European Banking C di ti Full Forum MeetingCoordination (Vienna 2) Initiative

Full Forum MeetingVienna

November 18, 2015

CESEE Deleveraging and Credit MonitorK d l t i BIS B k ’ E t l P iti d D ti C ditKey developments in BIS Banks’ External Positions and Domestic Credit

Anna Ilyina (IMF)

BIS reporting banks increased external positions vis-à-vis CESEE (excl. Russia and Turkey) in 2015:Q2

CESEE: Change in External Positions of BIS-reporting Banks, 2011:Q1–2015:Q2

(Percent of 2015 GDP, FX adjusted)

CESEE: External Position of BIS-reporting Banks, 2003:Q1–2015:Q2 (Billions of US dollars, FX

adjusted vis-à-vis all sectors)( e ce t o 0 5 G , adjusted)

800

900

1000CESEE

CESEE ex. RUS & TUR

US$287b

1.11.0

1.5

CESEE, all sectors and instruments

CESEE excl. Russia and Turkey, all sectors and instruments

adjusted, vis à vis all sectors)

500

600

700

800 US$287b(8.3% of 2015 GDP)

0.8

0.2

-0.2 0.00.2

0.7

-0.3-0.30 4-0 4

-0.20 4 0 30 2 -0.3

0.1

0.0

0.5

300

400

500US$215 b(14.3% of 2015 GDP)

-1.0

-0.5 -0.3-0.4-0.4 -0.4

-0.9 -0.5

-0.3

-0.3-0.4

-1.0

-0.6

-0.2

-0.7

-0.4 -0.2-0.4

-0.5-0.6-0.4

-0.9-1.0

-0.5

0

100

200

2003:Q1 2005:Q1 2007:Q1 2009:Q1 2011:Q1 2013:Q1 2015:Q1

-1.6-1.7-2.0

-1.5

1:Q

1

1:Q

2

1:Q

3

1:Q

4

2:Q

1

2:Q

2

2:Q

3

2:Q

4

3:Q

1

3:Q

2

3:Q

3

3:Q

4

4:Q

1

4:Q

2

4:Q

3

4:Q

4

5:Q

1

5:Q

2

2

Q Q Q Q Q Q Q

2011

2011

2011

2011

2012

2012

2012

2012

2013

2013

2013

2013

2014

2014

2014

2014

2015

2015

...still banks’ external positions declined in over half of CESEE, with larger reductions in claims on non-banks than on banks

CESEE: External Positions of BIS-reporting Banks, 2014:Q1–2015:Q2

(Percent of 2015 GDP, Gross, vis-à-vis all sectors)

CESEE: External Positions of BIS-reporting Banks, 2015:Q2

(Change, percent of 2015:Q1)

4

62014 Q3 2014 Q4 2015 Q1 2015 Q2 Total

4

6

8

10Non-bank

Bank

Total

5 .3-2

0

2

-2

0

2

4

-2.1 -1.5 -1.

-6

-4

2

10

-8

-6

-4

-8

Lith

uani

aU

krai

neC

roat

iaBu

lgar

iaR

ussi

aH

ung

ary

Ro

man

iaEs

toni

aSe

rbia

Latv

iaM

aced

oni

aM

old

ova

Bela

rus

Alb

ania

ch R

epub

lico

nten

e gro

Pola

ndSl

ove

nia

Turk

eyer

zeg

ovin

aSl

ova

kia

CES

EER

US

& T

UR

. CIS

& T

UR

-12

-10

Bulg

aria

Bela

rus

Mon

tene

gro

Ukr

aine

Russ

iaSl

ovak

iaSl

oven

iaCr

oatia

Serb

iaH

unga

ryLa

tvia

Turk

eyRo

man

iaLi

thua

nia

Alba

nia

Esto

nia

Mol

dova

Her

zego

vina

ch R

epub

licPo

land

Mac

edon

ia

CESE

ERU

S &

TU

Rx.

CIS

& T

UR

3

M

Cze

c M

Bosn

ia-H

CES

EE e

x. R

CES

EE e

x. M

Bosn

ia-H

Czec

CESE

E ex

. CE

SEE

e x

In 2015:Q2, bank related BoP flows to CESEE (excl. Russia and Turkey) turned positive as well…

CESEE: Change in BIS Banks’ External Positions and Other Investment Liabilities from BoP

(2015:Q2 percent of GDP)

CESEE (excl. Russia and Turkey): Change in BIS banks’ External Positions and Other Investment

Liabilities from BoP (Billions of US dollars)

10

15

20BOP other investment liabilities

Change in BIS external positions

PolandCzech Republic

MacedoniaBosnia

Moldova

Change in BIS external positions

BOP other investment liabilities

(2015:Q2, percent of GDP)Liabilities from BoP (Billions of US dollars)

