National Bank of Poland Measures taken during the crisis
Piotr Szpunar HdfthFiHead of the Financ ilStial System D epart ment 16.06.2009
1 Agenda
¾ Financial Stability at the NBP ¾ Potential contagion channels ¾ Impact of the Lehman’s collapse ¾ NBP’s actions ¾ Future challenges ¾ Conclusions
2 Financial stability at the NBP
• Formal responsibility of the National Bank of Poland for promoting financial stability until 2008 was not explicitly stated in the law… • … but for several years it has already been perceived by the central bank as its important task • (The Act on NBP, 1997 as amended in 2008): „The responsibilities of the NBP shall also include: – organizing monetary settlements, – regulating the liquidity of the banks and providing them with refinancing facilities, – establishing the necessary conditions for the development of the banking system – acting to ensure th e stabili ty of th e nati onal fi nanci al system”(” (add dddied in 2008)
3 The rol e of th e NBP in the financial safety net
• The new resppyonsibility of the NBP for the domestic financial s ystem stabilit y • Macroprudential analysis • Lender of Last Resort function • Inter-institutional cooperation – within the Financial Stability Commitee – personal li nk s with PFSA and BGF
4 Div ision of f unctions in the financial safety net
INSTITUTION DEPOSIT CENTRAL GOVERNMENT SUPERVISORY INSURANCE AUTHORITY BANK FUND ROLE
REGULATIONS, FINANCIAL FINANCIAL RECOMMENDATIONS REGULATIONS SYSTEMIC RISK CRISIS PREVENTION SYSTEM ANALYSES AND INSPECTIONS, REDUCTION (macroprudential) CODIFICATION SANCTIONS
ASSISTANCE EMERGENCY GUARANTEE OF CRISIS REHABILITATION LIQUIDITY BANKS’ PROGRAMMES (in MANAGEMENT PROGRAMMES ASSISTANCE LIABILITIES risk minimizer formula)
PUBLIC SUPPORT DEPOSIT CRISIS RESOLUTION PAYA -OSOUTS
5 Monitoring of the financial system ROUTINE MONITORING
FSD. PSD, DOD – routine monitoring
FSD – evaluation of information
Potentially important information
Chairman of the NBP’s Crisis Management Group Decision
COMPREHENSIVE MONITORING
Calling of the emergency meeting of the NBP’s Crisis Management Group
6 Monitoring of the financial system COPREHENSIVE MONITORING
ROUTINE MONITORING
FSD – centre of monitoring
FSD PSD DOD Motion to the Chairman for FSD – centre of monitoring calling of the emergency meeting of the Potentially important information NBP’s Crisis Management Group Chairman of the NBP’s Crisis Management Group Contact with the PFSA MiMeeting wi ihhth the probl em bank
Decision Information for the Information for the President of the NBP First Deputy President of the NBP
Calling of the emergency meeting of the NBP’s Crisis Management Group 7 Stand ard work sch ed ul e on financial stability • Half-yearly – Financial Stability Report/Review •Quarterly – Senior Loan Officer Survey • Monthly – Compilation of key financial indicators for the banking system for quick internal review
8 Task schedule during current turmoil
• Daily – Monitoring of ne ws agencies for information related to financial institutions • Monthly – Short assessment of the present condition of banks for Financial Stability Committee meetings • OillOccasionally – Internal reviews - extended risk assessment (note and presentation) for the Management Board, including stress test results
9 Banking sector – what to look at?
Shocks Macro- Current economic situation of Vulnerabilities shkhocks the banking Channels of impact sector
Assessment Banks’ income, capital, of potential funding loss & ability to withstand Lending and other functions shocks of the financial system Impact on Real Economy welfare of society
10 Banking sector – what to look at?
Shocks Strengths and high-risk areas in the financial system Vulnerabilities Examples: - Lending policy and loan portfolio Channels of impact structure - Capital position Banks’ income, capital, - Exposures to market risk funding - Asset prices: real estate, shares…
Lending and other functions TliditTools: indicators o ffif financ ilial sys tem of the financial system „health”, e.g. IMF’s Financial Soundness Indicators as a starting point Real Economy
