All Spain blogs
Start your own blog
|
|
|
Legal tip 391. Bank of Spain on transparency and regulation
Tuesday, November 9, 2010 @ 10:28 AM
I am sure that they will be welcoming your points of views and experiences within Law 57/68 for further regulation.
Let´s keep the effort up for the benefit of all.
Suggestion: Go sign Keith´s petition!
http://www.bde.es/prensa/intervenpub/diregen/regula/regula150310e.pdf
By José María Roldán
Director General of Banking Regulations
TRANSPARENCY
I will conclude by briefly mentioning transparency. The Banco de España has been a pioneer in the
publication of Financial Stability Reports which analyse in detail deposit institutions' exposure and
their position in terms of profitability (profits, it should not be forgotten, are the first line of defence
against risks) and solvency (the second line of defence).
The Boletín Estadístico publishes, on a
quarterly basis, banks', savings banks' and credit cooperatives' exposure to the construction and
development sector and each sector's volume of doubtful assets. Annex IX of Accounting Circular
4/2004 sets out provisioning obligations with specific percentages based on a precise time scale.
Furthermore, when there is a clarification of the rule which may have a material impact, it is also
published.
Can further progress be made in transparency? Yes, there is no doubt that more can be done, but
in the other developed economies better practices in this area are hard to find.
What does seem essential is a greater effort by institutions in explaining their strengths,
weaknesses, risks and how these risks are mitigated and managed.
This is because, in the
absence of information, the market may perceive the situation to be worse than it really is.
Therefore, it is not a question of transparency for the sake of plain good-heartedness or generosity,
but rather it is in the institutions' own interest.
CONCLUSION
The combination of a deep crisis and a rapid correction of the excesses of the recent real estate
cycle are setting the priorities for deposit institutions' risk management and
will continue to do so
over the next few years. The Banco de España is aware of this and is exercising its oversight
functions in an extraordinarily complex setting due to the wide variety of collateral underlying the
overall exposure to the construction and development sector.
All of us, both supervisor and
institutions, must make greater efforts to explain our priorities, our strategies and our uncertainties
to the market. Thank you very much.
1 Comments
Only registered users can comment on this blog post. Please Sign In or Register now.
|
|
|