Financial market supervision and stability

Transcription

1 Financial market supervision and stability Seminar to mark the 20th anniversary of the Czech and Slovak Central Banks Marek Ličák

2 Integrated supervision within the NBS Financial stability in Slovakia Agenda Challenges posed by the predominantly foreign owned banking system and banking union 2

3 Financial market supervision in transition countries Banking supervision in almost all transition countries had a prominent position in comparison with institutions responsible for other sectors (dominant share of banks on an overall financial sector) Banking supervision was mostly carried out by their central banks Central banks were established with strong guarantees of their independence; guarantee also for banking supervision to be shielded from undue political influence Supervision of other sectors was mostly established within separated institution or within Ministry of Finance Scandinavian countries were the first that established integrated supervision (Norway 1986, Denmark 1988, Sweden 1991) growth of bancassurance business model, financial innovation, economy of scale, synergies 3

4 Financial market supervision in Slovakia Banking system supervised and regulated by the NBS from 1993 Insurance sector, capital market supervised by the Ministry of finance between Financial market authority was established in 2000 Integrated supervision and regulation of banking sector, insurance, capital market and pension system within the NBS from

5 Integrated supervision in Slovakia Reasons for integration Economy of scale, synergies very important mainly for smaller countries Very strong reputation of the NBS Growing importance of other sectors (mainly pension funds) View after seven years of integration Synergies in many areas (human resources, analytical work, knowledge and so on) One culture of supervision in Slovakia 5

6 Financial stability in Slovakia 10 9 "baptism by fire" "period of maturing" "period of new challenges" "childhood period" bank failures or forced administration Total assets (right, bln.eur) Loans to households (right, bln. EUR)

7 Financial stability in Slovakia Banks mostly state owned or owned by domestic capital, low penetration of banking childhood or teenage period Inflow of foreign capital, significant change in banking culture, high growth of credit period of maturing Experience with global financial crisis GDP fall, confidence crisis, baptism by fire Very stable banking sector in SR, debt crisis, slow economic growth, SSM period of new challenges 7

8 Credit risk Liquidity Balance sheet Profitability Solvency Financial stability in Slovakia Comparison of SK banking sector with EU banking sector Indicator SR EU Lower quartile Median Upper quartile Indicator SR Lower quartile EU Median Upper quartile ROA 1,0 0,1 0,3 0,8 Tier I ratio 14,4 11,3 13,2 14,8 ROE 8,9 1,2 5,7 8,8 Credit to corporates (Y-to-Y) -1,0-6,7-0,9 2,0 Cost- to-income 58,5 49,8 57,1 65,7 Credit to households (Y-to-Y) 9,2-2,3 0,1 3,7 Net interest margin 3,1 1,1 1,7 2,3 Share of domestic GB 20,4 1,7 3,7 7,6 NPL 3,8 3,7 5,3 10,0 Share of financing from interbank market 5,2 11,4 18,1 20,6 Coverage of NPL 81,0 40,3 53,2 58,8 Loan to deposit ratio 90,3 93,6 119,0 128,4 Slovakia Median EU Upper and lower quartile EU 8

9 Challenges posed by predominantly foreign owned banks Many positive experience with foreign capital (new banking culture) Situation has changed subsidiaries in Slovakia are in most cases in a better position than their banking group Possible negative effects transformation of subsidiaries into branches, deleveraging, outflow of capital, liquidity, cost cutting Probability of negative spillovers depends on attractiveness of subsidiaries for parents Position of largest SK banks within their banking groups 35% 30% 25% 20% 15% 10% 5% 0% -5% -10% -15% -20% ROE Share of group's ROE Share of group's ROE Share of group's ROE Share of group's ROE Share of group's profit profit profit profit profit Banking group 1 Banking group 2 Banking group 3 Banking group 4 Banking group 5 Interquartile range for group Median value for group Subsidiary in Slovakia 9

10 Challenges posed by the banking union Single supervisory mechanism is a big challenge for the NBS Transfer of power for the microprudential supervision on the ECB The NBS will still keep macroprudential powers Close cooperation with the ECB; the need to understand local conditions Challanges posed by 10

11 Thank you for your attention Marek Ličák Director of Macroprudential Policy Department National Bank of Slovakia 11