Dexia Holding SA · EURONEXT:DEXB
Dexia Holding SA — Investor Presentation (October 2009)
31 slides from Dexia Holding SA's investor presentation, Oct 27, 2009
Slide 1: Impact of the financial crisis on the Public Finance specialized banks and their regional and local partners
Impact of the financial crisis on the Public Finance specialized banks and their regional and local partners ICLC survey October 2008 to July 2009
Slide 2: ICLC objectives and secretariat
Collective work under the direction of Marie-Alice Lallemand Flucher, Dexia, ICLC secretariat general, with the help of Amroze Adjuward ICLC objectives are to promote local public sector investment financing. The association was founded in October 1958 in Oslo by Crédit Communal de Belgique, Bank Ne
Slide 3: Survey Background (1)
Survey Background (1) • Initiated by the ICLC General Assembly 2008 • Launched by the ICLC general secretariat in October the same year • Given the evolution of the crisis, the survey was adapted in order to better reflect the new situation • 18 of 23 members answered during a nine month period prov
Slide 4: Survey Background (2)
Survey Background (2) • The answers were full of information but they required some interpretation • A challenge has been to highlight specific examples without disclosing sensitive information the Members provided • Hope the results will stimulate the following discussion…
Slide 5: I - Impact on the banking sector
I - Impact on the banking sector
Slide 6: I-1 Have you noticed a loss of confidence towards the banking sector?
I-1 Have you noticed a loss of confidence towards the banking sector? • Loss of confidence towards the banking sector is closely: – Tied to individual countries’ exposure to the financial crisis – Related to the size of banks: larger banks appear to have suffered from mistrust (Germany, Iceland, Swi
Slide 7: I-2 When do you believe we will start to see a recovery?
I-2 When do you believe we will start to see a recovery? • Most of the respondents agree that the recovery should start during 2010 • Most respondents expect that the recovery of the American will precede that of the Euro zone • A new member of the European Union mentions its reliance on the recover
Slide 8: I-3 Have you observed any structural change in the banking industry?
I-3 Have you observed any structural change in the banking industry? • Considerable turmoil reported for large German, Swiss and Icelandic banks Other observed • Withdrawal of foreign banks is observed in structural changes several countries Fundraising shifts (ex: from bank loans to equity issuance
Slide 9: I-4 How has the financial crisis affected the competitive environment?
I-4 How has the financial crisis affected the competitive environment? • The financial crisis has considerably impacted the competitive environment in The case of northern almost every country, except Canada, European municipality banks Israel and Morocco In northern Europe, several commercial banks
Slide 10: I-5 Will the crisis modify the banking regulatory environment?
I-5 Do you believe that the financial crisis will modify the current generic banking industry regulatory environment? • Out of 17 answers, 14 observe that the crisis will imply an important change of the regulatory environment, which may include: – Focus on regulation and transparency – New reportin
Slide 11: I-6 Do you expect more stringent rules of the game?
I-6 Do you expect more stringent rules of the game, in particular concerning the sale of sophisticated financial solutions? Will it significantly impact the profitability of Public Finance activities? • The majority of respondents indicated that new, more stringent rules and requirements would mostl
Slide 12: I-7 How has the crisis affected competitors' pricing policy?
I-7 How do you feel that the financial crisis has affected your competitors’ pricing policy? • All respondents report that credit margins have sharply increased in the aftermath of the financial crisis Margin range • Main reason: funding margins for Since the crisis, margins are from banks have incr
Slide 13: I-8 Will banks revise their services and products?
I-8 Will banks revise their services and products? • Some banks do not forecast any changes, notably those only active in the public sector Strategy reorientation: Focus on plain vanilla offers Diversification of offers • The other respondents indicate that new services and products should be create
Slide 14: Conclusions
Conclusions • A confidence crisis is more apparent where the financial crisis hit the hardest • State guarantees have in many cases enabled banks to avoid a “credit crunch” • Short term lending has been one immediate result of new financing conditions • The crisis stressed the importance of Basel II
Slide 15: II - Impact on your entity
II - Impact on your entity
Slide 16: II-1 Have you taken any action to restore your clients' confidence?
II-1 Have you taken any action to restore your clients’ confidence? • More than half of the banks assert that confidence has been maintained and sometimes even reinforced • Among banks which report a confidence loss, efforts have been made to: – Maintain a systematic presence to respond customers’ n
Slide 17: II-2 Have you changed your financial portfolio philosophy?
