Miguel Borg - Bank of Valletta

More documents

Recommendations

Info

november 2011 STRESS TEST Bank of Valletta, for the second consecutive year, was the only direct participant from Malta in the EU-wide stress testing exercise organised by the European Banking Authority (EBA). BOV achieved good results in both years as a result of the Bank’s prudent capital management, cautious risk appetite and responsible and sustainable dividend payout policy. In the wake of the most severe financial crisis in recent history, the European Parliament and Council established the EBA to act as the new EU-wide Supervisory Authority with the main responsibilities of ensuring the stability of the financial system, the transparency of the markets and the protection of depositors and investors. The main tool used by the EBA for its micro-prudential analysis is the EU-wide stress test exercise which is conducted in cooperation with the European Systemic Risk Board (ESRB). The stress testing exercise assesses the resilience of the major European banks to extreme hypothetical economic shocks using consistent methodologies and assumptions. The 2011 exercise tests the resilience of the banks over a two-year horizon to a marked deterioration in the macroeconomic environment. All the participating banks were subject to an adverse scenario as designed by the European Central Bank (ECB) that included substantial deviations from the baseline figures to the main economic variables such as GDP, employment and house prices. In addition, the stress test included a reduction in market prices for all government positions in the trading book. In the case of Malta, the ECB assumed a scenario 10 Miguel Borg Executive Head Risk Management where the economy declines by a substantial 3.1% in 2011, followed by a weak recovery of 0.5% in 2012. Unemployment was assumed to rise to 8.8% in 2012. In addition, property prices were assumed to fall by 6.3% in 2011 and by a sharp 23.8% in 2012. These stress test assumptions, which do not represent a forecast for the two-year horizon, were considered to be extreme when compared to the official EU economic forecasts for Malta and to past experience. Notwithstanding these severe conditions, BOV passed the stress test with good results, ranking with the top fifteen when compared to all 90 participating banks that represent 65% of the EU banking system. Indeed, BOV’s Core Tier 1 capital ratio, which relates shareholders’ funds to risk-weighted assets, fell marginally to 10.4% under the adverse scenario when compared to the 10.5% recorded as at end 2010. Out of the participating banks, eight failed to reach the pass mark of 5% while another sixteen passed marginally. The test showed that BOV’s balance sheet would barely be dented by a severe economic recession, inclusive of a hefty fall in house prices over a two-year period. This does not mean that the Bank, indeed the entire banking sector, is immune to the macro-economic cycles. It is, however, a testimony to the stability of the domestic financial sector, which came through the Great Crisis of 2007-09 practically unscathed, and which is geared to withstand quite severe shocks, no matter how unlikely such events may be.
