An Impact of Institutional Environment on the Czech Banking Sector

Petr BudinskýVice-rector VŠFS

ConferenceHuman Capital & Financial Management

Prague, September 2012

SOLUTION OF DEBT CRISIS

•Political Union

•Fiscal Union

•Banking Union

ECB

• Decrease of interest rates

• LTRO 1 trln EUR

• Unlimited buy-out of bonds

• Banking union - 1 regulator - sharing risks

BANKING ASSETS

in trln % of GDPEurozone 33 (EUR) 350CR 4,7 (CZK) 125

BANKING LOANS

% of banking assets % of GDP

Eurozone 33 124CR 44 57

BANKS

• Worsening of loans

• Holding of bonds

• Losing deposits

• Capital requirements

• Fundings problems

DELEVERAGING

+ … Restructuring of assets Capital increase

- … Restricting new loans

BANKS BEHAVIOUR

• Bonds purchases

• Stricter conditions for granting of loans

• Lower demand for loans

CNB EXPOSURE (in BLN´s of CZK)

2009 2010 2011

GERMANY 124 216,7 283,4

ITALY 54,1 17,9 4,8

IRELAND 13,8 5,8 0,5

SPAIN 60,6 11,1 6,7

GREECE 14,8 0,1 0

SOCIETE GENERALE / KB EXPOSURE

SOC. GEN. (in BLN´s of EUR)

KB ( in BLN´s of CZK)

GREECE 2,9 7

SPAIN 2,2 0

ITALY 4,5 8,2

PORTUGAL 0,4 0,2

IRELAND 0,2 0

KBC / CSOB EXPOSURE

KBC (in BLN´s FOND)

CSOB (in BLN´s of CZK)

GREECE 0,5 3,06

SPAIN 2,2 0,57

ITALY 6,1 1,99

PORTUGAL 0,4 0

IRELAND 0,3 0