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International Banking System
Transcript of International Banking System
-Focus on commercial bank
-Strength in balance
-No toxic assets
The euro allow the lowest interest rate in the history of Spain.
Evolution of Euribor in Spain 1985-2010
Consecuence of both previous effects
In the last years, great part of the international system banking has changed the business model towards a "CREDIT CREATION MODEL" and “RISK TRANSFER MODEL”. The Spanish system banking has maintained the classical business model in retailer banking .
Spain has been one of the countries where more the securitization has been developed during the last years.
The Spanish banking system took the role like intermediary of investment funds and pension funds. Important credit when the system needs credit in long term.
In Spain the 97% is fixed-rate mortgage
It is the European country with the highest level of provisions.
The Bank of Spain was NOT ALLOWED credits transfers without risk transfers.
So financial institutions have continued to make GOOD RISK ANALYSIS before to grant funding.
In fact, the SUB-PRIME segment has not been developed in Spain
-Exterior sector dependency
If the crisis is different...What is the real problem?
Decrease i% Increase over-indebtedness
Spanish economic Crisis
But the ECB offers a float
But the Spanish model used for securitization is different from the American model:
1.In Spain, the securitization has been developed with the objective of get LONG TERM CREDIT. Without carrying out a real transfer of the risk.
2.The development has been based on simple and TRADITIONAL FINANCIAL STRUCTURES.
3.And the QUALITY of these securization was HIGHER with delinquency rates lower than no securization assets
Unproductive develop model & housing bubble
Structural comercial debt
This sector is unproductive and where all the system's strength is in the labor force.
The Future depends of ...
1- Of how the economic crisis and current financier resolves.
- The exhibition to the sector of the real-estate promotion is a problem that will not be solved completely in the short term, though that the decrease of the prices
- The reduction of capacity of the sector in his set, simultaneously that increases the size of the entities increasing the efficiency.
- To increase his base of the capital and to adapt his ratios of leverage.
II- Of the new rules of the game that finally are adopted national and internationally.
This model became investment market and the spiral became one of the largest housing bubbles in Europe.