Spanish banking sector in the SSM context · 2016. 2. 11. · PORTFOLIO WEIGHT RWA RELATIVE SAVING...
Transcript of Spanish banking sector in the SSM context · 2016. 2. 11. · PORTFOLIO WEIGHT RWA RELATIVE SAVING...
SPANISH BANKING SECTOR IN THE SSM CONTEXT
Fernando Restoy
Deputy Governor, Banco de España
NINETEENTH ANNUAL EUROPEAN FINANCIALS CONFERENCE
GOLDMAN SACHS
Rome, 16 June 2015
OUTLINE
1. The current situation
1.1 The picture emerging from the comprehensive assessment in the euro zone
1.2 A note on Spain
2. Main challenges ahead
2.1 Profitability
2.2 Regulation
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1. THE CURRENT SITUATION
1.1 The picture emerging from the comprehensive assessment in the euro zone
Moderate impact of the AQR on CET 1 ratio (42 bp for SSM banks on average) but with high heterogeneity among countries. On the day of publication of the results, only 13 banks with net capital shortfall.
Currently, most of them have already addressed capital needs
Spanish banks: The lowest impact of the AQR (14 bp) No capital shortfall at the time of publication of the results.
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1. THE CURRENT SITUATION
NET IMPACT ON CET1 RATIO OF THE AQR (a)
0,00,51,01,52,02,53,03,5
Gre
ec
eC
ypru
sS
love
nia
La
tvia
Est
on
iaP
ort
ug
al
Au
stri
aIt
aly
Ma
lta
Slo
vakia
Fin
lan
dB
elg
ium
Ne
the
rla
nd
sL
ith
ua
nia
Ave
rag
e S
SM
Ire
lan
dG
erm
an
yL
uxe
mb
ou
rgF
ran
ce
Sp
ain
pp
-2
0
2
4
6
8
10
12
Slo
ven
iaG
ree
ce
Be
lgiu
mIr
ela
nd
Ma
lta
Cyp
rus
Po
rtu
ga
lL
uxe
mb
ou
rgG
erm
an
yF
inla
nd
Ita
lyA
ust
ria
Ave
rag
e S
SM
Ne
the
rla
nd
sF
ran
ce
Slo
vaki
aL
ith
ua
nia
Sp
ain
La
tvia
Est
on
ia
NET IMPACT ON CET1 RATIO OF THE STRESS TEST IN
THE ADVERSE SCENARIO, BY COUNTRY (a)
pp
Source: ECB and Banco de España a. Net of tax effect.
Source: ECB and Banco de España a. Net of tax effect.
CA results
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1. THE CURRENT SITUATION
5 5
1.2 A note on Spain
1. The cleaning up process
2. Reestructuring
3. Recapitalisation
1. THE CURRENT SITUATION
6 6
Clean-up
It includes loans to real estate and foreclosed assets.
0
50
100
150
200
250
300
2011 2012 2013 2014
BALANCE SHEET EXPOSURE TOREAL ESTATE SECTOR
(Net of provisions) €bn.
1. THE CURRENT SITUATION
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Reestructuring
NUMBER OF CREDIT INSTITUTIONS CONSOLIDATED GROUPS.
