2012年-ECB欧洲央行_EU_Bank_Deleveraging_–_Driving_Forces_and_Strategies_11页_471kb

IV SPECIAL FEATURES: EU BANK DELEVERAGING

Core Content

EU banks are expected to continue the deleveraging process over the medium term due to both cyclical and structural pressures. This process involves reducing assets and liabilities to improve capital and liquidity positions, driven by a variety of factors including debt overhang, financial fragility, regulatory requirements, and high funding costs.

Main Points

1. Drivers of Deleveraging

• Debt Overhang: Some EU countries accumulated significant debt before the financial crisis, which is now being corrected.
• Financial Fragility: The crisis exposed weaknesses in EU banks' business models, such as reliance on short-term wholesale funding and insufficient capital buffers.
• Regulatory Pressures: Basel III and other regulatory frameworks have pushed banks to improve capital ratios.
• High Funding Costs: Elevated unsecured funding costs and reduced profitability have led to a need for banks to reduce reliance on volatile funding sources.
• Market Uncertainty: The euro area sovereign debt crisis has limited access to capital markets, making asset reduction a more viable option.

2. Deleveraging Strategies

• Asset Reduction: Banks are likely to reduce non-core assets, liquid assets, and loan portfolios.
• Capital Build-Up: Raising capital through equity issuance, hybrid debt conversion, and retained earnings is a common strategy.
• Funding Adjustment: Banks may shift towards more stable funding sources, such as retail deposits and long-term wholesale funding.
• Restructuring Plans: Many large EU banks have announced medium-term restructuring plans targeting a reduction of approximately €1.6 trillion in assets, with a significant portion related to the euro area.

3. Impact on the Real Economy

• Deleveraging can have adverse effects on credit supply, especially for SMEs, which heavily rely on bank financing.
• However, it can also lead to more efficient financial resource allocation and reduce debt overhangs, promoting long-term economic sustainability.
• The process is expected to be gradual and orderly, with authorities monitoring it to prevent negative real economic repercussions.

4. Cross-Border Deleveraging and CESEE Countries

• EU banks are reducing foreign assets, particularly in CESEE countries, which are more vulnerable due to the concentration of EU bank exposure.
• The impact on CESEE may be mitigated by regional strategies and the growth potential of these economies.
• EU banks’ exposure to CESEE tends to be longer-term, making abrupt deleveraging less likely compared to other regions.

Key Information

• Leverage Ratios: EU banks have reduced leverage ratios from 30 at the crisis onset to 21 by 2011, with large euro area banks still at 25.
• Deleveraging Scope: By the end of 2013, EU banks are estimated to have deleveraged around €1.5 trillion, with €1.2 trillion for euro area banks.
• Deleveraging Mechanisms: Deleveraging can occur through capital adjustments, liability management, and asset reduction, with the latter being more common in times of distress.
• Market Conditions: The low price-to-book values of EU banks and the difficulty in raising new equity have pushed banks toward asset reduction.
• Policy Responses: Authorities have introduced measures to mitigate the impact of deleveraging, especially in CESEE, including the Vienna Initiative and stress tests.

Summary of Deleveraging Forces and Strategies

International Dimension

• Deleveraging is not limited to the EU, but the international dimension is particularly relevant for CESEE countries.
• EU banks' foreign exposure has declined significantly in some CESEE countries, contributing to the contraction of lending in these regions.
• Policy initiatives, such as the Vienna Initiative, aim to ensure orderly deleveraging and reduce financial market tensions.

Conclusion

The deleveraging process in the EU banking sector is driven by a combination of financial, regulatory, and structural factors. While it may pose challenges to the real economy, especially SMEs, it also represents a necessary correction of past imbalances. The process is expected to continue, with a focus on asset reduction, and will have a more pronounced impact in CESEE due to the high concentration of EU bank exposure. Authorities are monitoring the process to ensure it remains orderly and does not lead to broader financial instability.