11 Banking sector – what to look at?
Shocks Potential shocks to financial stability
Vulnerabilities Examples: - Macroeconomic imbalances – e.g. Channels of impact inflation, current account deficit, fiscal deficit – which may lead to weaker future Banks’ income, capital, economic growth funding - Materialisation of risk factors for industries with significant bank debt Lending and other functions - TiTensions ifiilktin financial markets of the financial system - Commodity prices
Real Economy Tools: macroeconomic analysis
12 Banking sector – what to look at?
Shocks Shock impact, transmission and amplification Vulnerabilities - Which institutions are influenced? Channels of impact - What are the consequences of shocks? Banks’ income, capital, - What mechanisms can exacerbate the funding impact of shocks ? (e.g. liquidity squeeze on money markets can also Lending and other functions worsen the sit ua tion of b orrowers with of the financial system floating-rate debt)
Real Economy
13 Banking sector – what to look at?
Shocks Impact on banks’ financial position
Vulnerabilities - Can institutions withstand the shocks? - What is their capital, liquidity and profit Channels of impact position after the shock?
Banks’ income, capital, Tools: stress tests funding
Lending and other functions of the financial system
Real Economy
14 Banking sector – what to look at?
Shocks Banks’ capacity to lend and risk appetite
Vulnerabilities -Would banks change their lending policy as a result of shocks? Channels of impact - Does their capital and funding position allow to continue to provide lending? Banks’ income, capital, funding Tools: most often through expert assessments. Macroeconomic models Lending and other functions withdtildfiith detailed financi ilal sec tor mo dldules of the financial system still uncommon but dynamically developing Real Economy
15 Banking sector – what to look at?
Shocks Impact on consumption, investment, unemployment, economic growth… Vulnerabilities Tools: expert assessments in Channels of impact cooperation with macroeconomic analysts; residual adjustments in macro Banks’ income, capital, forecasting models funding
Lending and other functions of the financial system
Real Economy
16 Stress tests
Shocks to FSIs are assumed „ad-hoc” by analysts „modldel-bd”based” A single risk factor is „single factor” shocked – can be a macro „sensitivity” variable or simply an FSI
Impact on FSIs „scenario” is based on econometric models Possibly multiple risk factors, comovements from macro model or historical experience
17 Before the Lehman Brothers default
• Polish banking sector relatively unaffected mainly because of:
– Traditional banking business model
– Negligible exposure towards subprime-backed securities
– However…
18 Iden tificati on of pot enti al transmission channels • Direct channels – Credit channel What is the potential impact? – Funding channel – Direct market channel • Indirect channels – Macroeconomic channel – CilhCapital channel – Indirect market channel – Indirect credit channel – Confidence channel
19 Transmission channels
Credit channel Outstanding and potential credit exposure to non-resident financial institutions FdihFunding channel Vo latil e ( sh ort -t)fifdifbkftitterm) foreign funding of banks, often intra- group Direct market channel Holdings of securities issued by non-residents Macroeconomic Slowdown in the domestic economy induced by events in channel other economies CitlhCapital channe l Depen dence on the f orei gn owner with regard t o di vid end s and capital increase Indirect market Correlation of prices in the domestic financial market with channel the prices in the international financial market Indirect credit channel Exposure of domestic borrowers to the situation in the international financial market,,g e.g. via FX loans Confidence channel Disruption of public confidence in a domestic financial institution(s) 20 Lehman Brother’s default
Significant rise in risk aversion and perception of credit risk on core markets
LkfLack of mutual confid ence b etween P Plihbkolish banks, resul lifting from th hhe the fact that most of the Polish banks are part of foreign banking groups
