Transcript Folie 1

Session III:
The role of the Austrian Central Bank in the
ongoing financial market turmoil
Russian Economic and Financial Forum in Austria
Vienna, 30 November 2008
Michael Würz
Head, Financial Markets Analysis and Surveillance Division
Oesterreichische Nationalbank
www.oenb.at
Financial market tensions emerged from the West
Interbank market - 3M OIS Spreads
Loss in confidence resulting
from US subprime-crisis
in basis points
350
- Markets for structured
products not/only to a
limited extent functioning
300
250
- Significant write-downs by
large international banks
200
150
- Increase in interbank
interest rates
100
50
- Liquidity provision by
central banks
Source: OeNB, Bloomberg.
www.oenb.at
USD
11
.0
8
09
.0
8
07
.0
8
05
.0
8
03
.0
8
01
.0
8
11
.0
7
09
.0
7
07
.0
7
0
- High stock price volatility
EUR
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Latest wave hit the Austrian banks too
Stock prices of Austrian banks
110
1.7.2007 = 100
120
1.7.2008 = 100
110
100
100
90
90
80
80
70
60
70
50
First waves
First waves
60
40
Latest wave
30
50
DJ EURO STOXX Financial Services
Erste Group Bank
11
/0
8
10
/0
8
09
/0
8
08
/0
8
07
/0
8
07
/0
7
08
/0
7
09
/0
7
10
/0
7
11
/0
7
12
/0
7
01
/0
8
02
/0
8
03
/0
8
04
/0
8
05
/0
8
06
/0
8
20
Raiffeisen International Bank Holding
Quelle: Bloomberg.
www.oenb.at
-3-
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Indirect effects of turmoil affect operating profits and
risk provisions
Growth of Operating Profit
and Risk Costs (yoy)
Operating Income (unconsolidated): +1.4%
in bn EUR
40%
14
300%
-1,2%
12
10
1.15
1.17
-9,1%
30%
3.21
20%
3.53
8
+26,8%
2.05
0%
0%
+11,4%
4
5.47
6.09
0.33
-198,3%
www.oenb.at
-200%
-20%
-0.33
-30%
2005Q4
-2
2007Q03
-100%
-10%
2
Source: OeNB.
100%
10%
2.59
6
0
200%
2008Q03
Other operating income
Net fees and commissions income
Securities and investment earnings
Net interest income
Trading income
-300%
2006Q2
2006Q4
2007Q2
2007Q4
2008Q2
Operating profit (cons.)
Operating profit (uncons.)
Risk costs (uncons.) (right axis)
-4-
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Liquidity conditions are challenging and closely monitored

Funding markets dried up in autumn 2008, Austrian banks were also affected

Tight liquidity conditions CHF and USD financing

Non-Euro liquidity situation has improved

General situation remains challenging

OeNB is closely monitoring the situation

Introduction of new weekly liquidity report
 The 24 largest banks report in- and outflows plus counterbalancing capacity
 Time horizons: up to 1 week, 1 month, 3 months and 6 months
 Currencies: CHF, EUR, GBP, JPY, USD and an aggregate of other FX

