Page 260 - 2019 6th AFIS & ASMMA

pollution of the European Union for 40% of the entire pollution of the
Union, and 40 percent of the energy consumption of the Union. This
is very important information, because the European Union is trying
decoupling the GDP from energy consumption. So, the consumption
of the housing sector is contributing enormously to the strategy of the
European Union to reduce energy consumption and increase GDP.
What can be done by the mortgage sectors to help the European
Union to achieve this huge target? Well, we think that making every
single house of every single citizen in Europe more energy efficient can
help two things from a Basel point of view, from a prudential point of
view. Well first of all, we think that improving the quality of a house is
important, in a way the energy consumption of the house can improve
the loss, given default of every single asset in the balance sheet of the
banks. Because the loan to value of every single house will be improved,
in the next crisis, the balance sheet of our banks will be much more
resilient.
Moreover, we believe that the probability of default of a family will
be improved and the family will have better capacity to manage a
financial crisis and to avoid obliging the banks to enter default and then
to intervene. Now what I'm saying is extremely obvious from our point
of view, but as you know, not everyone believes that global warming is
impacting our world. Let's go back to the news and let's look also what
happened in the last two to three days. I wanted to mention the hurricane
hitting Bahamas and will hit very soon South Carolina. But I don't want
to make reference of bad events. I will just make reference to something
which struck me.
Let's have a look at what happened in the wine production in UK,
in the last two to three years. Wine production in England and Wales
increased to 15 million bottles per year. Only between 2017 and 2018,
they increased 5 million bottles. This is the result of the global warming.
The line of the global warming is going up very fast and they will start
to grow wine in Belgium, which is a challenge for the beer industry
in Belgium. But our UK friends will be very happy, because since
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November, they would not have to buy any more French wine, and they
can be happy with their English wine, without any problem. This is a
sign of the global warming that is impacting our economy, and is really Speech Keynote
impacting our way of behavior.
I was also surprised on Saturday night, when we were out with friends.
There was a daughter of our friends. She's a young teenager, she's 14,
and she told me, "I don't buy anything with plastic". And she showed me
the toothbrush in bamboo. So, this young teenager is buying bamboo or
wooden toothbrush. Our consumer of tomorrow, our young generation,
are very sensitive to this topic. So, the next client of your banks will
be much more green-aware than all your clients of today. So it's very
important that we have a view to the future, and improve our production
line as soon as possible, because we have to be aware that in a few years,
consumers or investors will ask us something different; maybe not in a
few years, but maybe in your next road show. And as lenders, we need
to be ready to make our case and build a prudential framework, which
will help us at the Basel Committee level, to digest this information of
improving LGD and probability of default in a completely new way.
And congratulation to the ESG deals that have been concluded here in
Korea, because I think this is an important source of development for
the European investor base. The attention to these parameters is very
clear in the market, and as an industry, we need to work together to
move on. The mortgage industry is a very important social lift, and we
are important to our politicians, as long as we continue to do our simple
business; provide a young family with the opportunity and resources to
buy a house and move forward.
The housing costs in Europe are quite an expensive element in the life
of every single citizen. We have tried to show you all different regions
that we have in Europe. The green line in the histogram is the poor in
Europe, and the blue line is considered the rich of every single country.
As you can see, in Europe, housing costs represent more than 40% on
average of the expenses of a family with some difficulties, and less than
20% of a family without difficulties. But in some countries, for example,
in Greece, it represents almost 80% of the spending of a family.
2019 6th AFIS & ASMMA Annual Meeting 263