Download Diapositiva 1

Cross Border Financial
Positions and Exposures
Juan Pablo Graf
Banco de México
1
I. Introduction
Information Gaps
(Authorities)
Foreign Sectors
Banks
Non Banks
Domestic Sectors
Banks
Other
Financial
Entities
Listed
Corporations
Non - Listed
Corporations
Households
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I. Introduction
Information Gaps
(Publicly disclosed)
Foreign Sectors
Banks
Non Banks
Domestic Sectors
Banks
Other
Financial
Entities
Listed
Corporations
Non - Listed
Corporations
Households
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I. Introduction
The majority of systemically-important banks are foreignowned
Market Share %
BBVA-BANCOMER
23.5
CITIBANK-BANAMEX
21.2
SANTANDER-SERFIN
14.4
BANORTE
11.1
HSBC
9.5
INBURSA
4.0
SCOTIABANK-INVERLAT
3.2
Other subsidiaries of foreign
banks (14)
4.6
Other Banks (21)
8.4
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II. Exposures of financial corporations
Foreign Sectors
Banks
Non Banks
Detailed daily information:
Domestic Sectors
• Securities and Derivatives
Banks
Detailed daily
information on:
• Loans & Deposits
• Securities (incl. Repos)
• Credits and Deposits (No individual
counterpart ID)
Monthly Information
• Corporate credit
• Derivatives
• Swaps
Financial Entities
• Forwards
(Brokerage Houses,
Insurance Co., Pension
Funds)
• Options
• FX transactions
Detailed daily information:
• Securities and Derivatives
• Credits and Deposits (No individual
counterpart ID)
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II. Exposures of financial corporations
Subsidiaries and Parent Banks
•Financial regulation limits the exposure that domestic banks may
have to related counterparties (i.e. individuals, firms and any
financial entity owned by the same shareholders).
•For domestic banks, which are subsidiaries of foreign financial
groups, the limits apply to any exposure to parent banks and their
foreign subsidiaries (e.g., London, Cayman)
•As of 2008:
•The limit applies to all financial exposures (i.e., loans,
deposits, securities, repos, the net exposure arising from
derivative transactions; and settlement risk in forex exposures)
•The limit was reduced to 50% of Tier 1 capital.
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II. Exposures of financial corporations
Subsidiaries and Parent Banks
•
Some subsidiaries increased their lending to their parent banks
significantly. These positions have been closely monitored. However,
this information is not made public.
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II. Exposures of
1 Information
financial corporations
gaps
 Detailed data collected by central bank allowed a prompt
assessment of financial entities exposures to “toxic”
assets
 This information was very useful to assess early the
level of exposure. This information was not made public.
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III. Exposures of non-financial corporations
•
•
Type of exposure:
• Derivatives OTC
• Debt with banks and other FIs
• Debt through securities issued abroad
Information sources:
• Creditor data
BIS-type data
Timeliness
(work-in-progress)
Central bank survey Granularity ? (maturity,counterparties
currencies)
•
•
Debtor data
Listed corporates (see next)
Non-listed
Credit registry
?
?
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IV. OTC Derivatives
• Non-financial corporations in emerging market economies
reported large losses due to FX OTC derivatives
Exchange Rate Domestic
Currency / USD
15 days moving avg.
160
150
130
120
110
100
90
80
Jan
Jul
Apr
2008
Source: Banco de México
In millions of US dollars, October 2008.
Firms
Mexico
Comercial Mexicana
GRUMA
CEMEX
ALFA
VITRO
Grupo Posadas
Brazil
Sadia
Aracruz
Grupo Votorantim
Mexico
Brazil
Korea
140
Estimated losses from derivatives operations
Oct
Jan
2009
South Korea
500 small and
Taesan LCD
Losses
Some financial institutions reported as counterparties
$2,200
$804
$711
$250
$293
$50
Merrill Lynch, JP Morgan, Barclays, Goldman Sachs, Credit
Suisse, Deustche Bank AG and Citibank London (through
Banamex, the Citibank's Mexican subsidiary)
$2,400
$2,130
$967
Citigroup Inc., Merrill Lynch & Co., Barclays Plc, Banco
UBS Pactual SA, Banco Itau Holding Financeira and
Deustche Bank.
$1,000
$220
Kookmin Bank (biggest korean bank), Shinhan Bank,
Industrial Bank of Korea (small/medium size lender),
Citibank Korea Inc. and SC First Bank Korea Ltd.
Source: Quarterly reports for Mexican firms; Bloomberg and Reuters for firms in other countries.
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IV. OTC Derivatives
•
Host authorities do not have timely and detailed
information about derivative operations between
foreign banks and other FIs domestic non-financial
firms
•
Financial counterparties (domestic and foreign) might
not have information about firms’ derivatives
operations with other counterparties
•
Foreign financial counterparties of domestic firms do
not have information about firms’ credit history
•
Complexity of products
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IV. OTC Derivatives
•
Regulatory responses (May 2009)
Securities Markets Regulation(Periodical reporting - Quarterly)
 Market-to-market positions / Underlyings / Notional amounts
 Detailed payment conditions
 Contingency analysis
Financial Information Rules (Financial Statement Disclosure Rules)
 Risks involved (detailed analysis)
 Hedging structure of every derivatives position
(including “off- balance sheet” transactions)
 Collaterals
 Valuation techniques
 Levels of exposure
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V. Non-listed non financial corporations and households
Domestic
Sectors
Foreign Sectors
•
Non-listed Corporations
Households
Banks
Non Banks
BIS-type
Aggregate
statistics
No information (If regulated or
listed home supervisors may have
some information)
Creditor data
•
Timeliness, granularity of disclosures (maturity, counterparties,
currency)
•
Households: debt or equity
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V. Non-listed non financial corporations and households
Investments in foreign
funds “through” an
institution in Mexico
(“low profile soliciting”,
e.g. Stanford)
Domestic authorities
have no power over
such investments.
• Response to “Madoff and Stanford” cases: stress the importance of
investors verifying that institutions are authorized to take deposits or
investments.
• Irregular deposit taking and low-profile soliciting will continue, thus
information gaps for domestic authorities remain.
• Cooperation among international authorities may mitigate the information
gaps and greatly contribute to understanding risks borne domestically from
investments in foreign funds.
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