-5

0

5

MoldovaEstoniaAlbania

LithuaniaRomania

BelarusTurkey

-20

-15

-10

ySerbia

UkraineLatviaRussia

HungarySlovenia

i

Source: BIS locational banking statistics Haver and

-30

-25

2011Q1 2012Q1 2013Q1 2014Q1 2015Q1 -2.5 -1.5 -0.5 0.5 1.5 2.5

CroatiaSlovakiaBulgaria

Note: BoP other investment liabilities include investments other than FDI, portfolio investment, and financial derivatives, which includes loans and deposits, trade credit, etc. They correspond more closely in

4

Source: BIS locational banking statistics, Haver, and IMF staff calculation.

, p , , y p yterms of coverage to BIS claims based on locational banking statistics. Belarus, Bosnia and Herzegovina, Macedonia, Russia, Serbia, Turkey and Ukraine are on net basis, and others are on gross basis. BOP data for Moldova are not available yet for 2015 Q2.

Local credit growth is still largely concentrated in a few countries, but now more even across households and firms

Credit Growth to Households and Corporations, August 2015 (Percent change, year-over-year,

nominal, FX adjusted)

Credit to Private Sector, Jan 2009 – Aug 2015(Percent change, year-over-year, nominal,

FX adjusted, GDP-weighted)

25

30

35Total: CESEE excl. CIS & TUR Total: CIS & TUR

NFCs: CESEE excl. CIS & TUR NFCs: CIS & TUR

10

20

30HouseholdsCorporatesTotal

10

15

20

-10

0

0

5

10

-30

-20

-5Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15

-40

Ukr

aine

Mol

dova

Slov

enia

Hun

gary

Bulg

aria

Latv

iaAl

bani

aRo

man

iaCr

oatia

Bela

rus

Serb

iad

Her

zego

vina

Mon

tene

gro

Esto

nia

Pola

ndze

ch R

epub

licM

aced

onia

Turk

ey

CESE

Eex

. RU

S &

TU

Rex

. CIS

& T

UR

Sources: National authorities; ECB; BIS; EBRD and IMF staff calculations.

5

Bosn

ia a

nd C

CESE

E e

CESE

E

Deposit are growing at a robust pace in most countries…

8

Main Bank Funding Sources, 2015:Q2(Year-over-year change, Percent of GDP)

Changes in Domestic Deposit Base vs Changes in Private Savings, 2008-2014

(Percent of GDP)

4

BIS banks' external position

Domestic deposits

Total

ALB

BGRBIH

CZEHRV

LTUMKD

15

20

atio

(Percent of GDP)

-4

0CZE

ESTHUN

LTULVA POL

ROU

RUS

SRBSVK

SVN

TUR0

5

10

po

sit

to G

DP

Ra

-12

-8

e a a y a a a s a a a a a a d c E R R

MDA

UKR R² = 0.1917-15

-10

-5

Ch

ang

e in

Dep

Ukr

aine

Mo

ldo

vaBu

lgar

iaH

ung

ary

Rus

sia

Cro

atia

Ro

man

iaBe

laru

Serb

iaSl

ove

nia

Alb

ania

Latv

iaEs

toni

asn

ia &

Her

zeg

ovi

naPo

land

Slo

vak

Rep

ubli

CES

EESE

E ex

. RU

S &

TU

RES

EE e

x. C

IS &

TU

R

-20-10 -5 0 5 10 15 20

Change in Private Savings to GDP Ratio

C

6

Sources: BIS, Locational Banking Statistics; Haver Analytics; International Financial Statistics; and IMF staff calculations.

Bos

CE C

..and aggregate loan-deposit ratios continue to decline, broadly reflecting progress in private deleveraging

CESEE: Domestic Loan – to – Domestic Deposit Ratio, 2004:M3 - 2015:M7

(Percent)

CESEE: Changes in Domestic Deposit-Loan Gaps and Private Savings-Investment Balances

(2008-2014, Percent of GDP)

150

170

150

17075th percentile

Average (simple)

25th percentile

130130

90

110

90

110

Sources: IMF, International Financial Statistics; and IMF staff calculations. South Eastern European countries show in green; Central

7070Mar-04 Mar-06 Mar-08 Mar-10 Mar-12 Mar-14

7

and Eastern Europe and Baltics in blue and CIS in yellow.

Th kThank you

*This presentation is based on the 2015:Q2 CESEE Deleveraging and Credit Monitor

htt // i i iti ti / t t/ l d /2015/11/DCM t O t 2015 f ll N 16 dfhttp://vienna-initiative.com/wp-content/uploads/2015/11/DCM-note-Oct-2015-full_Nov-16.pdf