Most large Belgian banks have implemented the best part of their restructuring and risk-reduction measures, according to ratings agency Standard & Poor’s (S&P), in a report on the Belgian bank sector published on Friday. “The operational performance of the largest Belgian banks continued to improve in 2015 after a round of restructuring efforts (some mandatory) which started in 2009 and 2010, at the height of the financial crisis,” comments the ratings agency.
“Although some banks still have a few old problems to solve in 2015, we reckon that overall those issues are under control,” they add, mentioning in particular the situation of Belfius bank (formerly known as Dexia Banque Belgique). S&P notes that the current low rates are putting Belgian bank revenues under pressure, as is happening in other countries, but also that most Belgian banks have found a way to increase net earnings “without falling again into the trap of excessive risk taking.”
The ratings agency explains however, that they include a negative outlook to the ratings of most banks in Belgium because of the coming imposition of a European directive on insolvency and bank resolution. The new legislation dictates among other things, that in the event of a bank failure, shareholders and creditors will be liable for their share of the costs via a “bail-in” mechanism.