Għat-tieni sena konsekuttiva, l-Bank of Valletta kien l-uniku parteċipant dirett minn Malta fl-eżerċizzju ta’ stress testing organizzat mill-Awtorità Bankarja Ewropea (EBA) fil-pajjiżi kollha tal-UE. Il-BOV kiseb riżultati tajbin fis-sentejn li huma, bħala riżultat tal-ġestjoni prudenti tal-kapital, tal-attitudni kawta lejn ir-riskju u tal-politika responsabbli u sostenibbli dwar il-ħlas tad-dividends attwata mill-Bank. B’riżultat tal-aktar kriżi finanzjarja qawwija fl-istorja reċenti, il-Parlament Ewropew u l-Kunsill Ewropew waqqfu l-Awtorità Bankarja Ewropea (EBA) sabiex tassumi r-rwol ta’ awtorità superviżorja ġdida mal-UE kollha u tkun responsabbli prinċipalment li tassigura l-istabbiltà tas-sistema finanzjarja, t-trasparenza tas-swieq u mill-ħarsien tad-depożitanti u l-investituri. L-għodda prinċipali użata mill-EBA għallanaliżi mikro-prudenzjali tagħha huwa l-eżerċizzju ta’ stress testing imwettaq madwar il-pajjiżi kollha tal-UE li jitmexxa b’kooperazzjoni mal-Bord Ewropew dwar ir-Riskju Sistemiku (ESRB). L-eżerċizzju ta’ stress testing jevalwa r-reżistenza tal-banek prinċipali Ewropej quddiem ipotesi ta’ xokkijiet ekonomiċi estremi permezz ta’ metodoloġiji u suppożizzjonijiet konsistenti. L-eżerċizzju tal-2011 jittestja r-reżistenza talbanek fuq perspettiva ta’ sentejn fl-isfond ta’ deterjorament qawwi fl-ambjent makroenomiku. Il-banek kollha li pparteċipaw ġew soġġettati għal xenarju avvers mfassal mill- Bank Ċentrali Ewropew (BĊE) li kien jinkludi devjazzjonijiet sostanzjali mill-figuri tal-punt tat-tluq (baseline figures) firrigward tal-varjanti ekonomiċi prinċipali bħall-Prodott Gross Domestiku, ix-xogħol u l-prezzijiet tad-djar. Barra minn hekk, it-test kien jinkludi tnaqqis fil-prezzijiet tas-suq fir-rigward talpożizzjonijiet kollha tal-gvern fit-trading book. Fil-każ ta’ Malta, il-BĊE assuma xenarju fejn l-ekonomija tonqos b’ċifra sostanzjali ta’ 3.1% fl-2011, liema tnaqqis ikun segwit b’irkupru ta’ biss 0.5% fl-2012. Il-BĊE assuma ukoll li l-qgħad jitla’ għal 8.8% fl-2012 u li l-prezzijiet tal-proprjetà jaqgħu b’6.3% fl-2011 u b’rata qawwija ta’ 23.8% fl-2012. Dawn is-suppożizzjonijiet użati għall-eżerċizzju ta’ stress testing u li ma jirrappreżentawx tbassir għall-perspettiva tas-sentejn taħt konsiderazzjoni, kienu meqjusa li huma estremi meta mqabbla mat-tbassir ekonomiku uffiċjali tal-UE għal Malta u mal-esperjenza tal-imgħoddi. Minkejja dawn il-kondizzjonijiet iebsin ħafna, il-BOV għadda minn dan l-eżerċizzju ta’ stress testing b’riżultati tajbin, fejn anki spiċċa mal-ewwel ħmistax meta mqabbel mad-90 bank parteċipant li kienu jirrappreżentaw 65% tas-sistema bankarja tal-UE. Verament, il-ratio tal-kapital Core Tier 1 tal-Bank, li jirrelata l-fondi tal-azzjonisti mal-assi risk-weighted, niżel bi ftit għal 10.4% fl-isfond ta’ dan ix-xenarju avvers meta mqabbel mal- 10.5% irreġistrat fl-aħħar tal-2010. Mill-banek parteċipanti kollha, tmienja ma rnexxilhomx jilħqu l-pass mark ta’ 5%, filwaqt li sittax oħrajn għaddew mit-test b’mod marġinali. L-eżerċizzju wera li l-karta tal-bilanċ tal-BOV bil-kemm tkun mittiefsa f’każ ta’ reċessjoni ekonomika qawwija, inkluż jekk ikun tnaqqis sostanzjali fil-prezzijiet tal-proprjetà fuq perjodu ta’ sentejn. Dan ma jfissirx li l-Bank, anzi s-settur bankarju kollu, ma jħossx l-impatt taċ-ċikli makro-ekonomiċi. Madankollu, dan ir-riżultat huwa xhieda tal-istabbiltà tassettur finanzjarju domestiku, li rnexxilu jegħleb il-Kriżi l-Kbira tal-2007-2009, u li huwa armat għal xokkijiet qawwijin ħafna, irrispettivament minn kemm jistgħu jkunu improbabbli ċirkustanzi bħal dawn. 11
Page 1 and 2: issue 31 november 2011 INTERVIEW WI
Page 3 and 4: l-opportunitajiet ta’ tkabbir għ
Page 5 and 6: Notice Board Bank of Valletta award
Page 7 and 8: Joanna Camilleri, koordinatur edito
Page 9: X’inhu l-għan tal-LĠA? Waqt laq
Page 13 and 14: Suġġett li dwaru l-azzjonisti tal
Page 15 and 16: Esperjenza Personali Tlesta r-resta

Miguel Borg - Bank of Valletta

Create successful ePaper yourself

Delete template?

Save as template?