Luxembourg, 09/06/2009 (Agence Europe) - Specific measures to support the banking sector have had a positive impact on access to financing and credit flows towards the real economy, the Ecofin Council notes in a report adopted on Tuesday 9 June. These measures - which vary considerably depending on the approach used by member states (national regime or ad hoc measures) and the combinations proposed (guarantees on bank securities, capital injection and support in liquidities, or dealing with impaired assets) - are considered ambitious and have shown they are effective for stabilising the financial markets. The banking sector, however, remains under pressure and governments must be ready to take further action if necessary, it is added in the report, which is to be forwarded to the European Council (18 and 19 June).
Whether it be a question of state guarantees and/or recapitalisation, many EU member states have acted in line with the specific needs of their own banking sectors (only Bulgaria, Cyprus, Estonia, Lithuania, Malta, Poland, Czech Republic, Slovakia and Romania have not taken any national measures). More recently, a number of countries (Germany, Belgium, Denmark, France, Ireland, Netherlands and United Kingdom) have also implemented or announced measures, taking very different forms, in order to deal with impaired assets. The amount of public funds potentially allocated to the different support measures varies considerably from one member state to the next, but the overall effort is considerable and equivalent to 31.4% of GDP. The take up rate of banks for recapitalisation measures or guarantee mechanisms has increased in recent months and is generally satisfactory. Nonetheless, in some countries, few if no banks (Finland and Italy, for example) have applied to benefit from state guarantees, which can be explained by the satisfactory access to market funding but also by the specific access conditions of the scheme.
The environment in which the financial institutions operate is expected to remain difficult and it may prove necessary to take further measures, on a case by case basis, either to recapitalise or to clean up balance sheets. Further Commission guidance on the evaluation of impaired assets would thus be welcome to ensure that any future measures of this kind do not result in competition distortion. In this tricky context, the Ecofin Council notes that the pan-European stress test currently being conducted by the Committee of European Banking Supervisors (CEBS) by way of regular analyses, will help to better assess the resistance of the EU financial system.
It is also necessary to have a more exact idea of the overall amount of impaired assets. The ECB is expected to take this in hand for the eurozone, following an approach similar to that which had been conducted by the International Monetary Fund to assess the value of impaired assets throughout the world (result: US$ 4.1 trillion). (A.B./transl.jl)