have retreated. first, they have increased their lending to the region significantly. in 2007, asian banks accounted for just a third of all international claims 1 to the region. today, they account for more than 60 % of non - local lending to the region2. this increase comes on the back of a decline in lending by euro - area banks – over the same period, their share decreased from around a third to less than 15 % as they pulled back from the region. second, asian banks have been acquiring the asian business lines from global banks, especially in wealth management. in 2013, sumitomo mitsui banking corporation bought over socgen ’ s japanese private banking arm. and just late last year, ocbc bank acquired barclays ’ wealth and investment management business in singapore and hong kong. even as asian banks push for growth, they continue to maintain high prudential standards. the average tier 1 capital ratio of asian banks was 13. 4 % as of last year, up from 10. 6 % in 2008 and comfortably above the basel minimum requirement of 6 %. key asian jurisdictions who are members of the financial stability board – including china, japan, indonesia, korea, hong kong and singapore – have been assessed to be compliant or largely compliant with the basel committee ’ s capital and liquidity standards. several other asian countries – malaysia, philippines and thailand – have also implemented the basel iii rules. asian banks are dealing with cyclical headwinds the major asian banks ’ sound prudential standards position them well to face the challenges in the current environment – ranging from geopolitical risks to heightened policy uncertainty in the advanced economies. the post - crisis operating environment has been difficult for banks around the world. european bank profitability remains depressed seven years after the global financial crisis, with return on equity or roe averaging below 3 %. asian banks have also not been spared, though they have done better. the roe of asian banks has been declining in recent years, and is currently hovering around 8 %. a recent study3 by mas found that three cyclical factors have driven the decline in asian bank profitability. first, weaker global economic growth has affected credit demand in the region, leading to slower loan growth. second, prolonged accommodative monetary policy in the advanced economies has compressed domestic interest rate spreads in asia. this has reduced banks ’ interest income. third, asset quality has declined, as non - performing loans ( npls ) have risen in many regional economies

timetable ”. it is therefore essential that a suitable mechanism is in place to ensure that the required supervisory or regulatory actions are implemented in an effective and timely manner. no reflection on the appropriate macro - prudential framework for europe would be complete without due consideration of its international dimension. this global financial crisis has underscored the importance of concerted policy responses globally. the early identification and assessment of risks and vulnerabilities, the issuance of risk warnings, and the adoption of the related macro - prudential policies should be key responsibilities in a reformed global framework for financial oversight, in which the imf and the fsf should play a key role, but all relevant parties, including the new eu macro - prudential supervisory body, should be closely involved. our european framework should fit in, and be compatible with the global approach to be adopted. iv. conclusion in conclusion, let me emphasise that the establishment of the proposed eu body responsible for macro - prudential supervision, the effective performance of its tasks, the efficient translation of its risk assessments and macro - prudential policy recommendations into appropriate policy measures will require addressing a number of legal, institutional and organisational issues. one such issue is the institutional relationship and fruitful collaboration between the european systemic risk council and the envisaged european system of financial supervision. we should all contribute to addressing these issues in a constructive and timely manner, for the strengthening of macro - prudential supervision in europe is an important and urgent policy objective. thank you very much for your attention.