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Supervisory
Supervisory

Supervisory - PowerPoint Presentation

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Supervisory - Description

A ssessment of S ubsidiaries L oan P ortfolios A nd C ooperation W ith H ost Supervisors Vienna 21 October 2014 Boris Simunovic CFA FRM OeNB OnSite Banking ID: 541068 Download Presentation

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loan local assessment supervisors local loan supervisors assessment helpful site ifrs host oenb ocal market information assessing subsidiaries banks specifics quality bank

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Presentation on theme: "Supervisory"— Presentation transcript

Slide1

Supervisory

A

ssessment

of

S

ubsidiaries

L

oan

P

ortfolios

A

nd

C

ooperation

W

ith

H

ost Supervisors

Vienna, 21.

October

2014

Boris Simunovic CFA, FRM

OeNB

On-Site Banking

Inspections

Division –

Significant

Institutions

Boris.simunovic@oenb.atSlide2

Austrian Banks:

Subsidiaries In More Than 15 CountriesSlide3

Content

Austrian Banks and Their

Subsidiaries

The

Importance

of

On-Site

Loan

Book Assessment

OeNBs

A

pproach

to

S

upervisory

On-Site

C

ooperation

Overview

:

Loan

File Assessment in an IFRS

Context

Loan

Quality Assessment

and

Supervisory

Cooperation

Q&ASlide4

On-Site Look at

Subsidiaries‘ Loan Books I

s

Essential

Loans

are

originated

,

booked

and

serviced

locally

s

ingle-

loan

-information

locally

available

in

greater

detail

h

eterogeneity

:

k

nowledge

of

local

market

conditions

essential

when

assessing

credit

quality

Local

subsidiaries

subject

to

local

as

well

as

IFRS

accounting

m

eeting

local

requirements

naturally

has

a high

priority

for

banks

u

nderstanding

differences

local

vs.

group

(IFRS)

regulation

is

important

Understand

objectives

,

motives

and

concerns

of

local

regulator

h

ow

do

local

specifics

affect

group

steering

(e.g

.

d

ividends

,

products

,

capital

…)

l

ocal

regulatory

information

often

helpful

in

identifying

IFRS

issues

(e.g.

forbearance

)Slide5

All

OeNB On-Site Activity Within Legal Framework

OENB

emphasizes

strong

c

ooperation

with

local

supervisors

p

urpose

and

target

of

examination

shared

in

opening

meeting

with

host

supervisor

i

mportant

to

understand

respective

bank‘s

standing

in

the

local

market

(

strategy

,

issues

…)

Host

supervisors

invited

to

participate

in

examination

l

ocal

supervisors

offered

to

actively

participate

in all

meetings

with

local

bank

l

ocal

supervisors

are

first

reference

regarding

local

specifics

(

language

, legal

framework

…)

Transparency

with

respect

to

results

and

findings

r

esults

about

respective

bank

fully

shared

in

exit

meeting

with

host

supervisor

h

ost

supervisor

recieves

short

summary

report

Slide6

Loan

Book Assessment: What to Look For

Loan

Classification

Default

setting

performing

/

nonperforming

Basel II

compliancerestructuring/forbearanceRating Qualitysegmentation/rating modelfrequency of overrulingssensitivity of rating

Valuation / Provisioning

IFRS

C

ompliance

methodology

and

documentation

NPV

effects

of

restructurings

DCF -

assumptions

Collateral

l

egal

enforcement

c

onsistency

loan

file

/

system

a

ppraisals

and

haircutsSlide7

Loan

Quality Assessment And Supervisory Cooperation

Host

supervisors

helpful

in

selecting

appropriate

loan sample better understanding of local issues (risk-sectors, bank specifics…)concerns of local regulator can be taken into account (large exposures…)Knowledge of local rules

helpful assessing Basel II compliancedefault

classification

can

differ

between

regulatory

systems

: (

eg

.

c

ollateralized

loans

…)

p

ositive

local

rules

sometives

can

be

helpful

identifying

aggressive

forbearance

measures

Information on

local

market

conditions

essential

for

judgement

on

provisioning

levels

e

nforceability

of

legal

claims

,

marketability

of

certain

assets

k

nowledge

about

other

local

banks‘

practice

helpful

assessing

adequacy

of

, e.g.

haircuts

… Slide8

Thank

you For your Attention