Fall in liqqyuidity of Polish interbank money market and FX swap s market
21 Fall in liquidity of the interbank market
20 1816 14
. 12 bn
yy 10 8 zlot 6 4 2 0 8 6 7 7 7 7 00 00 00 008 008 008 009 009 006 006 006 00 00 00 22 22 22 22 22 22 22 22 22 22 22 22 22 22 1- 4- 7- 1- 4- 1- 4- 7- 1- 4- 7- 10- 10- 10- Whole market – on the basis of data from SORBNET system Data forming forming basis basis for POLONIA for POLONIA rate calculation rate calculation
22 Fall in liquidity of the interbank market Liabilities towards other domestic banks 60
50
40
30 billion yy zlot 20
10
0 8-2008 9-2008 10-2008 11-2008 12-2008 1-2009 2-2009 3-2009
23 Exposure to FX risk
FX assets FX liabilities 160 zł billion
226 zł billion
Currency mismatch that needs to be hedged by off-balance operations 66 zł billion 24 Exposure to FX risk Open balance sheet position 90
80
70
60
50
40 oty billionoty ll z 30
20
10
0 07 07 07 07 07 07 07 07 07 07 07 07 08 08 08 08 08 08 08 08 08 08 08 08 09 09 09 1-20 2-20 3-20 4-20 5-20 6-20 7-20 8-20 9-20 1-20 2-20 3-20 4-20 5-20 6-20 7-20 8-20 9-20 1-20 2-20 3-20 10-20 11-20 12-20 10-20 11-20 12-20
25 Exposure to FX risk
450 FX swap market monthly turnover 100%
400 95% 350
300 90%
lion 250 85% 200 zloty bil zloty 150 80%
100 75% 50
0 70% 1-2007 3-2007 5-2007 7-2007 9-2007 1-2008 3-2008 5-2008 7-2008 9-2008 1-2009 3-2009 11-2007 11-2008
Net turnover (left axis) Share of transactions with foreign banks (right axis)
26 NBP’s Confidence Package • Announced on 14th October 2008 • Main goals:
– Enable banks to obtain PLN funding for longer maturities (up to 3 month)
– Enable banks to obtain FX funding
27 Confidence Package - Instruments
INSTRUMENT EFFECT
Introducing 3-month repo Availability of PLN funding for longer maturities Introducing FX swaps (USD/PLN, EUR/PLN, CHF/PLN) Supporting FX liquidity
Introducing currency deposits as collateral for Availability of obtaining emergency PLN liquidity on non- refinancing loan standard collateral Decreasing haircut for collateral on Lombard loan Increasing the scope of available funding on the given level of collateral Broadening the range of collateral on Lombard loan Increased elasticity of banks’ liquidity management Possibility ibilit of i ncreasi ng th e f requency of open mark et Stabili zati on o f POLONIA rat e and i ncreased el asti cit y of operations banks’ liquidity management Possibility of earlier redemption of NBP bills Stabilization of POLONIA rate and increased elasticity of banks’ liquidity management Consideration of earlier redemption of NBP 10-year Increased structural liquidity of the banking sector bonds issued in 2002 (eventually performed in January 2009)
28 Confidence Package - extention
• January 2009 earlier redemption of NBP 10-year bonds (8,2 bn PLN injected into the system)
•Beggginning in May 2009 introduction of 6 month rep o transactions
• Introduction of 1month EUR/PLN and USD/PLN swaps
• Broadening the range of collateral accepted by NBP
29 NBP’s FX swaps
• The EBC Agreement. The National Bank of Poland and the European Central Bank jointly announced an agreement to support the NBP's instruments of euro liquidity provision. Under this agreement, which was concluded on 6 November 2008, the ECB provides the Polish central bank with a facility to borrow up to EUR 10 billion in order to provide additional support to NBP's operations. • The SNB Agreement. The Swiss National Bank (SNB) and Narodowy Bank Polski (NBP) announced on 7 November 2008 the establishment of a temporary EUR/CHF swap arrangement. – This facility, like the one signed by the SNB and the European Central Bank (ECB), a llows the NBP t o provid e S wi ss f ranc f undi ng t o b ank s i n it s j uri sdi cti on in the form of foreign exchange swaps. – Under this arrangement, the SNB provides the NBP with Swiss francs against euro, while the NBP provide s the Swiss francs to its counterparties against Polish zloty. The operations are conducted with a term of 7 days at a fixed price. Longer-term transactions are also offered from time to time.
