Customers of banks in case of trouble their parent companies can sleep peacefully Photo: Glow Image / East News
the chief economist of Deutsche Bank, David Folkerts-Landau believes that Europe is seriously ill and needs 150 billion euros to rescue banks, mainly Italian. But also German.
Stress tests verify banks
Andrew Reich, director of the Department of Regulatory Banking, Paying Authority and the Cooperative Savings and Credit in the Financial Supervision Commission, who was a guest of radio Ones does not share this opinion.
– no one should be judge in its own case. Therefore uncomfortable is when the man holding the high office in the bank, says aloud: help us, because our situation, the European sector is bad. Indeed, Deutsche Bank does not enjoy a large sympathy investors its shares steadily going down. But that’s no reason for concern. Besides, there is nothing to speculate whether this situation is good or not. In my opinion it is incomparably better than that presented to the chief economist of DB – explains director Andrew Reich.
In about two weeks the EBA (European Banking Authority) publish the results of the next stress test. And then you will know what the situation is the biggest banks, and that banks would possibly recapitalize.
– I hope that such banks will be because of the stress test is not intended to investigate banks in the current situation – he added.
By doing the stress test invents a black scenario. Very often it is really black and comes to identify which banks in such a purely hypothetical situation, practically improbable would have problems and how big.
– And then you know that you have just in case they recapitalize, if the future happened worst – emphasizes guest Ones.
Security and bank reserves
But 360 billion is currently outstanding loans in the Italian banking system may bother because it about 1/5 of the Italian GDP.
– It is true that this amount is large, but it is difficult to address it. It is not known because one of the basic things. When the loan is granted, it is usually the bank requires collateral. Just in case the loan was not repaid. And if a customer stops paying, the bank must create reserves. But those reserves are reduced by the value of collateral. In the whole European banking system level of provisioning is getting higher. Banks increase reserves. It is therefore not the same amount is now important, but that the risk to which the bank or the entire banking system is exposed – expert explains the KNF.
Italian Prime Minister Matteo Renzi announced that he would support the Italian banks, and declared the amount of aid in the amount of 40 billion euros. At the same time, however, he added that the current European Union regulations effectively block such assistance.
Scenario for banks in trouble
After the experience of the crisis, when lined with huge amount of money from the state, the decision was made public: end of state aid. Now banks are to be saved their money, or client money accumulated in the banks.
– It was, and should apply the principle that no client will not be as a result of such a process of saving in a worse situation than if it was in case of bankruptcy the bank. On this basis, a directive on the orderly restructuring and liquidation of banks, BRRD. And it actually provides a number of activities, but excluding public funds. These measures which are in the background, had already completely differently could not be, but first and foremost to the private funds. I was also the first test on a living organism – notes director Andrzej Reich.
Well, at the beginning of this year was saved in this way four small Italian banks. But clients lost their money. I did just a big brawl. From here you can understand the problems of the Italian government, because now you have to save another bank, and prior experience was bad, and also in autumn are choices. A scenarios after these elections are drawn rather bleak if this government will not survive. And here in the meantime you have to expose customers … Might be worth so sometimes hang accepted principles.
– Nothing is ever done forever. But very awkward thing is to start applying the provisions of hanging them. That is why the Italian Government should have acted earlier to think about it and react sooner. It has long been thought that the Italian banking system needs to be improved – says visitor Ones.
The situation of the Bank’s customers
Polish topic of the Italian troubles to Bank Pekao ARE. The owner of this bank is precisely the Italian group UniCredit, and on July 12 there was a sale of 10 per cent. shares of the Polish bank, which led to a drop in the price of its shares on the Warsaw Stock Exchange. Do so if you had to save the parent company of these internal funds deposited in a bank, Pekao SA customers can pay for the rescue UNICREDIT?
– They can not, because it is a legally completely different entity. Because of that he is not obliged to support his “mother”. Therefore, the fear is gone. If it came to that, the “mother” would have significant problems, because the Polish bank is very good and very strong, it is probably the Italians would sell the remaining 40 percent. shares, because would need cash to cover shortages – expert evaluates the KNF.
And he adds that as a very good subsidiary, it must be for him to breathe and blow, and keep for a rainy day. And this is what he does, it happens. Because if necessary, sell, hoping for a good price. So the customers of other banks in case of trouble their parent companies too can sleep peacefully.
And the results of stress tests will be known in late July and then it will be more clear if a bank can get into trouble – or not.
– we will have a better overview of the situation – emphasizes Andrew Reich, director of the Department of Regulatory banking, Paying Authority and the Cooperative Savings and credit in the Financial Supervision Commission.
Sylwia Zadrożna, mb
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