Preliminary Results of Survey on DIF Target Ratio 1_Ma. Ana Carmela... · 2015. 6. 16. · 1 1 1 13 15 18 Other-specified Other-Not applicable Repayment of initial "start-up" or "seed"

Preliminary Results of Survey on DIF Target Ratio

MA. ANA CARMELA L. VILLEGAS Senior Vice President & Officer-in-Charge Receivership & Liquidation Sector Philippine Deposit Insurance Corporation

Outline

1. Survey Objective 2. Background 3. Respondents’ Profile 4. Preliminary Survey Results A. DIAs with target fund B. DIAs without target fund 5. Findings/Conclusions (Preliminary)

6. Next Steps

2

Survey Objective

3

To gather data and information on practices

of DIAs that will address the issues identified

in the Research Plan

Background

• IADI’s online survey tool was used

• Survey questionnaire distributed on April 23

• Submission extended 2x; online system closed on May 22

• Results obtained on May 26

64 respondents

Seven (7) DIAs have not closed their surveys

• Survey results supplemented by data on respondents’ profile taken from the IADI Annual Survey Results

4

Respondents’ Profile

• Taken from database of IADI annual survey

Information based on December 2013 cut-off

• Survey on DIF Target based on December 2014 cut-off

5


57

7 0

10

20

30

40

50

60

IADI Members Non-IADI Members

6

Total DIA Respondents: 64


7

1

13

4

17

3

12

3

4

0

2

4

6

8

10

12

14

16

18

Africa Asia-Pacific Caribbean Europe Eurasia Latin

America

MENA North

America

Regional Distribution (IADI Member Respondents)


8

Total IADI Members vs. IADI Member Respondents

6

15

4

25

5

14

6

4

1

13

4

17

3

12

3 4

0

5

10

15

20

25

30

Total

Respondents


9

Type of Deposit Insurance System

33

21

6

3

1

0 5 10 15 20 25 30 35

Government- legislated and administered

Government- legislated and Privately Administered

Other

Privately Administered

Central Bank Administered


10

Legal Structure

48

1 3 4 3 5 0

5

10

15

20

25

30

35

40

45

50

Independent Within

Central Bank

Within Bank

Supervisor

Within Bank

associations

Within

Ministry ofFinance

Other


11

Mandate

0

5

10

15

20

25

30

Paybox Pay-box plus Loss minimizerRisk minimizer

(40.6%)

(35.9%)

(10.9%) (12.5%)


12

Type of Funding

Ex-ante 55

Ex-post 5

Other 4


13

Method of Premium Assessment

32

17

9 6

0

5

10

15

20

25

30

35

Flat rate Differential rate Combination Other

(50%)

(14.1%)

(26.6%)

(9.4%)

DIFTR Survey Results: Data Adjustments

14

1. DIAs indicating target fund as both amount and ratio were classified having ratios as target

2. Adjustments for consistency of some DIA replies to follow-up questions.

3. Reclassification of some responses under “Other” to appropriate categories in the selection

Survey Results

With Target

Without Target

Total

IADI Member

36 21 57

Non-IADI Member

6 1 7

Total 42 22 64

15

36

6

21

1

0

5

10

15

20

25

30

35

40

IADI member Non-IADI member

With target Without target

DIF TARGETING AND FUNDING TYPE N

um

ber

of

Re

sp

on

se

s

42

18

4

Survey Results: DIAs with Target Fund

With Target Fund

Total

Amount 2

Ratio 40

TOTAL 42

17

21 13 5 1

Insured or covered Insurable or eligible Other No Answer

(33%) (13%) (53%) (3%)

Base of Ratio


18

How Target Fund Size is Set

0

5

10

15

20

25

30

Law

Governing bodyOther

28

13

1

67%

31%

(2%)

2%


19

Factors considered in Setting the Target Fund Size

0 10 20 30

Others

State of accounting & disclosureregime

Availability/accessibility ofemergency/ back-up funding

Financial system structure &characteristics

Prudential regulation/ supervision

Macroeconomic conditions

Legal framework


20

Method Used in Estimating the Target Fund Size

8

7

6

16

5

0

2

4

6

8

10

12

14

16

18

Based on historical

experience

Statistical risk-based

model/s

Both historical &

statistical

Others No Answer


21

Who Developed the Estimation Method?

