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.

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

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Notice: Undefined index: subject_id in /var/www/html/application/controllers/IndexController.php on line 296
Dismiss