DIF Funding and Management

Transcription

1 DIF Funding and Management 11 March 2016

2 Establishment of the adequate funding mechanism for the DIF Purpose of the DIF interventions? How are the mechanisms for provision of the missing funds activated? Extraordinary premium as priority source of the backup funding? Efficiency of taking out loans from international institutions? Risk management of the DIF investment? 2

3 DIF use Payment of insured deposits and coverage of related costs in the cases of a bank failure EUR funds of the DIF Resolution financing Coverage of the DIF management costs and operational costs RSD funds of the DIF Repayment of borrowed funds 3

4 Funding sources Regular sources Regular premium DIF investment income Asset recovery of the Agency from the estate of the failed banks on account of payout of insured deposits and participation in the bank resolution processes Additional sources Extraordinary premium State budget Loans Funds provided through issuance of securities 4

5 Regular premium Every bank shall pay deposit insurance premium as prescribed by the Agency in terms of the method and deadlines. Every bank shall submit monthly reports to the Agency on: Total and insured deposits; Balance of deposits by their maturity and average interest rate; Balance of deposits of large legal entities. Ex-ante approach for the premium assessment and collection Regular premium rate shall amount to at maximum 0.2% Agency shall determine the regular premium rate for the following year by 30 September of the present year Agency shall assess and collect the regular premium on a quarterly basis, according to the average balance of total deposits held by a bank over the preceding quarter Ukupna naplaćena redovna premija u periodu godine ( u milionima evra) 60,00 50,00 40,00 30,00 20,00 10,00 0,

6 Rulebook on DIF replenishment DIF liquid funds Total required funds DIF available funds Decision on collection of the extraordinary premium and/or taking out loans/credits Missing funds 6

7 Extraordinary premium Consideration of the available backup funding sources In case of the minor sum missing, the extraordinary premium seems to be the most logical step DIF replenishment: decisions on collection of extraordinary premiums of 0.05% quarterly in 2014 and 2015 (collection presented in EUR millions). Predgled naplaćene vanredne premije u i godini ( u milionima evra) Risks of assessment of the extraordinary premium: Taking into account the premium collection dynamics when determining the extraordinary premium relative to the quarter Consequences for the following year in terms of the level of the regular and extraordinary premiums Extraordinary premium: In urgent procedure Longer period of collection 7,0 6,0 5,0 4,0 3,0 2,0 1,0 0,0 I Q II Q III Q IV Q ,68 5,69 5,95 6, ,22 6,23 6,22 6,27 7

8 Loans made by the international institutions Deposit Insurance Function Strengthening Project IBRD loan Amount: EUR million Active from: 26 October 2014 Availability period: until June 2016 Front-end fee: 0.25% Repayment period: (2 semi-annual installments) Interest rate: variable Drawdown conditions: subject to fulfillment of the disbursement-linked indicators (DLI) Fund drawdown until now: EUR million EBRD stand-by facility Amount: EUR 200 million Active from: 23 June 2015 Availability period: 9 years after the activation Commitment fee: 0.5% Front-end fee: 0.5% Interest rate: variable Grace period: 12 months Drawdown conditions: after occurrence of the insured event as described in the loan agreement 8

9 Setting priorities in the case of the backup funding When major funds are missing the Agency shall consider taking out a loan/loans from the international institutions in addition to assessing the extraordinary insurance premium Approval of the BoD of the Agency to submit a request Decision of the Serbian Government subject to the previous view of the ministry in charge of finance Requesting a view from the relevant institutions such as the NBS 9

10 DIF management DIF resources are invested in line with the principles of fund safety, liquidity and profitability Investment policy Procedure for decision-making for DIF investment NBS guidelines Investment RSD funds FCY funds Securities issued by the government Securities issued by the NBS Foreign deposits Foreign securities 10

11 DIF management Investment in the home market Challenges of the global market rates Currency issue European practice in terms of payment obligation and its indirect role in reduction of the potential losses Home securities investment trends Foreign securities investment trends 11

12 Asset management within the scope of the Agency Rulebook on investment of the available funds: Agency funds Investor protection fund resources Funds of the failed financial institutions Basic investment principles: Implementation efficiency of the investment decisions Fund safety (collaterals) Risk minimizing (securities quality, bank rating) Liquidity of funds invested in securities and bank deposits 12

13 Interest rate trends for RSD investments 8,00% 7,00% 6,00% 5,00% 4,00% 3,00% 2,00% 1,00% 0,00% Three-month RSD bills rate 7,23% 6,95% 6,45% 5,63% 4,79% 4,40% 3,00% 2,94% 2,79% 2,75% 8,00% 7,00% 6,00% 5,00% 4,00% 3,00% 2,00% 1,00% 0,00% Six-month RSD bills rate 7,00% 5,25% 4,57% 4,09% 3,25% 3,25% 9,00% 8,00% 7,00% 6,00% 5,00% 4,00% 3,00% 2,00% 1,00% 0,00% 8,45% 8,45% 8,40% 8,00% 8,14% 53-week RSD bills rate 6,39% 6,18% 6,18% 5,00% 4,89% 4,09% 4,09% 9,0% 8,0% 7,0% 6,0% 5,0% 4,0% 3,0% 2,0% 1,0% 0,0% Key policy rate vs banks deposit offers 8,00% 8,00% 7,50% 7,00% 6,50% 6,00% 6,00% 5,50% 5,00% 4,50% 4,50% 4,50% 4,50% 4,25% 6,69% 6,53% 6,63% 5,98% 5,06% 4,80% 4,85% 4,22% 4,05% 3,35% 2,83% 3,01% 2,91% 2,67% key policy rate avg. interest rate 13

14 Thank you for your attention Deposit Insurance Agency Кnez Мihailova 2, Beograd Теl: