Proceedings report from the China Banking Risk Dialogue 2013, on the importance of balance sheet management and stress testing best practices.
July 17, 2013 | Research*The following is an extract of an important eight-page proceedings report on The Asian Banker’s China Banking Risk Dialogue 2013. The entire report is available here.
Global macroeconomic landscape and its impact on China’s retail banking industry
China is still operating under a relatively closed capital economy, which has helped reduce the impact of recent market volatilities. Stephen Schwartz, chief economist Asia at BBVA, highlighted the following points:
- The European Union experienced a relatively weak Q1 2013 in terms of financial growth, but the region benefits from a positive outlook due to the European Central Bank’s promise to do “whatever it takes” to help the EU. The second quarter should show signs of recovery.
- In the US, the outlook is more encouraging, with signs of a strong housing market recovery; GDP is expected to grow 1.8% in 2013 and 2% in 2014. US Federal Reserve has yet to indicate that the quantitative easing measures already in place would be withdrawn.
- On the emerging markets front, risky asset flows continue to undermine growth and inflate volatility. This trend should negatively impact GDP growth, indicating an upcoming slowdown. Moreover, the increase of capital outflows from these countries put pressure on the exchange rate; investors’ interest in such currencies is weaker hence making said nations more competitive – reducing China’s competitiveness on a global scale.
Importance of balance sheet management and stress testing best practices
Financial institutions will have improve their asset and liability management capabilities, and be able to calculate and report quantitative liqu...
Categories:
Basel III, China, Operational Risk, Regulation, Risk and RegulationKeywords:Liquidity Risk, Credit Risk, ICBC, US Fed, EU, BBVA, ANZ, CBA
