Robert Ophèle: Micro economic analysis of companies
Introductory speech by Mr Robert Ophèle, Second Deputy Governor of the Bank of France,
at the Plenary Meeting of the European Committee of Central Balance Sheet Data Offices
(ECCBSO), Paris, 18-19 October 2012.
* * *
Mr President, Ladies and Gentlemen,
It is a great pleasure for me to welcome you in our new conference center. I am delighted to
receive so many distinguished participants to this meeting, coming from the same universe
of statistical institutions or central banks - whether they are members of the Eurosystem or
not - and sharing the same interest for micro economic analysis of companies.
We are very happy indeed to organise this year's ECCBSO regular meeting which will
enable you to discuss in depth about the past achievements of your task forces and the
prospects, drawing possibly some kind of action plans. Undoubtedly, we need to explore
further a number of those issues where your Committee is fully and often very
successfully involved. I am grateful that BDF can provide, in its turn, the opportunity
to host this conference. As you know, Banque de France is one of the co-founders of the
Committee and has always shown its commitment by actively contributing to these task
forces.
From my previous experiences, especially as head of the Directorate General Operations,
and presently also, as President of the French Banking and Insurance Supervisory
Authority, I measure what your contributions can provide in operational terms (risk
assessment) and also in terms of analysis (research, advice, BACH data base). The
works of your Committee, and so to say its affiliates, is useful and I would like to take the
opportunity of this plenary meeting to encourage you to keep the same stance. From the
perspective of a NCB, your contributions are important in so far they provide platforms
for exchanging our thoughts, our know-how and, last but not least, for exchanging data
within the Eurosystem but also with statistical institutions, witness in that regard is all what
is being done with the European Group Register managed by EUROSTAT and now
with the Committee for Monetary Financial and Balance of payment statistics.
Obviously, Balance sheet and Profit & Loss information, or more generally information on
non-financial companies, have a real bearing on our institutions in line with a twofold
objective: assessing individual companies and using aggregated company data to perform
macro economic analyses or researches.
First, it is important for micro-analyses in the assessment of individual companies
using classic ratio-based firm analysis methods. This can help us to evaluate our
collateral, or portfolios of banks if we are involved in banking supervision.
But for an NCB member of the Eurosystem, the micro analyses have a particular
importance within the European Credit Assessment Framework if it is recognised as an
In-house Credit Assessment System. Those NCBs which run an ICAS (currently
Austria, France, Germany and Spain) use balance sheet data for the assessment and
prediction of default risk under a set of precisely defined conditions. The ICAS statute is
demanding but it is worthwhile because it can play an important role for monetary policy
operations. For this purpose, we need to rely on a good methodology, commonly
agreed and depending to a large extent on an ability to deliver a sound and solid
assessment of non-financial companies. This helps NCBs to fulfil one of their core
functions, which is the refinancing of commercial banks and we experience that daily.
On this very important subject - the ability to assess credit risk of non financial
companies as offering a possibility to expand the amount of eligible collaterals - I took note
that several NCBs are about to join the four present ICAS: this is a signal of the
relevance of this mechanism to help the commercial banks to develop their loans
and, hence, support economic growth. Quite in line with this subject, I would like to
stress the quality of the work that has been done recently by the Working Group Risk
Assessment, to compare the various European central Banks' Internal Credit Risk
Assessment Systems: this is a very topical issue which is a good example of what
your Committee can bring to all of us.
Second, information on non-financial companies is important for analyses on a
macro level, e.g. by using aggregated company data to perform economic analyses or
stress testing experiments.
On a macro level, the analysis of the non-financial sector is essential both for
policymakers and for central banks. From a central bank's perspective, these analyses
help to ensure financial stability, e.g. through performing different kinds of economic
analyses and stress tests, the latter having gained dramatically in importance in the
course of the crisis.
The work performed by the working groups has thus several major fields of application. Be
it by trying to fathom new accounting standards, building databases, or working on the
model development and default definitions, the different working groups contribute greatly
to enhancing our models and procedures and also, more generally our micro economic
intelligence. Thus the publications of the different working groups, especially on the
ECCSBO website can play an important role in consolidating our knowledge but also
supporting works in other instances within all participating institutions and beyond, because
we can only gain in keeping an open mind.
From this point of view, as you know Banque de France has paid particular attention to the
continuation of the BACH database, since we were chosen to run it, two years ago, for the
common interest of the ECCBSO members and beyond. We are committed to keeping
it functioning properly, and encourage all initiatives to exploit all those interesting series of
aggregated ratios. Among the numerous researches that have been made with these
data, I would like to refer to the paper published by two economists from the ECB, Andra
Buca and Philip Vermeulen, last February, concerning "corporate investment and
bankdependant borrowers during the recent financial crisis". Here also at the Banque de
France, we publish several articles in our Bulletin extracting valuable piece of information
in the BACH data base.
Concerning your so-called WG 3, which focuses on IASB methodology and more generally
monitoring of listed groups, Banque de France is interested in the new cooperation
started last year with Eurostat. It will help to identify more precisely European groups'
structure and especially cross-border groups. But I understand that this TF is involved in
many other topics, of which works on a dedicated data base (ERICA) which can deliver
interesting results. There is a lot of work behind this and we can only hope to see those
valuable contributions to be well promoted.
The same is true for your Study group: you are about to release a seemingly very
attractive study on "net worth at risk" which aims at describing the ability of companies to
face an external financial shock, with a focus on recent years: it will certainly attract a lot of
attention when you publish this work.
As it is time to conclude, I would like first to confirm that BDF, a founding member of
the ECCSBO, is still very dedicated in all that is related with corporate analysis.
Your presence here today is certainly the expression of a commitment similar to our own
one; it is a good augur for your future works and an encouragement for our joint efforts to
be pursued.
Finally, I would like to thank personally President Manuel Ortega because I know all
what you do to keep the dynamics of this Committee. Many thanks also to all of you for
being here today, for your support and your participation in this meeting, because I have
no doubt that you will have fruitful debates. If I may, I would add a special thanks for my
colleagues from the Companies Directorate and for the protocol office, who deployed a lot
of efforts in organising this event for the better: without their help we wouldn't have been
able to meet at this venue.
Thank you for your attention.