53
all, is very diversified and 82% of the institu-
tions have their headquarters abroad. Regu-
lations that reason merely nationally might
therefore sometimes have an opposite effect.
The concept of a bank union also offers an-
other perspective on the security of financial
institutions. The optimal size of a financial
institution is currently mainly tested against
the national budget and the gross domestic
product (GDP) of the country to which the
institution belongs. However, the European
bank union will unlink the financial institu-
tions from the national budgets and GDPs.
The question may be posed therefore if we
should not anyway test the best possible size
of a bank against other criteria.
Phasing down of balance
sheets in Belgian financial
sector
The Belgian financial institutions have rein-
forced their balance sheets considerably, espe-
cially due to the phasing out of their foreign
activities. At the end of March 2012, they had
phased out their leverage by 41.4% compared
to end June 2007. At the same time they raised
their equity by 19.3% and reduced their liabili-
ties by more than a quarter. The Belgian finan-
cial sector seems ready, therefore, to comply
with the new Basel III legislation.
>
Risk management
BELGIUM TAKES THE LEAD IN ‘DELEVERAGING’ - TRANSFORMATION ONGOING
Total liabilities of
Belgian banking sector
(
in billions of EUR)
Total equity capital of
Belgian banking sector
(
in billions of EUR)
Leverage
(
in units)
End of June 2007
1,595.2
48.5
31.9
End of Dec. 2011
1,139.4
57.8
18.3
%
change
-28.6%
+19.3%
-41.4%
Belgium is a quick
learner when it comes
to deleveraging