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
1
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
2
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
3
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