THE FINANCIAL INDUSTRY

In the post-crisis era within Banking Union Framework

Kanellos Nikolaos BEng, MSc

Pitikaris Theodoros BAB,BSc,MSc
Soukeras Dimitrios BSc, MBA(ER)
Nelson R. Carrera LLB

some history

grain loans
1.

the Roman monetary union -state lending

2.

the Spanish inquisition

3.

the bank of Venice

4.

the Templars intra-Europe money transfer

5.

the Banca Monte dei Paschi di Siena S.p.A. Philanthropic institution (1472 )

Some History

the central bank of Amsterdam

the bank of England -Adam Smith theory of regulation

gold standard (Isaac Newton)

the Latin Monetary Union

World War I Each crisis disconnects the global markets

FED

New Deal regulatory framework

Bretton Woods IMF World Bank

dollar and gold

Nixons Shock

Some History

snake in a tunnel

OPEC stagnation

EMS EMU

the Maastricht Treaty

the invisible hand the case of UK Forced to leave the EURO

the SGP

Towards the Banking Union

the Lisbon treaty and the "non bailout clause

Lehman Brothers - subprime/ Europe :saving banks with national fund

Actor of Change: Media Management (Rhetoric, statements, public press)

Revive Old Stereotypes

Leader of Hegemon ?

Cumulative Responsibility Nuremberg trials , Rwanda , Yugoslavia : Doesnt exists

Rifting apart the Single Market

- 81.7Bn Euros Ireland

-48.1Bn Euros Spain

-25.3 Bn Euros

-19.9

Greece

-91.7 Italy

-103.8Bn Spain
-13.0 Bn Euros Portugal

-6.5 Bn Euros
Portogual

Bn Euros Greece

39.9Bn Euros Ireland

-91.7 Bn Euros Italy

(Germany)
301.8 Bn Euros

(France)
203.9 Bn Euros

ECB Response

the non standard measures Trichet

"whatever it takes

from micro prudential to macro prudential

LTRO

LTRO the geographical distribution

RO
Source:
Bruegel
Database

ECB Response

Outright monetary transactions(OMT)

the schism Bundesbank vs the Rest

National Wide Court : Supreme Federal Constitutional Court (Karsluhe)

TLROs

4/12/2014 ECB goes shoping : Sovereign Debt

European Constellation
European System of Financial Supervision (ESFS)
European Systemic
Risk Board
(ESRB)

EBA

European
Insurance the
Occupational
Pensions
Authority
(EIOPA)

ESM
ECB

Table 1 Bail-out cost and CET1 Source:EBA

Bail-out/Bail-in
Country

Greece

Spain

Cyprus

Portugal

Ireland

Bail-out

180

11

70

67.5

Bail-in

40

40

PSI

30

ECB/ELA

200

800

9,5

600

210

0,87

10

IMF
Recapitalization Cost
(nominal) without interest
rate

50

100

10

67

Fully Load CET1 -2016

Adverse Scenario

-5.4

7.71

-1.12

3.9

-0.965

USA Constellation
Federal National
Mortgage
Association
(FNMA)

Consumer Financial
Protection Bureau
(CFPB)
FDIC

Financial Stability
Oversight Council
(FSOC)
New Deal
Troubled
Asset Relief
Program

Bush

ECB
DoddFrank

Banking Union

Spain and Italy too Big to Fail

Single Supervisory Mechanism

Single Resolution Mechanism

Common Deposit Guarantee scheme

Commonwealth
of Independent
States (CIS)

Scandinavian
Council

EUROPE

OSCE

European
cooperation
Council of
Europe
European Court
of Human Rights

EFTA
UN

European Commission
ESMA/EMA/ECHA/ENISA etc

IMF

Euro

EZ

ECB

EU

Council
EU Parliament

ECJ
ESRB/EBA/EIOPA

European
European
Assembly
Assembly

The Coupling-Tractable Diagram,

Perrow (1984)

Eurobanking
System

EVALUATION OF ACCIDENT INVESTIGATION

METHODS METHODS

17
ESASI MADRID 2013

By Katsakiori et al (2008)

Is any Entity with the

potential to change
Harm or damage an
Object upon it is
Acting.

The Object is the

item changed ,
or potentially
changed
by An Agent of
Change.

A change of State
whereby an object
is adversely
affected (Or
threatened)
by an Agent of
Change
The Environmental, situational or
psychological System states or
States of Mind that promote
Immediate Causes

18

Barrier GUARDING
THE Change Agent

CHAN
GE
AGENT

19

EVENT
MISSIN
FAILED
G
BARRIE
BARRI
R
ER

OBJECT
FAILED
BARRIE
R

Barrier Protecting
The
Object
EFFEC

TIVE
BARRI
ER

The First TRIPOD

The First TRIPOD

The EUROBANKING SYSTEM FAILURE-The TRIPOD INCIDENT ANALYSIS

Tripod Analysis

17 missing Barriers

No good planning

Not thoroughly designed Risk Assessment

18 Failed Barriers

Need for minor changes less efforts minimum consensus

Time is Luxury

Tripod Analysis

The organizational culture within EU is not a generated

Instead it is a Fixed Culture

Conservative decision process in place

Unable to recognize changes

A predetermine mechanism which lies in tradition

Scapegoats unable to learn

This Esprit de Corps abstain for solidarity

Win-Win

Hellenic Banking Industry

Challenges

low level of income low savings -accumulation process

more recapitalization

poor stress test performance

NPL culture

high level of unemployment

mass immigration

Hellenic Banking Industry

Challenges

Deflation reverse incentive

Eugen Bhm von Bawerk (Capital and Interest.) Marginal utility

(law of diminishing marginal utility) [Principles of Economics]
1.

DG-Com (Competition Commotion) no further Merging

2.

Immigration of Sound Business to Northern Europe Access to

funding (3E, FAGE, Biochalko)

3.

Contradiction of Balkan Economies & High political Instability in

Turkey exposure of Hellenic Banking Industry

4.

political decision SEPA competition with any other Financial

Institute within SEPA

Points of Discussion

A European Credit Rating House

internal credit mechanism

Micro lending

NPL clearance

EIOPA STRESS TESTS

either real banking union or national level banking resolution

creative destruction

in the long run...

Conclusions

Treaty change is unavoidable

EU