What is Wrong with the Banks?
- Impact Boards EM
- Apr 20, 2023
- 1 min read
Updated: Apr 16
On 20 April 2023, Impact Boards EM gathered Board Members and banking industry experts from Asia, Latin America and EMEA to share their insights on the potential risks impacting the Emerging Markets banking sector in light of recent banking issues in developed markets.
Our panel of 5 experts – Bruno Balvanera (Independent Board Member Liberty Bank, Qishloq Qurillish Bank), Ashot Osipyan (Independent Director Asakabank, Nominee Director EBRD), Jose Guimaraes Monforte (Partner Emax Consulting), Inessa Tolokonnikova (Principal Banking Specialist IFC) and Olga Pascault (Co-Founder Impact Boards EM, ex-Board Member, SPB Exchange, Asakabank) - discussed their experiences from a global and regional perspective on the recent banking crisis in the developed world and any potential spill-over risks into emerging countries.
Since the 2008 Global Financial Crisis, regulators and banks’ management teams have been operating with more prudence; banks have de-risked and adapted their business models to the tighter regulatory environment.
The recent banking crisis has impacted investors’ perception and banks’ management behaviour as a response to the crisis. Going forward, we are likely to witness two categories emerge given structural differences across their banking sectors; firstly, with significant regional discrepancies due to capital structure variations i.e. between US-based banks, European banks, and EM-based banks. Secondly, large systemic banks with differences in their shareholder controlling structure, split between state-owned banks versus privately owned banks.
Most participants view contagion risks in their regions and countries to be limited, given the lessons learned from past crises and actions taken by the central banks and regulators to mitigate exposure. They acknowledged that the cost of funding will increase amidst tighter financial conditions, resulting in higher non-performing loans. Banks’ management teams must take a cautious approach by making provisions and writing-off bad loans.
The detailed summary, highlighting the key topics discussed by our panellists, and the presentation is available to view here.
