The banking system in Israel in view of
The banking system in Israel in view of the global crisis Roni Hizkiyahu, Supervisor of Banks Herzliya Conference February 4, 2009 1
Government and central bank intervention Governments and central banks are taking far -reaching measures to mitigate the on-going financial crisis: • Injecting capital into the banking and finance system, nationalizing banks. • Acquiring toxic assets from the financial system. • Guaranteeing the debts of the banking system. • Cutting interest rates. • Extending the use of collateral, recognizing other forms of collateral. • Activity in trading vis-à-vis the banks. 2
Extent of the impairment of the market value of international banks In US $ billion June 2007 compared with January 20, 2009 3
Rate of impairment in the market value of Israeli banks and international banks June 2007 compared with January 20, 2009 4
Capital to risk assets ratio The five banking groups 2000 – 9/2008 % 5 30
Capital adequacy in the banking system • The target for capital adequacy is at least 12% by December 2009. • Assuming that the financial crisis will still be in full swing, this indication must be adhered to. • IMF and other international entities recommend improving the capital adequacy and raising capital at this time. • Regulators worldwide are making a concerted effort to increase the capital ratio (US – 12. 8%, England – 12. 8%, Switzerland – 12%, Canada – 12. 3%, Israel 11. 5%), including the primary capital ratio requirement. • Concurrently, these countries are working to provide sources for improving the capital adequacy in the banking system. 6
Development of corporate banking and non-banking credit NIS billions, current prices 7
Interest developments in the non-linked sector For the seven largest banks, December 31, 2007 December 31, 2008 8
Summary Israel's banking system is stable Further difficulties and challenges in the financial and real system are expected this year. We must therefore: • Maintain a stable banking system. • Work to encourage the non-banking credit market. • Work to revive the capital market. 9
Thank you! 10
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