9  The average cost of liabilities is the ratio of net interest expense to financial liabilities. 10  The risk-free interest rate benchmark. 10  (CoCos). A more diverse set of banks made such issuances last year, giving rise to greater cost dispersion.11 There was also a significant increase in unsecured debt issuances in 2021, in this case at a slightly higher cost than in 2020. Meanwhile, deposits at Spanish banks continued to grow in recent quarters, albeit at slower rates than a year earlier.12 After falling in 2020, the cost of capital rose in the first ten months of 2021,13 but then fell back again, to 8.1% at December 2021. This is below the sector return on equity (ROE) (10.5%), even without taking into account extraordinary items (9%).14 In the initial months of 2022, the cost of capital continued the downward pattern of late 2021 to stand at 6.8% at May, likewise below the ROE for 2022 Q1 of listed Spanish banks (11.7%). In terms of solvency, the common equity tier 1 ratio (CET1) of Spanish banks held relatively stable in 2021, after increasing in 2020.15 The CET1 ratios of the main European countries’ banks were also relatively stable, meaning that the Spanish banking industry, on average, remains in last place in terms of this solvency indicator. This difference owes largely to Spanish banks’ higher asset density, influenced by structural factors such as the more widespread use of the standardised approach to calculate asset risk weightings.
I do not wish to prescribe what you should talk about throughout this workshop, but I am hopeful that what I have mentioned above can form some discussion points in the deliberations of this workshop. It is also my desire that as you travel back to your respective countries, you would have learnt something you can implement to improve our respective financial systems. In conclusion, as financial markets become increasingly globalised, supervisory co-operation and harmonisation become increasingly important. Organisations such as MEFMI play an important role in developing capacity in the identified areas of macroeconomic and financial sector management. Ladies and gentlemen, Allow me to commend MEFMI which has been in the fore front of building sustainable capacity in financial supervision in the sub-region. It has shown the cause for fostering best practices, raising awareness and helping us to improve our processes especially in this area of financial stability in the region in general. Finally, I hope that you will find this workshop stimulating and that you will enjoy your stay in Zambia. With these remarks, I declare this workshop officially open. I Thank you. 2  BIS central bankers’ speeches