NSFR regulations – real challenge for banking sector in Poland? Panel discussion – 5th Banking Forum April, 2013 Maciej Rapkiewicz, Instytut Sobieskiego

Net Stable Funding Ratio (NSFR)  Aims to ensure banks are able to survive an extended closure of wholesale funding markets.  The NSFR can be summarised as the requirement for a minimum amount of ‘stable funding’ over a one year time horizon based on liquidity risk factors assigned to assets, off‐balance sheet liquidity exposures and other contingent funding obligations.  Is intended to deal with longer-term structural liquidity mismatches by establishing a minimum acceptable amount of stable funding based on the liquidity characteristics of a bank's assets and activities over a one-year horizon.  Implementation is scheduled for Mismatch between the maturities of banks' deposits and loans in Poland (Dec. 2012) Polish Financial Supervision Authority (KNF) ”Information about banking sector – Jan.-Sep., 2012” Mismatch between the maturities of banks’ deposits and loans is described as a ”adverse effect” and excessive dependency of lending on short term deposits. PLN Billions 34.5% of assets 5.3% of liabilities Source of Data: KNF

Threats for growth of loans Annual growth rate of liabilities from banks and branches of credit institutions Zloty term deposits KNF: ”Decreasing in foreign funding is a factor for stability of the system, but on the other hand, leads to limited lending opportunities.” Decreasing in spread (WIBOR – deposits) Non-residents After excluding the impact of exchange rates Source of Data: NBP

Share of banks with a certain profitability of housing loans Some banks already faces problems with profitability of long-term loans Over 30% of the sector not making a profit in regard to long-term loans Source of Data: NBP

Solutions:  Long-term bonds/deposits  MBS - mortgage backed securities  Securitisation The development of long-term, stable sources of funding is essential Securitisation in Poland:  market of performing loans hardly exists – only two significant transactions in the last decade: (2006 – 270 mln euro; 2012 – 1 bln PLN)  non–performing loans (NPLs): December 2012 – NPLs in banks’ balance sheets – approx 71.7 bln PLN. transactions – value in 2012: approx 9.3 bln PLN. € Billions European and US Securitisation Issuance – 2012

Instytut Sobieskiego Contact: Maciej Rapkiewicz, Member of the Board Mobile: