Post on 19-Mar-2016
description
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Cross Border Financial Positions and Exposures
Juan Pablo GrafBanco de México
I. Introduction
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Dom
estic
Sec
tors
Foreign Sectors
Banks
Other Financial Entities
Listed Corporations
Non - Listed Corporations
Households
Banks Non Banks
Information Gaps(Authorities)
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Dom
estic
Sec
tors
Foreign Sectors
Banks
Other Financial Entities
Listed Corporations
Non - Listed Corporations
Households
Banks Non Banks
Information Gaps (Publicly disclosed)
I. Introduction
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The majority of systemically-important banks are foreign-owned
I. Introduction
Market Share
CITIBANK-BANAMEX
23.5BBVA-BANCOMER
21.2
SANTANDER-SERFIN 14.4
HSBC 9.5
SCOTIABANK-INVERLAT
BANORTE 11.1
3.2
INBURSA
%
Other subsidiaries of foreign banks (14)
Other Banks (21)
4.6
8.4
4.0
II. Exposures of financial corporations
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Banks Non Banks
BanksDetailed daily information on:
• Loans & Deposits• Securities (incl. Repos)• Derivatives
• Swaps• Forwards• Options
• FX transactions
Detailed daily information:• Securities and Derivatives
• Credits and Deposits (No individual counterpart ID)
Monthly Information• Corporate credit
Financial Entities (Brokerage Houses,
Insurance Co., Pension Funds)
Detailed daily information:• Securities and Derivatives
• Credits and Deposits (No individual counterpart ID)
Dom
estic
Sec
tors
Foreign Sectors
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Subsidiaries and Parent Banks•Financial regulation limits the exposure that domestic banks may have to related counterparties (i.e. individuals, firms and any financial entity owned by the same shareholders).
•For domestic banks, which are subsidiaries of foreign financial groups, the limits apply to any exposure to parent banks and their foreign subsidiaries (e.g., London, Cayman)
•As of 2008:•The limit applies to all financial exposures (i.e., loans, deposits, securities, repos, the net exposure arising from derivative transactions; and settlement risk in forex exposures)•The limit was reduced to 50% of Tier 1 capital.
II. Exposures of financial corporations
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• Some subsidiaries increased their lending to their parent banks significantly. These positions have been closely monitored. However, this information is not made public.
Subsidiaries and Parent Banks
II. Exposures of financial corporations
1 Information gaps
Detailed data collected by central bank allowed a prompt assessment of financial entities exposures to “toxic” assets
This information was very useful to assess early the level of exposure. This information was not made public.
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II. Exposures of financial corporations
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• Type of exposure:• Derivatives OTC• Debt with banks and other FIs• Debt through securities issued abroad
• Information sources:• Creditor data BIS-type data Central bank survey
Timeliness (work-in-progress) Granularity (maturity,counterparties currencies)
• Debtor data
Listed corporates (see next) Non-listed
?
• Credit registry
?
III. Exposures of non-financial corporations
?
• Non-financial corporations in emerging market economies reported large losses due to FX OTC derivatives
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IV. OTC Derivatives
Comercial Mexicana $2,200GRUMA $804CEMEX $711ALFA $250VITRO $293Grupo Posadas $50
Sadia $2,400Aracruz $2,130Grupo Votorantim $967
500 small and $1,000Taesan LCD $220
Source: Quarterly reports for Mexican firms; Bloomberg and Reuters for firms in other countries.
Merrill Lynch, JP Morgan, Barclays, Goldman Sachs, Credit Suisse, Deustche Bank AG and Citibank London (through Banamex, the Citibank's Mexican subsidiary)
Brazil
Losses
Citigroup Inc., Merrill Lynch & Co., Barclays Plc, Banco UBS Pactual SA, Banco Itau Holding Financeira and Deustche Bank.
South KoreaKookmin Bank (biggest korean bank), Shinhan Bank, Industrial Bank of Korea (small/medium size lender), Citibank Korea Inc. and SC First Bank Korea Ltd.
Estimated losses from derivatives operationsIn millions of US dollars, October 2008.
Firms Some financial institutions reported as counterparties
Mexico
Exchange Rate Domestic Currency / USD
15 days moving avg.
80
90
100
110
120
130
140
150
160
Jan Apr Jul Oct Jan
MexicoBrazilKorea
2008 2009Source: Banco de México
• Host authorities do not have timely and detailed information about derivative operations between foreign banks and other FIs domestic non-financial firms
• Financial counterparties (domestic and foreign) might not have information about firms’ derivatives operations with other counterparties
• Foreign financial counterparties of domestic firms do not have information about firms’ credit history
• Complexity of products
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IV. OTC Derivatives
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• Regulatory responses (May 2009)
Securities Markets Regulation(Periodical reporting - Quarterly) Market-to-market positions / Underlyings / Notional amounts Detailed payment conditions Contingency analysis
Financial Information Rules (Financial Statement Disclosure Rules) Risks involved (detailed analysis) Hedging structure of every derivatives position (including “off- balance sheet” transactions) Collaterals Valuation techniques Levels of exposure
IV. OTC Derivatives
• Creditor data• Timeliness, granularity of disclosures (maturity, counterparties,
currency)
• Households: debt or equity
V. Non-listed non financial corporations and households
Banks Non Banks
Non-listed Corporations BIS-typeAggregate statistics
No information (If regulated or listed home supervisors may have
some information)Households
13
Foreign Sectors
Dom
estic
Se
ctor
s
14
• Response to “Madoff and Stanford” cases: stress the importance of investors verifying that institutions are authorized to take deposits or investments.
• Irregular deposit taking and low-profile soliciting will continue, thus information gaps for domestic authorities remain.
• Cooperation among international authorities may mitigate the information gaps and greatly contribute to understanding risks borne domestically from investments in foreign funds.
Investments in foreign funds “through” an institution in Mexico
(“low profile soliciting”, e.g. Stanford)
Domestic authorities have no power over such investments.
V. Non-listed non financial corporations and households