Cecabank Annual Report 2014

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What impacts do you think
the new economic and
regulatory context could have for
the institution?
The economic context is
characterised by the progressive
recovery of the headline
indicators, which allows us to be
relatively optimistic about how
lending and deposits will progress,
and that default rates will drop.
From Cecabank’s viewpoint, the
development of off-balance sheet
products is beneficial, offering
us opportunities as a depositary
bank, due to the increase in
funds’ assets.
This regulatory context is linked
to Banking Union, which will
encourage greater integration
in the European financial sector.
One of its main effects will be the
harmonisation of supervisory
practices, which will change the
current accounting approach for
one based more on corporate
governance and performing
stress tests. It will also foster
the establishment of a common
safety net, enhancing the
system’s stability. The intention is
to break the vicious circle between
banks and governments that
has become apparent in the
current crisis.
Banking Union represents the most
significant cession of sovereignty
since the euro come into force,
and a paradigm shift that in
time should enable economic
integration to lead to closer
political and fiscal integration
in the EU. This needs to be seen
as an excellent opportunity to
reduce the fragmentation between
different systems, which raises
the cost of finance for our banks,
and the interdependence between
sovereign risk and banking risk.
To this must be added the different
regulatory burden imposed by
European directives pursuing
the dual goals of strengthening
of regulatory capital on the one
hand and investor protection
thresholds on the other. Both
approaches, present in much
current and upcoming legislation,
are opportunities for a bank, like
Cecabank, which is able to draw
on very high solvency and a niche
specialisation that banking’s future
prudential approach demand for
our financial system.
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