The biggest single issue we face on an operational level is no doubt the impact the weakened macroeconomic situation is having on all sectors of the ‘real economy’. Like all banks active in emerging markets such as the central and eastern Europe region, we feel this impact in the form of rising non-performing loan rates, sharply higher provisioning rates, and declining credit volumes, to name just a few developments. As such, the current crisis is about prudent banking: all banks committed to staying in business in the long term must be able to manage their risks effectively and to earn sufficient capital remuneration for further growth.
Regulatory developments are no doubt also of great relevance for us, as they are likely to have a direct impact on capital requirements and other elements essential to the proper functioning of a bank. However, what we should avoid is a situation in which too many regulators with similar but different tasks burden banks with excessive stipulations. For example, while stress tests are undoubtedly a good idea, I don’t think it’s a good idea for five different regulatory entities to implement five stress tests with five different methodologies – the tests’ findings will not provide five times the value of one single test.