30 NBP’s FX swaps
• Intended to be a ‘last resort’ instrument for banks that cannot hedge their open FX position elsewhere • Therefore, relatively tight pricing conditions ( example as of 15 April 2009) 1W FX swaps: – PLN interest rate: NBP reference rate – a bp – FX interest rate: LIBOR 1W + b bp – Haircut on spot exchange rate: (EUR/PLN 5%, USD/PLN 7%, CHF/PLN 5%) 1M FX swaps: – PLN interest rate: 1M WIBID – x bp – FX interest rate: LIBOR 1M + y bp – Haircut on spot exch ange rate: ( EUR/ PLN: 10% , US D/ PLN: 1 5%)
31 NBP’s FX swaps
• As it was intended, used by a small group of banks which cannot hedge the FX risk with their parent entities or other counterparties • As a result, limited turnover
Total amount (million) Liqudity provided in (as of end of April 2009)
EUR 635
USD 2270
(7 D): 7960 CHF (84 D): 475
32 REPOs • As o f 15 May – 11 opera tions t ot ali ng 53 .1 z lot y billi on 20
15
10
5 zloty billion zloty
0
-5
-10 08 08 09 09 09 09 08 08 08 08 08 08 08 08 08 08 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 2-2 3-2 4-2 5-2 5-2 6-2 7-2 8-2 9-2 1-2 2-2 3-2 4-2 10-2 11-2 12-2 Repo Balance of open market operations 33 NBP operations Structure of NBP monetary policy operations 20 000000 20 000000 16 000 16 000 12 000 12 000 8 000 8 000 4 000 4 000 0 0 -4 000 -4 000 -8 000 -8 000 -12 000 -12 000 nn nn -16 000 -16 000 -20 000 -20 000 -24 000 -24 000 zloty millio zloty zloty millio zloty -28 000 -28 000 -32 000000 -32 000000 -36 000 -36 000 -40 000 -40 000 -44 000 -44 000 -48 000 -48 000 -52 000 -52 000 -56 000 -56 000 -60 000 -60 000 -2008 -2008 -2009 -2009 -2009 -2009 -2009 -2007 -2008 -2008 -2008 -2008 -2008 -2008 -2008 -2008 -2008 -2008 11 22 11 22 33 44 55 22 11 22 33 44 55 66 77 88 99 00 1 1 1 1 Net FX swaps End of day deposits Net fine-tunning operations (excluding repo)
Net basic operation NBP bonds Lombard loan Net fine-tunning repo operations 34 REPOs 7
6,5
6 91D 6D 14D 28D 5,5
5
91D 90D 4,5
4
91D 3,5 09 09 09 09 09 09 09 09 08 08 08 08 08 08 08 08 08 09 09 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 01-09-2 15-09-2 29-09-2 13-10-2 27-10-2 10-11-2 24-11-2 08-12-2 22-12-2 05-01-2 19-01-2 02-02-2 16-02-2 02-03-2 16-03-2 30-03-2 13-04-2 27-04-2 11-05-2
3M T-bills yield WIBOR 3M WIBID 3M REPO 35 REPOs
• Possibility of arbitrage
• Reappearance of bilateral quotations on the interbank depo market and transactions longer than O/N
• WIBOR 3M rates movements in line with policy rate
• Re dist rib uti on of li quidit y i n th e b anki ng sect or
36 REPOs – impact on interbank market 7
6,5 -225 bp -257 bp
6
5,5
5
4,5
4
3,5
3 009 009 009 009 009 009 009 008 008 008 008 008 008 009 009 009 22 22 22 22 22 22 22 22 22 22 22 22 22 22 22 22 20-02- 06-03- 20-03- 03-04- 17-04- 01-05- 15-05- 17-10- 31-10- 14-11- 28-11- 12-12- 26-12- 09-01- 23-01- 06-02-
WIBOR 3M NBP Reference Rate
37 Transmission channels
• Direct channels – Credit channel To what extent have these – Funding channel channels – Direct market channel materi aliz ed? • Indirect channels – Macroeconomic channel – CilhCapital channel – Indirect market channel – Indirect credit channel – Confidence channel
38 Credit channel
Claims on foreign financial institutions 90 14%
80 12%
