Banque de France - Autorité de Contrôle Prudentiel

Relevance of liquidity regulation

and impact on business models

Frédéric VISNOVSKY Deputy general secretaryMay 10 2012, Château de Montvillargenne

AFGAP & ALMA International Conference 2012

Banque de France – Secrétariat général de la Commission bancaire Banque de France – Autorité de Contrôle Prudentiel

Banque de France – Secrétariat général de la Commission bancaire Banque de France – Autorité de Contrôle Prudentiel

 

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1 - Relevance of liquidity regulation

A) European regulators have learnt common lessons from the crisis

B) Despite a single objective, some differences of analysis exist between regulators

C) Differences are expressed in the current discussions on the LCR under way at BCBS and EU levels

Banque de France – Secrétariat général de la Commission bancaire Banque de France – Autorité de Contrôle Prudentiel

 

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2. Impact on business models

A) Banks need to adapt their business models

Banque de France – Secrétariat général de la Commission bancaire Banque de France – Autorité de Contrôle Prudentiel

 

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B) Deleveraging must be addressed carefully

Exhibit 1 Deleveraging pressures and means to accommodate them

sell-off business lines

CT1 capital disposal of liquid assets Loans

RWA non-renewal maturing loans Deposits

restrict new lending

debt-to-equity conversion

retain earningsTotal

capitalequity issuance

Total assets increase deposits

Capital pressures Funding / liquidity pressures

Core Tier 1 ratio =

= Loan-deposit ratio

Available stable

funding = Net stable funding ratio

Leverage ratio = Required stable

fundingincrease long-term

wholesale funding