2009年-ECB欧洲央行_EU_banks_funding_structures_and_policies_44页_1mb

Summary of "EU Banks' Funding Structures and Policies" (May 2009)

Core Content

This document provides an in-depth analysis of the changes in funding structures and strategies of EU banks in the context of the financial crisis that began in 2007. It outlines the impact of the crisis on bank funding, the role of public authorities, and the challenges faced by banks in restoring their access to funding. The report is based on data available up to the end of March 2009 and includes insights from a survey of 36 EU banks.

Main Viewpoints

• Funding Scarcity and Cost Increase: The financial crisis led to a significant reduction in the availability of funding, especially from wholesale and interbank markets. Banks had to adapt their strategies to more stable sources such as deposits and central bank support.

• Shift in Funding Strategy: Banks that previously relied heavily on wholesale funding have increasingly turned to retail deposits and central bank liquidity. However, this shift has not fully resolved liquidity issues, as central bank funds are often hoarded or recycled in the overnight market.

• Government and Central Bank Interventions: Both government guarantee schemes and central bank liquidity injections were used to support banks. These measures have had mixed success in restoring market confidence and unlocking long-term liquidity.

Key Information

Funding Sources and Strategies

• Pre-Crisis Trends: Before the crisis, banks had access to abundant liquidity, which fueled their leverage. Funding structures were dominated by long-term debt and securitisation, with deposits playing a secondary role.

• Post-Crisis Changes: Banks have increasingly relied on retail deposits, which are seen as more stable. However, deposit rates have risen, making it harder for banks to compete in the retail deposit market.

• Market Data: The report includes charts and data showing the evolution of funding sources over time, including the percentage of total liabilities from deposits, interbank loans, and other instruments.

Debt Composition and Investors

• Debt Issuance: Banks have reduced net issuance and increased the use of short-term instruments. The issuance of covered bonds and securitisation has also declined.

• Investor Behavior: Investor demand for short-term instruments has increased, and government-guaranteed instruments have attracted a different investor base, one more willing to take on government risk than corporate credit risk.

Collateral and Its Management

• Collateral Constraints: The repo market has tightened, with a narrowing of accepted collateral types. Government bonds are now the primary form of collateral.

• Haircuts: The use of haircuts (i.e., the percentage of an asset's value that must be deposited as collateral) has increased significantly, affecting the availability of liquidity.

• Collateral Management: Banks have improved their collateral management practices, including increasing strategic reserves and centralising their management processes to optimise cross-border liquidity flows.

Internal Transfer Pricing

• Liquidity Pricing: Internal transfer pricing has become more important in the context of liquidity constraints. Banks have increased the cost of internal liquidity supplies and used broader criteria for pricing.

• Flaws in Policies: Some banks had overly optimistic assumptions about liquidity unwinding, cross-subsidisation of activities, and inaccurate pricing of backstop credit lines. These practices may have encouraged excessive risk-taking.

Challenges in Restarting Funding Markets

• Government-Guaranteed Instruments: These have helped in some cases, but they have not yet displaced non-guaranteed instruments. The traditional investor base is still hesitant to return to the market.

• Market Reassurance: Investors need reassurance about the health of the asset side of bank balance sheets before they can restore confidence in the market.

• Securitisation and Covered Bonds: These markets remain constrained, and their reopening is essential for the long-term health of the banking sector.

Immediate Challenges for Banks

• Retail Deposits: Increasing the share of retail deposits is seen as beneficial, but it is not a complete solution to bank runs. The credibility of deposit guarantee schemes is crucial.

• Exit Strategies: Banks need to develop their own exit strategies to reduce reliance on government support. This includes better monitoring and understanding of their investor base and improving relationships with key counterparties.

Conclusion

The crisis has fundamentally altered the funding landscape for EU banks, leading to a greater reliance on retail deposits and central bank support. The report highlights the need for more transparent and stable funding markets, as well as the importance of sound internal pricing and collateral management practices. It also underscores the long-term implications of the crisis, including the potential for a more domestic-oriented banking sector and the need for regulatory oversight to ensure financial stability.