. 10% 70 illion s bb 8% tt 60 6% Zloty Zloty 50 4% % of asse 40 2% 30 0% 8 8 8 7 7 7 8 8 8 8 9 9 9 7 7 7 7 7 7 7 7 7 8 8 8 8 8 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 6-20 7-20 8-20 9-20 1-20 2-20 3-20 1-20 2-20 3-20 4-20 5-20 6-20 7-20 8-20 9-20 1-20 2-20 3-20 4-20 5-20 10-20 11-20 12-20 10-20 11-20 12-20 Amount % of total assets
39 Funding channel
Liabilities towards foreign financial institutions 120 12% 100 10%
. 80 8% llion ssets ii
60 6% aa 40 4% Zloty b Zloty 20 2% of total 0 0% % 008 007 008 008 009 009 007 007 007 007 007 008 008 008 22 22 22 22 22 22 22 22 22 22 22 22 22 22 7- 9- 1- 3- 1- 3- 5- 7- 9- 1- 3- 5- 11- 11-
Long term - amount Short term - amount Long term - percent of total assets Short term - percent of total assets 40 Funding channel Implied spread for A-rated Polish banks 900 800 700 600 ss 500 400 bsis point bsis 300 200 100 0 22,533,545678910 maturity in years 30-04-08 30-06-08 30-09-08 31-12-08 19-03-09 30-04-09 41 Market channel
Distribution of assets of banks by the total holdings of debt securities issued by non-residents as percent of total assets
As of March 2008: As of March 2009:
3% 5% 12% 10%
40% 42%
43% 45%
No exposure Under 1% 1-2% Over 2% No exposure Under 1% 1-2% Over 2%
42 Macroeconomic channel
• The macroeconomic forecasts are changing very rapidly, often downward revisions of future GDP growth • Decoupling hypothesis might fail • Real economy relies on export revenues from EU (78% of export flows to EU countries ) • Increasing probability of credit risk materialization
43 Macroeconomic channel macro stress test
• Designed to determine the vulnerability of the Polish banking sector to unfavourable changes of external conditions
• Baseline scenario - GDP projection prepared for the February 2009 edition of "Inflation Report"
• The "shock" scenario - much stronger economic slowdown in US and strong economic recession in euro area (the growth of GDP in Poland is 4-5 percentage point lower than in baseline scenario).
44 Macroeconomic channel macro stress test
Baseline scenario • Strong increase in loan losses, but still on comparable level with that during the economic slowdown of the years (2001-2002), • Hypothetical losses originating from the impaired loans portfolio could be absorbed by almost all of the banks (the capital adequacy ratio in three small banks would fall below 8%). The " sh ock" scenar io • Loan losses more than double over the simulation horizon as compared with the baseline scenario, • Number of banks with the capital adequacy ratio below 8% increase, but the value of hypothetical recapitalization is still insignificant in relation to banks’ asset s.
45 2009 2010 Baseline Scenario GDP Growth y/y 1,1 2,2 CPI Inflation 3,2 1,9 WIBOR3M 4,78 4,45 Stress Scenario GDP Growth y/y -2,0 -2,0 CPI Inflation 1,0 0,6 WIBOR3M 4,78 4,45
Baseline Scenario Stress Scenario
Net charges to provision for loans(zloty billion) 25,0 55,0
- Corporate loans 13,3 29,4
- Loans to households 11,7 25,6
Net charges to provisions for loans 2,24% 5,3% as percentage of total assets (as of 12.2008)
46 Capital channel
• Despite losses incurred by many parent-entities, majority of Polish banks decided to assign the 2008 profits for increasing own funds.
