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Marek Ličák

Financial market super vision and stability Seminar to mark the 20th anniversary of the Czech and Slovak Central Banks. Marek Ličák. Agenda. Integrated supervision within the NBS Financial stability in Slovakia

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Marek Ličák

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  1. Financial market supervision and stabilitySeminar to mark the 20th anniversary of the Czech and Slovak Central Banks Marek Ličák

  2. Agenda • Integrated supervision within the NBS • Financial stability in Slovakia • Challenges posed by the predominantly foreign owned banking system and banking union

  3. Financial market supervision in transition countries • Banking supervision in almost all transition countries had a prominent position in comparison with institutions responsible for other sectors (dominant share of banks on an overall financial sector) • Banking supervision was mostly carried out by their central banks • Central banks were established with strong guarantees of their independence; guarantee also for banking supervision to be shielded from undue political influence • Supervision of other sectors was mostly established within separated institution or within Ministry of Finance • Scandinavian countries were the first that established integrated supervision (Norway 1986, Denmark 1988, Sweden 1991) • growth of „bancassurance“ business model, financial innovation, economy of scale, synergies

  4. Financial market supervision in Slovakia • Banking system supervised and regulated by the NBS from 1993 • Insurance sector, capital market– supervised by the Ministry of finance between 1993-2000 • Financial market authority was established in 2000 • Integrated supervision and regulation of banking sector, insurance, capital market and pension system within the NBS from 2006

  5. Integratedsupervision in Slovakia • Reasons for integration • Economy of scale, synergies – very important mainly for smaller countries • Very strong reputation of the NBS • Growing importance of other sectors (mainly pension funds) • View after seven years of integration • Synergies in many areas (human resources, analytical work, knowledge and so on) • One culture of supervision in Slovakia

  6. Financial stability in Slovakia

  7. Financial stability in Slovakia • 1993 – 2001 • Banks mostly state owned or owned by domestic capital, low penetration of banking • „childhood or teenage period“ • 2002 – 2008 • Inflow of foreign capital, significant change in banking culture, high growth of credit • „period of maturing“ • 2009 - 2010 • Experience with global financial crisis – GDP fall, confidence crisis, • „baptism by fire“ • 2011- • Very stable banking sector in SR, debt crisis, slow economic growth, SSM • „period of new challenges“

  8. Financial stability in Slovakia Comparison of SK banking sector with EU banking sector Upper and lower quartile EU Median EU Slovakia

  9. Challenges posed by predominantly foreign owned banks • Many positive experience with foreign capital (new banking culture) • Situation has changed – subsidiaries in Slovakia are in most cases in a better position than their banking group • Possible negative effects – transformation of subsidiaries into branches, deleveraging, outflow of capital, liquidity, cost cutting • Probability of negative spillovers depends on attractiveness of subsidiaries for parents Position of largest SK banks within their banking groups

  10. Challenges posed by the banking union • Single supervisory mechanism is a big challenge for the NBS • Transfer of power for the microprudential supervision on the ECB • The NBS will still keep macroprudential powers • Close cooperation with the ECB; the need to understand local conditions Challanges posed by

  11. Thank you for your attention • Marek Ličák • Director of Macroprudential Policy Department • National Bank of Slovakia • marek.licak@nbs.sk

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