Page 21 - EBA 2013.2869 Risk Assesment Report final proof4

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R I S K A S S E S S M E N T O F T H E E U R O P E A N B A N K I N G S Y S T E M
19
years. In addition, there are fewer respond-
ents affirming that their bank’s business
model has proved to be recession-proof and
that their main markets have not been mate-
rially affected by the sovereign crisis. There
are several drivers underpinning this trend,
such as: (i) earnings pressure, with a notice-
able augmentation in positive responses and
possibly signalling an increasing scepticism
in regard to the quality and sustainability of
earnings; (ii) regulatory changes (e.g. CRR/
CRD framework, transition towards Ba-
sel III); (iii) reforms on market structure; and
(iv) increased capital charges and funding/
liquidity constraints, with possible impacts
on the intermediation form and on the scale
and functioning of the banking sector.
A strong majority of the RAQ market analysts
respondents also agree that the main fac-
tors causing adjustments in banks’ business
models are the new regulations on capital,
liquidity, funding, resolution, bail-in, and on
banking structures. In addition, the economic
and financial market trends are also men-
tioned as main factors.
Regarding the new regulations, the EU is
closer to resolving some of the regulatory
uncertainty through the agreement on the
CRD IV/CRR legislative package. Further-
more, regulatory discussions on the bail-in
framework also need to be finalised in order
to continue to reduce uncertainties and es-
tablish a clear framework for adjustments
in banks’ business models, consequently re-
ducing creditors’ and investors’ concerns.
At the same time, EU banks’ home markets
and businesses — in particular SMEs — have
tightened their credit conditions further, as
shown by more recent statistics and lending
surveys at EU level. There is also evidence of
significant differences in lending conditions
and very low numbers in new lending within
EU countries. Looking forward, European
banks expect further tightening of lending
conditions and weaker demand in the next
few months. Therefore, this trend is unlikely
to reverse itself in the immediate future — at
least not while domestic economies do not
show signs of recovery.
0 %
20 %
40 %
60 %
80 %
100 %
The main factors causing adjustments in banks’ business models are:
1. New regulations on capital, liquidity and funding.
2. New regulations on resolution/bail-in.
3. New regulations and policies on banking structures (activity ring fencing etc.).
4. Investor pressure.
5. Strategies adopted by new management teams in place.
6. Competitive/peer pressures.
7. Macro evolution (economic and financial market trends etc.).
Agree
Somewhat agree
Somewhat disagree
Disagree
No opinion
Figure 10: Business model adjustments (
source:
RAQ market analysts)
The length of the bars shows the percentage of respondents who agreed or somewhat agreed with the statement on the y-axis.
The y-axis carries the distribution ABCDE, i.e. answers to all closed questions, namely: ‘A’ — agree; ‘B’ — somewhat/mostly agree; ‘C’ — somewhat/mostly disagree; ‘D’ — disa-
gree; and ‘E’ — not applicable or no opinion.