Five years after Lehman Changes in the banking world – Europe vs Asia Erik Versavel Country Head ING Commercial Banking Ukraine
Five Years After Lehmann: Changes in the Banking World
Aug 20, 2015
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Five years after Lehman Changes in the banking world – Europe vs Asia
Erik Versavel Country Head
ING Commercial Banking Ukraine
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Guidelines www.ing-presentations.intranet GDP indicators for selected countries
Real GDP growth 2009 2010 2011 2012
US -3.1% 2.4% 1.8% 2.2%
Euro area -4.4% 2.0% 1.4% -0.6%
China 9.2% 10.4% 9.2% 7.8%
Japan -5.5% 4.5% -0.8% 2.0%
India 5.9% 10.1% 6.8% 4.0%
Korea 0.3% 6.3% 3.6% 2.0%
Ukraine -14.8% 4.1% 5.2% 0.2%
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Guidelines www.ing-presentations.intranet Financial system before 2008
• Highly developed. • High liquidity. • High leverage (total assets over equity). • Wide and complex product range. • Generally high Returns on Equity.
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Guidelines www.ing-presentations.intranet Financial system after 2008
• Reducing leverage and complexity. • Regulatory expansion. • Global regulatory reform – national agenda’s. • Banks de-globalise. • Lower growth prospects in mature markets. • Banks cannot move “homemarkets”, and cannot invest in fast growing
markets. • Large companies doubled their cash holdings. • Disintermediation reducing business opportunities for banks. • New players and technologies entering market: telecom, retail…
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Guidelines www.ing-presentations.intranet Corporate cash levels
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Guidelines www.ing-presentations.intranet Return on Equity
• In current economic – financial system, ROE remains most critical parameter.
• Banks need to increase their equity. • But as they de-leverage and de-globalise, profitability reduces, and
ROE hurdles cannot be met. • Therefore they cannot easily raise capital. • Therefore large cost cutting exercises across mature markets.
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Merchandise exports and imports in current USD by region, 2012*
7 * Values and Shares include intra-EU trade Source: World Trade Organisation
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Guidelines www.ing-presentations.intranet Meanwhile in Asia
• Foreign Exchange Reserves: • FER increased from USD 2 trio in 2000 to USD 12 trio in 2012, with
expansion coming mostly from Asia. • Asia constitutes 52% of the world. • China alone represents 25%. • Top 10 countries include 7 Asian countries.
• Standard & Poors: • upgraded 4 Asian countries in last 6 months: Korea, Pakistan, Philippines,
Vietnam. • India is only country downgraded in last 6 months. • Asia now has 3 countries with AAA rating (Australia, Hong Kong,
Singapore). • Top 10 of AAA countries is still mostly European countries (only Singapore
is in top 10).
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Guidelines www.ing-presentations.intranet Forex and Gold reserves
9
25
104
140
148
182
259
287
317
327
409
864
1 351
3 312
-‐ 500 1 000 1 500 2 000 2 500 3 000 3 500
Ukraine
Indonesia
Malaysia
US
Thailand
Singapore
India
Hong Kong
Korea
Taiwan
Eurosystem
Japan
China
Figures Dec 31 2012E, bln USD Source: CIA data
3 312
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Guidelines www.ing-presentations.intranet Internationalisation of Asian companies
Forbes Global 2000 Number of Asian companies in top 2000: 2004: 250 2008: 359 2012: 733 of which Japan 258 and China 136
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Guidelines www.ing-presentations.intranet Banks in Asia
• Largely unaffected by banking crisis, eurozone problems. • High correlation with growth in China (except India). • Rising leverage contributing to build-up of risk in the system. • Regional banks emerging / getting stronger.
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Guidelines www.ing-presentations.intranet Something about China
• IPO’s: China sets world records in 2010 and 2011 (USD 45 bio in 2011).
• Internationalization of Renminbi (cross border settlements, cash payments offshore…).
• Reform of the RMB exchange rate. • Continues to inject high liquidity into the system. • In 2000 there were only 2 Porsches in China, now 50,000 with 25,000
expected to be sold in 2012.
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Guidelines www.ing-presentations.intranet PBOC Financial Statistics
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Money Supply • Broad money (M2) stood at 75.73 trillion yuan: up 15.3% yoy • Narrow money (M1) registered 26.68 trillion yuan: up 12.9% yoy • Currency in circulation (M0) posted 4.55 trillion yuan: up 14.7% yoy Loans • RMB and FCY loans totalled 53.37 trillion yuan: up 17.2% yoy • RMB loans registered 50.21 trillion yuan: up 17.5% yoy • FCY loans registered $485.1 billion: up 17.6% yoy Deposits • RMB and FCY deposits totalled 77.17 trillion yuan: up 17.1% yoy • RMB deposits registered 75.62 trillion yuan: up 17.3% yoy • FCY deposits stood at $237.9 billion: up 14.3% yoy
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Guidelines www.ing-presentations.intranet Internationalization of Renminbi
Dimsum bond Settlement of
international trade in RMB
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