Page 43 - 2014_3865_EBA 5th

Basic HTML Version

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 — J U N E 2 0 1 4
41
The re-emergence of an active cross-border
interbank market would be a strong sign of
regained confidence. Despite some encour-
aging signs of stabilisation, the cross-border
interbank activities remain low, signalling
fragmentation of the single market funding
conditions.
In comparison with previous periods, fewer
respondents report that they are reducing
their cross-border interbank lending. At the
same time, the number of respondents af-
fected as inter-bank borrowers by reduced
cross-border activity remains the same and
one fifth of the banks have been affected (Fig-
ure 39). The main reasons for the reduced
cross-border interbank activity were higher
general risk aversion and fear of uncertainty
in the EU, and the apprehension about spe-
cific bank or banking markets. In some ju-
risdictions, supervisory measures have also
impacted on cross-border lending.
5.2 Deposits
In the last few years, European banks have
been under increasing pressure to restruc-
ture their balance sheets, de-risk their posi-
tions, and align their business models. Con-
sequently, banks have deleveraged assets
and paid greater attention to funding struc-
tures. The deleveraging process has given
banks the opportunity to reduce reliance on
short-term funding sources and increase
the share of more stable financing despite
sometimes very challenging funding condi-
tions and limited market access in the last
few years.
Share of deposit funding have continued
to increase
EU banks have been able to meet their fund-
ing needs not only via refinancing operations,
but also by reducing their overall balance
sheet and reducing the need to attract new
funding, as well as by strengthening their
deposit base. This is allowing EU banks to
attain lower loan-to-deposit ratios and lead-
ing to greater balance sheet stability and a
better funding mix.
The ratio of customer deposits to total li-
abilities has continued to increase steadily
from September 2011 (Figure 40). The de-
posit position strengthened especially dur-
Figure 39: Cross border borrowing and lending (
source
: RAQ)
0 % 10 % 20 % 30 % 40 % 50 % 60 % 70 %
You have reduced your
cross-border interbank
lending as a provider of
funding.
You have been affected by the
reduction in cross-border
interbank activities as a taker
of funding.
Jun 2014 A — Agree
Dec 2013 A — Agree
Jun 2013 A — Agree
Dec 2012 A — Agree
0 % 10 % 20 % 30 % 40 % 50 % 60 %
You have reduced your
cross-border interbank
lending as a provider of
funding.
a. If yes, this is due to:
i. Higher general risk
aversion and fear of
uncertainty in the EU.
ii. Apprehension about
specific banks or
banking markets.
iii. Guidance from
regulators to limit risk.
iv. View that pricing does
not reflect the true risk
level of the transactions.
v. Changed business
needs
A — Agree
B — Somewhat agree