17

11

5

1

8

0

2

4

6

8

10

12

14

16

18

DIA Outsourced/

DIA with

others/ 3rd

party

Directive/

Policy/ Law

Others not

specified

No Answer


22

With Time Frame to Achieve the Target

23

19

0

5

10

15

20

25

Yes No

55%

45%


23

On schedule Ahead of schedule

Not on schedule

15 (65%)

2 (9%)

6 (26%)

For those with Time Frame, Status of Achieving

the Target


24

Reasons cited by the 2 DIAs for achieving the

target fund ahead of schedule

• Higher premium collections than expected

• Higher income from investments than expected

• Lower resolution cost due to improved financial

condition of member institutions

• Improved regulatory environment


25

Reasons cited by the 6 DIAs for not achieving

the target fund on schedule

• Lower premium collections than expected

• Lower income from investments than expected

• Higher resolution cost due to deteriorating

financial condition of member institutions


26

Fund Sources

0

5

10

15

20

25

30

35

40

45

Premiums Income frominvestments

Recoveries Other - fines andpenalties

42 40

31

4


27

Fund Uses

0

20

40

Insurance

losses/

resolution

costs

Operational

expenses

Refund of

govt’s start-

up funding

Other

38 32

3 5


28

YES, 25 NO, 16

No Answer,1

Is the target fund subject to periodic review?

By whom? DIA, 23 Outsourced, 2

Annually, 15 Other, 9

No Answer,1

How often?

By whom?

TARGET FUND SIZE SETTING AND REVIEW

Nu

mb

er

of

Re

sp

on

se

s


30

Conditions that will trigger a review for DIAs not

conducting periodic review

Changes in macroeconomic environment, response to credit crisis

Increase in bank failure

Increase in guarantee/protection limit

EU Commission review

Review of mandates and powers

No trigger


31

3

1

1

1

13

15

18

Other-specified

Other-Not applicable

Repayment of initial "start-up" or "seed" funding fromgovernment

Refund/rebates to member banks

None

Suspension of premium collections

Reduction of premium rates

0 2 4 6 8 10 12 14 16 18 20

Policy Responses when Target Fund Size is

Reached


32

4

2

2

3

7

8

10

11

19

Other- specified

Other-not specified

Other-none

Other-borrowings

Grants

Capital injection or budget appropriation by thegovernment

Advance premium collection

Special premiums levied on insured institutions

Increase in premiums

0 2 4 6 8 10 12 14 16 18 20

Policy Actions to Fund DIF Shortfall against Target


33

Has there been a Change in the Target Fund Size?

Yes 16

No 25

No Answer 1

If yes, what triggered the change?

Some Responses:

Changes in macroeconomic environment

In response to credit crisis and international movement to higher targets

Recent comprehensive review / Review & enhancement of insurance reserves targeting framework / Result of periodic review

Increase in coverage/ guarantee amount / deposit protection limit

New DGS Directive

TARGET FUND SIZE REVIEW AND CHANGE N

um

ber

of

Re

sp

on

se

s


35

Has there been a Change in the Method of Estimation since

the Initial Adoption of a Target?

Yes 5

No 34

No Answer 3

If yes, what triggered the change?

Summary of Responses:

Changes in economic conditions & credit union systems

IADI guidance & best practice

Fine tuning of model, settings & assumptions

Legislation

Review/enhancement of targeting framework

Survey Results: DIAs without Target Fund

36

Time Frame to Set up Target Fund

Short-term 2

Medium-term 6

Long-term 0

To be determined 11

No Answer 2

No plan 1

Total 22

2

6

0

11

1

2

0

2

4

6

8

10

12

Findings/Conclusions (Preliminary)

37

1. Almost two-thirds of DIA respondents have target fund size, predominantly expressed in ratios.

70% of ex-ante funded DIAs have target fund size

2. Two-thirds of DIAs with target fund have legislated targets.

3. The primary considerations in setting DIF target size are:

DIAs’ mandate and powers Financial system structure & characteristics Prudential regulation/supervision Macro-economic conditions Availability & accessibility of backup funding


38

4. Half of DIAs with target fund use the following estimation methods:

Based on historical failure/loss experience Statistical risk-based models Combination of both

5. More than half of DIAs with fund target have a time frame set to achieve target.

Almost 75% on schedule in achieving target


39

6. Close to 60% of DIAs with fund target review their targets periodically.

Of those not conducting periodic review, 94% have legislated targets.

7. Almost two-thirds of DIAs with fund target have policy responses when target fund is reached.

8. Around one-third of DIA respondents without fund target have specific time frame to set up a target fund.

One-half have yet to determine time frame for set up.

Next Steps

40

1. Resolution on need to validate data adjustments made

2. Request respondents with incomplete or no answers to key questions to provide appropriate responses

3. Conduct more in-depth analysis of survey data

4. Documentation of outputs of the workshop to supplement case studies submitted by volunteer DIA subcommittee members

5. Preparation of research paper

41

Thank you

QUESTIONS ?

COMMENTS ?

42

DIF METHODOLOGY & DEVELOPER

Documents

Preliminary Results of Survey on DIF Target Ratio 1_Ma. Ana Carmela... · 2015. 6. 16. · 1 1 1 13 15 18 Other-specified Other-Not applicable Repayment of initial "start-up" or "seed"