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European Banking Industry: Difference between revisions
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=== Unrealized | === Unrealized Losses === | ||
In Europe, banks have a smaller proportion of debt securities where the marked to market is not reflected in capital ratios. | In Europe, banks have a smaller proportion of debt securities where the marked to market is not reflected in capital ratios. | ||
* These securities are accounted for in their Amortised Cost (AC) portfolio and according to EBA data, range on average from 18% of total assets (mostly Italian banks) to close to 0% (banks in Finland, Sweden and the Netherlands) at end-June 2022 | * These securities are accounted for in their Amortised Cost (AC) portfolio and according to EBA data, range on average from 18% of total assets (mostly Italian banks) to close to 0% (banks in Finland, Sweden and the Netherlands) at end-June 2022 | ||
* In a scenario with a pre-tax loss of 10%, it would translate into a manageable theoretical capital impact for the average of the sample, although the capital depletion would be significant for some banks. Nevertheless, all the banks in the sample will maintain a post-adjustment CET1 ratio above 8%. | |||
EU Banks’ Deposits are Less Concentrated in Corporate Deposits | EU Banks’ Deposits are Less Concentrated in Corporate Deposits | ||
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* EU banks have larger loan books (55% of assets vs. 35% in the case of SVB) and these are already repricing (given a large proportion are variable rate loans). | * EU banks have larger loan books (55% of assets vs. 35% in the case of SVB) and these are already repricing (given a large proportion are variable rate loans). | ||
* Excluding central bank funding, corporate deposits as a share of total funding in Europe averages between 8% to 30% by country in the selected sample. For SVB, corporate deposits represented around 90% of total funding. | * Excluding central bank funding, corporate deposits as a share of total funding in Europe averages between 8% to 30% by country in the selected sample. For SVB, corporate deposits represented around 90% of total funding. | ||
Supervisory framework of EU banks is stronger too, since all EU banks are subject to Basel rules on liquidity, in particular the calculation of the Liquidity Coverage Ratio (LCR) as well as the Net Stable Funding ratios (NSFR). | |||
* On average, EU banks have an LCR of 200% and an NSFR of around 130% at end-2022. <ref>https://www.dbrsmorningstar.com/document/410978.pdf?Expires=1679953758&Policy=eyJTdGF0ZW1lbnQiOlt7IlJlc291cmNlIjoiaHR0cHM6Ly93d3cuZGJyc21vcm5pbmdzdGFyLmNvbS9kb2N1bWVudC80MTA5NzgucGRmIiwiQ29uZGl0aW9uIjp7IkRhdGVMZXNzVGhhbiI6eyJBV1M6RXBvY2hUaW1lIjoxNjc5OTUzNzU4fX19XX0_&Signature=MUfrM-q6GsGHoZh5bmhqKoyhvydbvybPNXCL9MOUAvt2wr1cV5XtPO2gngp2~i0JmX7MjqWUkXTaXgfngq7sUAtd5KUr18D-uemzqmu9KTzu6klioWQdDGEeL3nA0GJsF4Sa7yGvGjBmNWk7zA1z0b0YE6Nt-~cn5qFbbJkCqGWAr9nfzSAKUuacLu-fS4Fbl7ZKhMZRci-2hMhMEl4tSnOMASV8P0aMIuuuI73I~XTSkAaqWKxGGETQ-y-xxTsL5Y9jSRKJ8wCw6BEWWJg7Lv1P0EjD0~JGK6c2mKW~b0WxlgIlZaKrBvSCrJAFTReLqfW8ds82niBC-goGx4YXvw__&Key-Pair-Id=KNWV36WLG7L4J</ref> | |||
== References == | == References == | ||