www.oenb.at
Additional regular information exchange with banks reporting liquidity mismatches
-5-
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High deposit growth in Austria and Central, Eastern and
South-Eastern Europe (CESEE)
Growth Rate of Deposits
in Austria (yoy)
02
20
08
Q
04
20
07
Q
02
20
07
Q
02
20
05
Q
20
07
Q
20
07
Q
20
06
Q
20
06
Q
20
05
Q
20
05
Q
20
08
Q
Due to changes in reporting requirements the comparability of
CESEE growth rates before 2008 with more recent values is limited.
Source: OeNB, unconsolidated figures.
www.oenb.at
04
0%
20
06
Q
0%
02
10%
20
06
Q
3%
20
05
Q
20%
02
6%
04
30%
02
9%
04
40%
02
12%
04
50%
02
15%
04
Growth Rate of Deposits
of Austrian Subsidiaries in CESEE (yoy)
-6-
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CESEE exposure of Austrian banks focussed on New
Member States (NMS) in the EU
CESEE Exposure
 AT banks are ….
… significant players in CESEE
… diversified across the region but
exposure to NMS dominates
NMS-2007
17%
NMS-2004
56%
SEE
14%
Source: BIS, Q2 2008.
CIS
13%
Share of CESEE Segment in Consolidated Pretax Profit
90
80
 Growth is redirected and partly cooling
off
70
60
 CESEE segment is highly profitable
50
40
30
Q2
2008
Q3
2008
Q3
2008
Q2
2008
20
 Major banks depend strongly on CESEE
10
0
RZB
Erste Bank
Bank Austria
VBAG
Source: quarterly consolidated reports.
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Business model of Austrian banks in CESEE faces short run
challenge
Business model of Austrian banks in CESEE is in principle fit for
future
– Retail banking based on a strong deposit base will emerge as a winner of the financial turmoil
Cut and run – no option for Austrian banks
– Costs would outweigh benefits by far
Turmoil in CESEE represents a short run jeopardy for the long
and medium term growth potential
– CESEE is an important contributor to EU-15 growth rates
www.oenb.at
-8-
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Austria‘s comprehensive financial stability package
• Strengthening Banks‘ Confidence
– Interbank Market Strengthening Act (up to 75 bn EUR):
- Clearing house
- Federal guarantee for securities issued by banks
• Strengthening Banks‘ Capitalisation
– Financial Market Stability Act (up to 15 bn EUR):
- „Recapitalisation measures“
• Strengthening Depositors‘ Confidence
– Deposit insurance
- physical persons: until end-2009 unlimited amount; afterwards up to 100,000 EUR
- legal persons: 90% of up to 20,000 EUR.
• Further measures:
- Amendment in the Banking Act: „Capital Add-On“
- Prohibition of Speculative short selling
www.oenb.at
-9-
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OeNB‘s role in banking supervision and financial stability
1. Banking Supervision:
- 2 institutions (FMA and OeNB), but 1 process & joint responsibility
- OeNB: fact finding, including risk assessment
On-site
inspections
Off-site
analysis
Reporting
Authority
function
OLD
FMA/OeNB
FMA/OeNB
OeNB
FMA
NEW
OeNB
OeNB
OeNB
FMA
2. Financial Stability:
- Comprehensive and recently extended mandate, based on the EC-Treaty
and the National Bank Act: Monitoring of all circumstances that are of
relevance for the safeguarding of financial stability in Austria
www.oenb.at
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Thank you for your attention!
www.oenb.at
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Austrian Clearingbank/Oesterreichische Clearingbank AG (OeCAG)
• Legal basis is a temporary law to stabilise the Austrian interbank
market
– Austrian government backs a clearing house (OeCAG) to unfreeze interbank lending and debt instrument issuances of
financial institutions
– Guarantees amount up to 75 bn EUR
– Expiration date of law is Dec. 31st, 2009
• Austrian Clearingbank (OeCAG):
–
–
–
–
Founded on Nov. 14th, 2008 by major banks; Initial own funds: 180 mn EUR
Business activities are conducted by OeKB and guaranteed by the Austrian government
Participants are banks and insurance companies
So far three auctions have taken place
• Allocated volume in sum: 804.6 mn EUR; decreasing rates and increasing volume
– Intention to raise additional funds through commercial paper auctions
www.oenb.at
- 12 -
[email protected]
OeNB‘s financial stability mandate
Financial stability mandate inherent central banking task
in Austria: comprehensive monitoring responsibility explicitly stipulated
by the National Bank Act
- combined with the obligation to report observations and findings of
fundamental nature or particular importance to the MoF and the FMA
Recent extension of data availability allows for integrated financial
stability analyses
Structured processes for core stability issues:
- CESEE Risk Assessment
- Risk Transfer
Links/feedback-loops to banking
- Extension of stress testing
supervision and vice versa!
- Liquidity
www.oenb.at
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Specific focus on CESEE activities in banking supervision
and financial stability
Specific CESEE-meetings with the relevant Austrian banks
Further extension of cross-border supervisory cooperation
- Cooperation in the framework of so-called “colleges”
- Joint/simultaneous on-site inspections
- Joint seminars, conferences
- ad-hoc meetings, cooperation in EU fora etc
„CESEE Risk Assessment“ as core issue
within the extended stability mandate of
the OeNB
www.oenb.at
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Cross-border banking supervision in the EU
Consensus: cross-border banking groups require responses
in the supervisory process, but: Quo vadis?
OeNB‘s perspective:
- “Lead Supervisor” is no option
- decentralized European System of Banking Supervisors might emerge in the
long-term (masterplan with milestones and timeline needed)
- For the time being: evolutionary development of the model “national
supervisory authorities & CEBS”
→ Colleges (delegation of tasks ok, but no change in home/host
responsibilities)
→ via CEBS: European supervisory culture
→ ensuring that all banks are subject to the same (high) standards
www.oenb.at
- 15 -
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