• Some bkbanks rece idived sub bdidlordinated loans f rom th hieir parent enti iities
47 Indirect market channel
• Decreased liquidity of markets for instruments used for market risk hedging. As a result impeded market risk management • However, banks have the possibility to enter into FX swaps transactions with the NBP (Confidence Pt)Pact) • Increase in global risk aversion affected the PLN exchange rate. Depreciation of zloty was stronger than it would emerge from fundamental factors
Exchange rates against the EUR, 01. 01. 2007=100 130
125
120
115
110
105
100
95
90
85
80 01-2007 04-2007 07-2007 10-2007 01-2008 04-2008 07-2008 10-2008 01-2009 04-2009 Poland Czech Republic Hungary 48 Indirect credit channel
Theoretical loan installments 1250
1150
1050 ł z 950
850
750
650 07 08 08 08 09 05 05 05 06 06 06 07 07 007 008 005 006 004 00 00 00 00 00 00 00 00 00 00 00 00 00 9-2 6-2 9-2 6-2 9-2 6-2 9-2 6-2 3-2 3-2 3-2 3-2 3-2 12-2 12-2 12-2 12-2 12-2 12-2004 12-2005 12-2006 12-2007 12-2008
49 Confidence channel
• Client confidence - challenges for subsidiaries of institutions involved in government bailouts – Orderly/disorderly sale of CEE operations?
• ItInterb ank mark ktet – iflinfluence of groupwid idike risk management poli liicies on interbank limits „imported confidence crisis”
50 Current challenges
• Impact of economic slowdown • Capital position of banks
Annual credit growth Capital adequacy ratio of the banking sector 50% 14%
45% 12% 40%
35% 10%
30% 8% 25%
20% 6%
15% 4% 10% 2% 5%
0% 0% 3-2009 3-2008 6-2008 9-2008 3-2007 6-2007 9-2007 3-2006 6-2006 9-2006 3-2007 6-2007 9-2007 3-2008 6-2008 9-2008 1-2009 2-2009 12-2008 12-2007 12-2006 12-2005 12-2006 12-2007 12-2008
loans to enterprises loans to households total loans Note: Data adjusted for exchange rate movements
51 Current challenges
Corporate loans Household loans
7 000 10 000 5 000 8 000 n on oo 3 000 60006 000
milli 1 000 4 000 milli ł ł z -1 000 z 2 000 -3 000 000 0 1-2008 2-2008 3-2008 4-2008 5-2008 6-2008 7-2008 8-2008 9-2008 1-2009 2-2009 3-2009 4-2009 1-2008 2-2008 3-2008 4-2008 5-2008 6-2008 7-2008 8-2008 9-2008 1-2009 2-2009 3-2009 4-2009 10-2008 11-2008 12-2008 10-2008 11-2008 12-2008
m/m change in loans m/m change in loans average m/m change in loans in 2008 averaggge m/m change in loans in 2008
52 Loan survey - enterprises
Realised Expected
Large enterprises Large enterprises Small- and medium-sized enterprises Small- and medium-sized enterprises short term loans long term loans short term loans long term loans 80% 80%
60% 60%
40% 40%
20% 20%
0% 0%
-20% -20%
-40% -40%
-60% -60%
-80% -80%
-100% -100% I.2009 I.2009 I.2009 I.2009 I.2008 I.2008 I.2008 I.2008 II.2009 II.2009 II.2009 II.2009 II.2008 II.2008 II.2008 II.2008 III.2008 III.2008 III.2008 III.2008 III.2007 III.2007 III.2007 III.2007 IV.2008 IV.2008 IV.2008 IV.2008 IV.2007 IV.2007 IV.2007 IV.2007
53 Loan survey - enterprises
Capital position Economic conditions
Risk related to the Changes in the share Current or expected Risk related to the Industry-specific risk financial standing of of adversely classified capital position of the NBP's monetary expected general (please specify the bank's largest loans in bank's loan Changes in Changes in corporate bank policy decisions economic situation industry / industries) borrowers. portfolio competitive pressure loan demand Other factors 60%
