2010年-世界发展银行全球_El_Salvador_-_Financial_sector_assessment_33页_716kb

El Salvador Financial Sector Assessment Summary (November 2010)

Core Content Overview

This report summarizes the findings of the 2010 Financial Sector Assessment Program (FSAP) update for El Salvador, conducted by a joint IMF-World Bank mission. It outlines the current state of the financial sector, identifies key risks, and presents policy recommendations aimed at improving financial stability, development, and oversight.

I. Overall Assessment and Main Recommendations

Key Findings

• The banking sector remains sound despite the 2008-2009 global and domestic shocks. Banks were not directly affected by the financial crisis, but their parent companies were, leading to risk capital conservation.
• Non-performing loans (NPLs) increased and profitability declined due to economic downturn and reduced credit demand and supply.
• Stress tests indicate that most banks can withstand large deposit withdrawals and severe credit quality deterioration, but credit concentration risks are significant.
• Regulated non-bank financial institutions, such as cooperative banks and insurance companies, report healthy financial indicators.
• Pension funds are a growing part of the financial sector but face challenges due to poor investment returns and limited diversification.

Policy Priorities

• Approve the proposed Financial System Supervision and Regulation Law (FSSRL) to enhance supervision and safety net arrangements.
• Amend the Banking Law to improve the resolution framework and deposit insurance.
• Reform the regulatory framework for capital markets, including the approval of a new capital markets law and investment funds law.
• Enhance pension fund investment options to increase returns and diversification.
• Strengthen oversight of unregulated institutions through auxiliary supervision and information reporting.
• Improve financial infrastructure, including the credit reporting system and the Real Time Gross Settlement (RTGS) system.

II. Macroeconomic Developments

Economic Impact of the Crisis

• The global financial crisis and political uncertainty negatively impacted the Salvadoran economy starting in late 2008.
• Trade, remittances, and private capital flows sharply declined, leading to a 3.5% contraction in real GDP in 2009.
• The fiscal deficit reached 5.6% of GDP, and public sector debt rose to 50% of GDP.
• Credit rating agencies downgraded the sovereign rating due to fiscal deterioration.

Risks to Stability

• External and political shocks pose risks to near-term macroeconomic stability.
• Fiscal consolidation and pension-related contingent liabilities could be long-term risks.
• The old pay-as-you-go pension system requires significant funding, while the new defined contribution system may create a potential contingent liability if returns fall short of expectations.

III. Financial Sector Soundness and Performance

Sector Overview

• The financial system is comparable in size to regional peers but has grown slower than the average.
• Financial deepening has stagnated since the 1990s banking crisis, with equity and security markets still underdeveloped.
• Unregulated institutions (cooperatives, S&Ls) play a significant role in financial intermediation, though they are not captured in official statistics.

Banking Performance

• Foreign-owned banks dominate the sector and have shown efficiency, with low intermediation margins.
• Pension funds hold 25% of total financial sector assets, mostly in public sector securities.
• Non-performing loans reached 3.7% of total loans, with a broader risk measure indicating 10% of total loans at risk.
• Capital adequacy ratio (CAR) remains high at 16.5%, though some banks approach the 12% regulatory minimum.

Cooperative Banks

• Regulated cooperative banks have higher NPLs (2.9%) than commercial banks (focused on SMEs and microfinance).
• They are more profitable than commercial banks, with higher efficiency (120 loans per employee).
• S&Ls have higher NPLs (4.0%) and lower profitability due to less competition.

Insurance Sector

• The insurance sector is small, well capitalized, liquid, and profitable.
• Insurance penetration is 2.1% of GDP, in line with Central American peers.
• Statutory solvency reached 120.6% in 2009, indicating strong capacity to meet obligations.
• Profitability is strong, with ROE of 20.9% and ROA of 10.3%.
• Reinsurance is adequately covered, with 41.7% of premiums reinsured in 2009.

IV. Financial Sector Oversight

Banking Supervision

• The SSF has been reorganized and now includes a risk unit.
• CAMELS models are used to assess bank-specific risk profiles.
• Supervisory practices need more qualitative and forward-looking risk assessments.
• Resource constraints and increased consumer protection responsibilities have diverted supervisory focus.

Regulatory Gaps

• Significant regulatory gaps exist in areas like corporate governance, credit risk, liquidity risk, market risk, operational risk, and derivatives.
• Legal protection for supervisory staff is lacking, which hampers the SSF’s ability to enforce corrective measures.
• The remedial action framework gives limited powers to the SSF for preventive action.

Safety Nets

• Deposit insurance and bank resolution frameworks need strengthening.
• Emergency liquidity assistance powers of the BCR should be implemented.
• A systemic risk committee should be established to coordinate liquidity policies and contingency plans.

V. Financial Sector Development Agenda

Capital Markets

• The capital markets are underdeveloped, with an outdated regulatory framework.
• The domestic stock exchange holds a natural monopoly, limiting market development.
• A comprehensive overhaul of the securities markets law is needed to promote market development and regional integration.

Access to Finance

• Financial service provision is comparable to Latin American peers, but access in remote areas can be improved.
• Correspondent agents and mobile payments could help improve access.
• Unregulated institutions should be monitored and licensed when they exceed size thresholds.

Public Banks

• Public banks should complement private sector activity and improve internal processes.
• A strategy for public banking is being formulated to enhance access to finance.
• Risk management and governance must be strengthened to avoid market distortions.

VI. Financial Sector Infrastructure

Payment and Settlement Systems

• The RTGS system has been launched and improved, but interlinkages with securities settlement systems need to be strengthened.
• The Central Bank Law should be amended to fully implement the Treaty on Payment and Securities Settlement Systems for Central America and the Dominican Republic.

Credit Information Systems

• Credit reporting systems have improved, but information is still limited and fragmented.
• The Banking Law should be reformed to allow free circulation of credit information among credit bureaus.

VII. Implementation Status

• The implementation of the 2004 FSAP recommendations has been limited due to legal and regulatory reforms not passing.
• Partial progress has been made in supervisory frameworks, financial infrastructure, and state-owned bank restructuring.
• Important legal provisions, such as a corporate insolvency law, have not yet been approved.
• Key risk and corporate governance regulations for banks remain to be issued.

Key Recommendations Summary

Conclusion

El Salvador's financial sector has shown resilience in the face of the global financial crisis, but it faces significant challenges in supervision, regulatory frameworks, and financial development. While the banking sector remains sound, credit concentration and pension fund returns are key areas of concern. Capital markets and financial infrastructure need substantial reform to support regional integration and economic growth. The proposed FSSRL Law and other reforms are critical for improving financial stability and market efficiency.