Romanian Banking Forum – Discussion Paper.pptVIP

* * * * * * * * * * * … … ? 2008 Roland Berger Strategy Consultants GmbH Agenda * RBSC_Risk_management_ForumBancarRoman_ppt Grafik_Moll_10-07-06 Bucharest | 18 November 2008 Romanian Banking Forum – Discussion Paper Strategies put to the test in the current global crisis – Which banking models are sustainable? * A. Global crisis – what type, why and where to? B. Impact on banking strategies/models C. Future of Risk – strong reshaping of the function D. Open discussion – what is likely to impact us in Romania A. Global crisis – what type, why and where to? What crisis are we talking about? In fact, there have been four different crises Sub-prime crisis Falling house prices and rising interest rates in US lead to high number of people who could not keep paying their mortgages Packaging of risk/exposure to subprime sector in sophisticated products Intransparent tracing of subprime exposure among financial players Equity markets became very difficult/costly to access due to huge discounting Credit markets froze as banks became reluctant to take on more exposure, not knowing how many bad loans could be on the counterpartys books Liquidity crisis Major players not able to ensure short-term financing: Lehman Brothers, AIG, etc Stock markets plummeted Key failures in the framework of capital markets/regulations emerged Credibility/trust in the financial system at record lows Financial crisis Real consumer demand slow-down in certain sectors further worsened by perceived propensity away from consumption Reduced capacity and/or appetite for financing certain sectors Real and perceived financing difficulties for corporates lead to downward adjustment of growth prospects for key sectors Economic crisis Why? Looking behind the curtain, one could see several root causes Over-leveraging of households in a climate of cheap financing and short-termism – leading to current reduction of spending capacity Poor lending judgements in a bubble market Re-selling e