40%
20%
0%
-20%
-40%
-60%
-80%
-100% I.2008 I.2009 I.2008 I.2009 I.2008 I.2009 I.2008 I.2009 I.2008 I.2009 I.2008 I.2009 I.2008 I.2009 I.2008 I.2009 I.2008 I.2009 II.2008 II.2008 II.2008 II.2008 II.2008 II.2008 II.2008 II.2008 II.2008 III.2007 III.2008 III.2007 III.2008 III.2007 III.2008 III.2007 III.2008 III.2007 III.2008 III.2007 III.2008 III.2007 III.2008 III.2007 III.2008 III.2007 III.2008 IV.2007 IV.2008 IV.2007 IV.2008 IV.2007 IV.2008 IV.2007 IV.2008 IV.2007 IV.2008 IV.2007 IV.2008 IV.2007 IV.2008 IV.2007 IV.2008 IV.2007 IV.2008
54 Loan survey – housing loans
Capital position Economic conditions
Changes in the share of Current or expected Risk related to the adversely classified loans Realised Expected capital position of the NBP' s monetary policy expected general in the housing loan Changes in competitive Changes in housing loan bank decisions economic situation Housing market prospects portfolio pressure demand Other factors 80% 80%
60% 60%
40% 40%
20% 20%
0% 0%
-20% -20%
-40% -40%
-60% -60%
-80% -80%
-100% -100% I.2009 I.2009 I.2008 I.2009 I.2008 I.2009 I.2008 I.2009 I.2008 I.2009 I.2008 I.2009 I.2008 I.2009 I.2009 I.2008 I.2008 I.2008 II.2008 II.2008 II.2008 II.2008 II.2008 II.2008 II.2009 II.2008 II.2008 II.2008 III.2008 III.2008 III.2007 III.2008 III.2007 III.2008 III.2007 III.2008 III.2007 III.2008 III.2007 III.2008 III.2007 III.2008 III.2008 III.2007 III.2007 III.2007 IV.2008 IV.2008 IV.2007 IV.2008 IV.2007 IV.2008 IV.2007 IV.2008 IV.2007 IV.2008 IV.2007 IV.2008 IV.2007 IV.2008 IV.2008 IV.2007 IV.2007 IV.2007
55 Loan survey – consumer loans
Changes in the share of adversely classified Current or expected Risk related to the loans in the other Changes in the Realised Expected capital position of the NBP's monetary expected general Risk on the collateral consumer loan Changes in demand for other bank policy decisions economic situation demanded portfolio competitive pressure consumer loans Other terms 100% 100%
80% 80%
60% 60%
40% 40%
20% 20%
0% 0%
-20% -20%
-40% -40%
-60% -60%
-80% -80%
-100% -100% 2008 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 2007 2008 2007 I.2009 I.2009 I.2008 I.2009 I.2008 I.2009 I.2008 I.2009 I.2008 I.2009 I.2008 I.2009 I.2008 I.2009 I.2008 I.2008 I.2009 I.2008 II.2008 II.2008 II.2008 II.2008 II.2008 II.2008 II.2008 II.2008 II.2009 II.2008 III. III. III. III. III. III. III. III. III. III. III. III. III. III. III. III. IV.2008 IV.2008 IV.2007 IV.2008 IV.2007 IV.2008 IV.2007 IV.2008 IV.2007 IV.2008 IV.2007 IV.2008 IV.2007 IV.2008 IV.2007 IV.2007 III. III. IV.2008 IV.2007
56 Risk of a ‘vicious circle’
More pessimistic credit risk Lower availability of assessment by loans banks
Worsening Decreased financial standing domestic of enterprises demand
Decreased external demand
57 Current challenges – policy response
• NBP’s proposal on Lending Support Pact
• Meetings with representatives of commercial banks discussing the issue of how to stimulate lending to real economy
• Need for a firm reaction of the Supervision Authority – foreign parent entities are obliged to support Polish subsidiaries with sufficient capital
• Availability of public intervention – Flexible Credit Line granted by IMF
58