II-2 Have you changed your financial portfolio philosophy since the beginning of the crisis? • 12 banks report changes whereas 7 do not Lower More selective maturity on investment loans policy Focus on More risk core public Changes adverse clients Focus on Limited government exposure to bonds foreig
Slide 18: II-3 Have you adapted your funding strategy?
II-3 Have you adapted your funding strategy? • 10 banks assert that they did not change their funding strategy because they: – Already had a solid liquid base – Rely on diversification and flexibility – Enjoy an important competitive advantage - investors prefer highly rated issuers – Want to mainta
Slide 19: II-4 Have you changed your own pricing policy?
II-4 Have you changed your own pricing policy? • A few banks which preserved stable funding costs did not increase their prices Danish KommuneKredit One bank has even decreased its prices reports that as its funding costs have decreased, it has also decreased its • Most of the banks have increased t
Slide 20: II-5 Do you impose more stringent covenants in project finance?
II-5 As far as project finance is concerned, do you impose more stringent covenants? • All respondents do not have a project finance activity • Among the banks continuing their project finance activity: – In Northern countries, project finance already only 100% local authority guarantee and lending
Slide 21: II-6 General impact of the crisis on your organization and strategy
II-6 What is the general impact of the financial crisis on your own organization and development strategy? Activities are limited to a smaller geographic field Process of Focus on core rationalization, clients reorganization, HR 5 optimization approaches Reduce global Stricter internal credit volume
Slide 22: Conclusions
Conclusions • Northern and Swiss banks tend to be the sole provider of funding to local authorities • In the mainstream, responses reveal that banks have focused on their core clients and limited their activities to some countries / on some products • Given the increased lending rates, and more stri
Slide 23: III - Impact on sub-national governments
III - Impact on sub-national governments
Slide 24: III-1 How has the crisis affected sub-national governments?
III-1 How has the Q4 2008 financial crisis affected sub-national governments? • Some respondents did not report a “credit crunch” in the short term Early leader of pain • Some specific impacts are reported, The Icelandic member reported the including: strong difficulties of – credit spreads have sha
Slide 25: III-2 Impact of the economic downturn on sub-national entities
III-2 Did the resulting economic downturn have a major impact on sub-national entities? Lower tax revenues Higher expenses Income tax Financial expenses (higher spreads) Property tax Social expenses due to VAT unemployment and Gas and oil royalties social housing
Slide 26: III-3 National government actions towards the local government sector
III-3 Has the national government taken any action towards the local government sector in the framework of national rescue plan? • In 12 countries national measures have been taken to support local authorities A different approach in Israel • Direct assistance through subsidies: – Social housing – E
Slide 27: III-4 Initiatives of sub-national governments in response to the crisis
III-4 Did sub-national governments take any particular initiatives in response to the crisis? • One third of respondents report that regional / federated authorities planned Counter cyclical measures to face the crisis measures France: local plans in Bourgogne (EUR 23M), – Counter cyclical measures
Slide 28: III-5 Do you forecast an increase of financing needs?
III-5 Do you forecast an increase of financing needs? Austria, Canada, Denmark, Belgium, Iceland, South Finland, France, Iceland, Africa, Slovakia, Switzerland Israel, Japan, Morocco, the and Sweden do not believe Netherlands, Norway and that financing needs will Spain expect new financial increase
Slide 29: III-6 Adjustments to the local finance regulatory framework
III-6 Have adjustments to the current local finance regulatory framework been made? Germany, Canada, Finland, Netherlands, • 10 countries report no changes in the Norway, Switzerland, current local finance regulatory framework RSA, Sweden, France, Israel • 3 countries report immediate temporary adju
Slide 30: III-7 Dislocation of financial market segments and customer financing
III-7 How has the dislocation of certain financial market segments affected customer financing practices? 11 countries report changes in customer financing practices Credit enhancement Short term vs. Long activity is dropping term funding Funding diversification More bond issues Commercial paper
Slide 31: Conclusions
Conclusions • The effects of the crisis are diverse • 3 countries do not observe an immediate impact of the crisis on sub-national governments: • Morocco: low exposure to the international financial market • Israel: local authorities are marginally affected • South Africa: no immediate effects but e