Transcript Tony Myron Prezentacija

Belgrade - November 2012
Financial System and Economy and the
Reponses to the Financial Crisis
South Eastern Europe region
Albania, Bosnia, Bulgaria, Croatia, FYR Macedonia, Montenegro, Romania, Serbia
Financial crisis and South Eastern Europe
- Second wave
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Second wave of the global financial crisis that started in 2008
First wave in part tacked by the Joint IFI Action Plan of 2009-10
Economic recovery appeared to be taking hold in 2010-2011
But continuing Eurozone crisis impacting SEE
Due to close links to troubled euro zone countries
Causing feeble or no growth and financial distress in SEE
Falling investment
Transition achievements are, once again, at increasing risk
Exports to the Eurozone are declining
High NPL ratios persist in banking systems
Contribute to low credit growth
Unemployment has remained high
Government debt is climbing
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Real GDP growth (per cent)
Source: EBRD, Regional Economic Prospects, July 2012
3
Net FDI (in USD million)
10,000
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
Albania
Bosnia and Bulgaria
Herzegovina
Croatia
Average 2004 - 2008
Source: IMF, WEO May 2012
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FYR
Montenegro Romania
Macedonia
Average 2009 - 2011
Serbia
Non-performing loans (per cent of total credit)
*Data refer to end of 2011 or latest available
Source: National central banks
5
General government gross debt (per cent of GDP)
70
2007
60
2011
50
40
30
20
10
0
Albania
Bosnia &
Herzegovina
Bulgaria
Croatia
Source: IMF, WEO May 2012
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Macedonia,
FYR
Montenegro
Romania
Serbia
External debt (per cent of GDP)
120
100
2007
2011
80
60
40
20
0
Albania
Bosnia &
Herzegovina
Bulgaria
Croatia
Source: IMF, WEO May 2012
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Macedonia, FYR
Montenegro
Romania
Serbia
Unemployment rate (per cent)
40
2008
2011
35
30
25
20
15
10
5
0
Albania
Bosnia &
Bulgaria
Herzegovina
Croatia
Source: IMF, WEO May 2012; MONSTAT (Montenegro)
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Macedonia,
FYR
Montenegro
Romania
Serbia
Share of FX-denominated loans and FX-indexed
loans (per cent of total loans)
100
80
60
40
20
0
Albania
Bosnia and
Herzegovina
Bulgaria
Croatia
* Data refer to 2011 or latest available.
Source: National central banks
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FYR
Macedonia
Romania
Serbia
Bank Deleveraging continues
second wave of the global
• Euro zone-based parent banks are under severe stress
• And have systemic subsidiaries and branches in many SEE countries
• With less external funding available, real credit continues to contract
• Withdrawal of cross-border flows from the region put pressure on
• exchange rates
• bank balance sheets
• although differences among countries and bank groups are
significant.
• This has reduced both
• activity levels and investment
• resulted in lower credit demand
• impacted credit quality and
• set in place a prolonged negative feedback loop between the real and
financial sectors
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SEE – Difficult Outlook
• GDP growth is expected to slow down substantially in 2012 and 2013
• Euro area crisis will continue to negatively impact growth and exports from
the region
• as well as the availability of finance for the region’s banks and therefore
credit growth
• Real activity in the Eurozone will suffer due to fiscal contraction and credit
decline although a full scale credit crunch should be avoided as the ECB
has shown it will provide the necessary liquidity to the financial system
• Countries that are the most integrated with the Euro area will slow down
somewhat more than previously predicted
• Exports to and FDI and bank funding from the Eurozone will continue to
fall for these countries as the Euro area stagnates
• SEE regions will slow down this year even more than previously forecast
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Support from MFIs and international community
• EBRD has broadly maintained crisis level lending volumes since 2009
• Annual SEE investments about EUR 1.5 billion with significant policy
dialogue and technical assistance
• World Bank and EIB are actively engaged in the region as well.
• IMF and the European Commission have continued to play an active role
• During the first phase of the crisis, jointly with the World Bank and EIB,
EBRD successfully mounted what has become known as the Joint IFI
Action Plan, which provided significant financial support to systemic
banks in emerging Europe at the height of the crisis in 2009-10.
• Banks continue to need both financing and restructuring without which
they would be a drag on future growth
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EBRD Financial Institutions Portfolio:
South-Eastern Europe
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Coming out of the crisis
• Countries in the region are better prepared now, having made important
adjustments in fiscal and current accounts, increased domestic savings,
improved deposit insurance schemes and improved bank balance sheets
• thanks in part to parent bank’s commitment in 2009/10 under the Vienna
Initiative.
• The key needs: liquidity, capital, and restructuring/consolidation.
• IFIs can provide additional funding to address balance sheet mismatches, in
particular the short tenor of wholesale funding.
• IFIs can mobilize equity capital
• Innovative instruments - risk-sharing, securitization, NPLs and distressed
assets are needed
• Well-coordinated technical assistance
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Challenges for national governments
• SEE Countries have a good record of responsible policies since the
start of the crisis,
• While structural reforms need to continue, growth will be lagging, and
competitiveness and employment will deteriorate irrespective of the
external environment.
• Eurozone periphery crisis highlights the challenge for the region’s
governments.
• SEE, vulnerable region, due in part to its strong financial, trade and
remittance links with Greece and Italy.
• The financial sector transmission channels are particularly strong in
Bulgaria, Romania and Serbia, where Greek banking groups still hold
significant market share (somewhere below 30% and 20%) and lending
is financed to a certain extent through parent bank support.
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Sovereign ratings
(long-term sovereign debt, August 15, 2012)
Albania
BiH
Bulgaria
Croatia
FYRoM
Montenegro
Romania
Serbia
S&P
B+
B
BBB
BBBBB
BBBB+
BB-
Fitch
BBBBBBBB+
BBBBB-
Source: S&P, Moody’s, Fitch.
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Moodys
B1
B3
Baa2
Baa3
Ba3
Baa3
Remittances (per cent of GDP)
Source: World Bank
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World Bank Ease of Doing Business, 2012
Source: World Bank Doing Business Report, 2012
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Future support from international agencies for
recovery and growth
• Lending to banks to support strategic priorities of MSME and EE
• Develop capital markets, investing in bonds issued by local banks
• Work with Greek bank subsidiaries, trade finance, swaps, credit lines
and equity
• Support restructuring efforts of the banking sector
• Mobilize other investors to help address NPLs on bank balance sheets
• Corporate working capital, refinancing of maturing loans/bonds
• Corporate restructuring, foreign investors, mid-sized companies
• Infrastructural projects, use of EU structural funds
• Policy Dialogue – bank and corporate restructuring, regulatory issues,
state aid provisions, governance
• Full Forum of the Vienna 2 Initiative in Brussels on November 9, 2012
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