: 2.2 billion

  • Key Corp: 1.8 billion


A capital adequacy cont d

A. Capital Adequacy (cont’d)

Results stress tests IMF(May 2009)

  • Morgan Stanley: 1.8 billion

  • Fifth Third: 1.1 billion

  • PNC: 0.6 billion

    11. American Express, 12. BB&T, 13. Bank of

    New York Mellon, 14. Capital One, 15. Goldman

    Sachs, 16. JP Morgan Chase, 17. Metlife, 18. State

    Street, and 19. US Bancorp are sufficiently

    capitalized.


B effective liquidity management

B. Effective liquidity management

  • Key question: Can the liquidity of the banking sector fare under the stressed market conditions?

  • Result: Daily monitoring of the liquidity management of U.S. banks


C effective risk management

C. Effective risk management

  • Adequacy of risk management system;

  • Counterparty risk;

  • Credit risk (structured credit products and mortgage lending on HIGH alert);

  • Monitor the link between risk-taking and compensation; (bonus of top managers); and

  • Effective internal communication of risks.


Lessons from george soros

Lessons from George Soros

  • Loan To Value ratio (LTV) is important;

  • Past experience: Outstanding loans as % GDP was lower than today e.g., 150% in 1955, as opposed to 300% + today (HIGHLY LEVERAGED market);

  • Mortgage loans was limited to 80% of the value of the properties (in 1950’s);

  • Loans linked to an investment portfolio was limited to 50% (legal margin) of the value of the portfolio (in 1950’s); and

  • Concentration risk: Government loans in many countries is the multiplication factor of GDP (Latin-American banking crisis of the 1980’s)


Developments housing prices in the netherlands

Developments housing prices in the Netherlands


Bankruptcies in the netherlands

Bankruptcies in the Netherlands


Unemployed persons in the netherlands 3 months average 2001 2009

Unemployed personsin the Netherlands (3 months average: 2001-2009)


Dutch security exchange market aex index

Dutch security exchange market (AEX-index)


Main developments netherlands antilles real changes

Main developments Netherlands Antilles (real % changes)


Expected developments in 2009

Expected developments in 2009

  • Slower economic growth of 1.0% due to fewer domestic activities caused by a further slowdown of the world economy.

  • Lower inflation of 2.1% stemming from decelerating global commodity prices.

  • Debt relief started in February 2009 (For Curaçao: May 2009).

  • Lower surplus on the balance of payments due to higher current account deficit combined with lower external financing.


Thank you

THANK YOU!


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