0
20
40
60
80
100
120
2007 2014
60
70
80
90
100
110
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
EMPLOYEES AND OFFICES (Dec08 = 100)
OFFICES EMPLOYEES
0,0%
2,0%
4,0%
6,0%
8,0%
10,0%
12,0%
14,0%
Phase-in Fully loaded
0
50.000
100.000
150.000
200.000
250.000
300.000
2008 2009 2010 2011 2012 2013 2014
Eligible Capital Reserves Capital + Reserves
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CAPITAL EVOLUTION. SPANISH BANKING SECTOR Mill € CET1 2014
SPANISH BANKING SECTOR
1. THE CURRENT SITUATION
Recapitalisation
2. MAIN CHALLENGES AHEAD
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2.1. Profitability
Slowly improving thanks to lower impairments
-20
-15
-10
-5
0
5
10
15
20
2011 2012 2013 2014
ROE and components (%)
SSM significant institutions
Pre- impairment op.profit/Equity Net op. profit after impairment/Equity
Impairment/Equity RoE
2. MAIN CHALLENGES AHEAD
10
SPAIN: EVOLUTION OF ROE
-30
-25
-20
-15
-10
-5
0
5
10
Dec-10 Dec-11 Dec-12 Dec-13 Dec-14
ROE ROE (excl. Results of Financial Operations)
2.1. Profitability
Significant variability across jurisdictions
-15
-10
-5
0
5
10
15
GR CY AT PT IT DE SI FR NL ES BE LU FI LV EE IE
RoE(%) 2014
SSM
11
0
20
40
60
80
ES PT NL SSMaverage
IT FR DE
EFFICIENCY RATIO. December 2014
%
0,00
0,20
0,40
0,60
0,80
1,00
1,20
ES FR PT IT DE BE GR IE (a)
UK (a)
NL
2001 2007 2010 2013
NUMBER OF OFFICES PER ONE THOUSAND INHABITANTS
Source: Financial Stability Report May,2015, Banco de España (a) Data refer to December 2012.
2. MAIN CHALLENGES AHEAD
2.1. Profitability
Need to review business models and strategies
COST TO INCOME. December 2014
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2.2 Regulation: issues on the ongoing international debate
2. MAIN CHALLENGES AHEAD
Simplicity and Comparability:
Seeking an appropriate balance between simplicity, comparability and risk sensitivity, particularly relevant in the calculation of RWA.
The appropriateness of the use of internal models needs to be defined.
TLAC :
Having sufficient loss absorbing and recapitalization capacity to implement an orderly resolution that minimises impact on financial stability and taxpayers, and ensures continuity of critical functions.
Important to achieve neutrality between the different resolution models and consistency with MREL.
Simple, Transparent and Comparable Securitisations:
Reducing for this type of securitisations some of the conservatism built into the capital framework.
Relevant to bear in mind the role of securitisations as a risk transfer tool
2. MAIN CHALLENGES AHEAD
2.2. Regulation: foster harmonisation across the SSM
In particular, harmonise solvency measures:
Capital definitions (national discretions)
Risk Weighted Assets
Basis for capital measurement (accounting)
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14
TRANSITIONAL ADJUSTMENTS BY COUNTRY OF PARTICIPATING BANKS
As of 1 January 2014
Source: Aggregate Report on the Comprehensive Assessment ECB (October 2014)
-3
0
3
6
9
12
15
18
21G
R IE PT
AT
DE
BE ES IT NL
LV FI SI FR CY SK LT EE MT
LU
Ch
ange
in C
ET1
in %
of
RW
A
National discretions
2. MAIN CHALLENGES AHEAD
15
Source: Financial Stability Report May,2015, Banco de España
0
1
2
3
4
5
6
7
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
NL FR IT DE UK ES
PORTFOLIO WEIGHT RWA RELATIVE SAVING
IRB WEIGHT IRB INDICATOR (Right-hand scale)
%
IRB IMPACT ON RWA Private Sector Portfolio
RWA RELATIVE SAVING: Average
Risk weighted assets
2. MAIN CHALLENGES AHEAD
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2. MAIN CHALLENGES AHEAD
Accounting
To ensure that the accounts give a fair view of the banks’ financial situation is key.
Solvency ratios are calculated on the basis of accounting information.
There are noticeable discrepancies between the accounting criteria used in the different jurisdictions (AQR results), although IFRS principles must be applied in most of them.
The harmonisation of these criteria would be highly desirable (classification of exposures and provisioning policy).
Specially considering the entry into force in 2018 of the new standard (IFRS 9): expected loss vs. incurred loss.
THANK YOU FOR YOUR ATTENTION