Fitch sees Bulgarian banks among most vulnerable to new crisis in east Europe.

By bne IntelliNews October 22, 2010
Commercial banks in Romania, Hungary and Bulgaria are the most vulnerable in east Europe if the crisis is to reoccur, Michael Steinbarth, a senior director at Fitch, told Bloomberg in an interview. In those countries, the value of bad loans is high, the weak economic recovery hampers credit growth, and the bank asset quality is weak, Steinbarth added. The macroeconomic imbalances have a negative impact as well. Steinbarth considers the situation of the Romanian banks the worst in the region, followed by the lenders in Hungary and then in Bulgaria. In addition to the efforts of the banks in the region to roll over debt, the lenders in Bulgaria and Romania should fear from contagion effects from the debt crisis in Greece, as Greek banks control a considerable share of the bank assets in those two countries (some 30% in Bulgaria). Also, Bulgaria should bring its budget deficit level within the EU requirements. Fitch holds negative outlooks on 15 of the 44 banks it rates in the region, six of which are located in Bulgaria. The outlook actions take into account the unwinding of the credit growth, the share of the foreign currency debt in the balance sheets and the reliance on funding from parents' institutions. Steinbarth warned that non-performing loan ratios are likely to remain high this year, similarly to loan impairment charges, which however are to decrease in 2011. He recommended that foreign-currency lending should be pressed down in the future and stated that the credit expansion is unlikely to reach its pre-crisis levels. Steinbarth projected that eastern European countries have better growth perspectives than the more developed countries.

Read in IntelliNews Pro
Get IntelliNews Pro

Related Articles

EC urges Bulgaria to comply with EU rules on free movement of capital.

The EC has sent a reasoned opinion to Bulgaria over failure to comply with EU rules on the free movement of capital, the EC said on its website. The privatisation act in Bulgaria introduces ... more

Govt seeks delay of antitrust rules violation procedure against Bulgaria.

Bulgaria will be seeking an extension of the court procedure filed by the EC against the country over irregularities found in the assignment of digital broadcast spectrum, transport minister ... more

Bulgarians hold EUR 100mn in deposits in Cyprus.

Bulgarian individuals and companies hold EUR 100mn in Cypriot banks according to ECB data, BTA reported quoting Reuters. The largest EU depositors in the crisis-hit country are Greece with EUR ... more

Follow Us On

Most Read

  1. Iran vs Israel: Who is better equipped for war?
    6 days ago
  2. Saudi Arabia to scale back plans for Neom city
    9 days ago
  3. BREAKING: Iraq, Syria and Jordan close airspace amid Iranian strike on Israel
    6 days ago
  4. PANNIER: Caspian military drills that exclude Russia and Iran have some people in Moscow asking questions
    7 days ago
  5. Oil continues to flow to Israel via Turkey despite Erdogan’s vehement speeches on plight of Gaza
    5 months ago
  1. Russia could pay off its entire external debt tomorrow, in cash
    20 days ago
  2. Speculation swirls of “Men in Blue” in Crocus City Hall terrorist attack linked to FSB
    24 days ago
  3. Albanians campaign on social media to keep bus bridge created in freak accident
    1 year ago
  4. UBN: Russia could take the Baltic states in 48 hours
    29 days ago
  5. BRICS announce a blockchain-based payment system to create a common currency
    22 days ago

Reports

Dismiss