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06 March 2017

EBA: Vienna Initiative: New Working Group on Capital Markets Union for CESEE region

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The Vienna Initiative has agreed to establish a Working Group on Capital Markets Union. This follows the European Union's push to strengthen Capital Markets which will have a major impact on financing of investment and sustaining growth in the Central, Eastern and South-Eastern Europe region (CESEE)

"Strengthening and diversifying sources of finance is crucial in the region today, as the regional catching up process advances and a new model for growth emerges", commented Werner Hoyer, the President of the European Investment Bank (EIB), which is hosting this year's Vienna Initiative 2 Full Forum at its headquarters in Luxembourg. 

All members of the Forum expressed their strong commitment to the work of the new Working Group, which will report by the end of 2017. The working group will help to promote the diversification of investment finance in the region, mobilize the Vienna Initiative network to analyse structural obstacles and regulatory gaps impeding capital market development in the Central, Eastern and South-Eastern Europe region (CESEE) and identify solutions at the national and regional levels. 

A further topic, which was discussed in Luxembourg, was the recent evolution of bank regulation in home countries and at the global level. The Forum discussed the issue of unintended impediments to cross-border banking due to prudential restrictions on the cross-border flow of capital and liquidity within banking groups. The commercial bank group participants also noted that the increasing number of national regulatory initiatives in some CESEE countries have had some unintended negative consequences. The Forum received an update on the Non-performing loans (NPL) Initiative work-stream of the Vienna Initiative, which reported substantial achievements in enhancing the transparency of restructuring frameworks, building capacity through coordinated technical assistance, and sharing knowledge. All of this has partly led to a recent abatement of NPLs in the region and has helped to deepen the secondary market for NPLs, with sales of NPLs reaching EUR 7.3 billion over the last eighteen months. The Forum also discussed recent NPL dynamics and regulatory moves at the European Union level.

The Forum also took note of the fact that the economies of the region all showed fairly strong growth in 2016, and that this is expected to continue in 2017. Banking developments have supported this positive outcome. Overall deleveraging by parent banks, which started more markedly in 2011, has now largely come to an end, while domestic deposits have been growing, thus ensuring banks operating in the region have sufficient funding, while becoming less dependent on parent bank funding.

Press release


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