Ben Aris in Moscow -

Even before the dust from the crisis in Cyprus had settled, attention was turning to which European country is likely to crash next. Slovenia's name came up almost immediately because its banking sector is saddled with bad loans worth about 20% of annual GDP, but Ukraine, Belarus and Moldova also look increasingly shaky.

Slovenia's government, backed by European officials, have rushed to assure the rest of Europe that a good dose of reform plus and a restructuring at the banks would enable the country to cope. The size of the Slovenian bank sector is much smaller, only about 50% of GDP against the 800% in Cyprus, and Ljubljana insists it can come up with the financing necessary to keep the economy afloat.

The Organisation for Economic Co-operation and Development (OECD) is not so sure. It warned in a report in April that the government had "significantly" underestimated the level of bad loans and may be the next Eurozone country to ask for a bailout. The OECD says the stress tests that the central bank has already carried out were far too lenient and the central bank's refusal to publish the results is only adding to the uncertainty. The size of the bad debts hidden in bank balance sheets could be a lot bigger than that €7bn that the central bank is willing to 'fess up to.

The true situation should become clear over the next few months. The country on April 16 managed a successful treasury bond sale - selling €1.1bn, more than twice as much as hoped - which will get it over the debt hump in June. This has given the government a bit more confidence, and it mandated three international banks to start sounding out investors about another Eurobond, the sale of which would give the government even more of a financial buffer. However, analysts say the government needs to put more of a concrete reform plan together, which would help to convince investors that it is dealing with the root causes of the unfolding crisis there. "It's positive that Slovenia is able to sell T-bills, but I would be hesitant to lend them more money until they show progress on reforms, including privatisation and the bad debt situation," Sam Finkelstein, a bond fund manager at Goldman Sachs Asset Management, told Bloomberg.

So far the population is remaining calm. And that is important, as it is they who decide when any bank runs will start. A survey at the end of March found that 51% of Slovenes have less than €100,000 on their bank account and think deposits are safe.

A poor corner of Europe

The one name that is high on the list to suffer a banking crash has barely been mentioned - and that's because the small, backward and desperately poor Moldova rarely figures much in European affairs.

Back in the 1990s, the Russian authorities were desperate to raise revenues from taxes, but the country was bleeding cash to offshore banking havens. Thus the Central Bank of Russia blacklisted Latvia, Montenegro and Moldova, which were operating as little more than money chutes out of Russia. Latvia and Montenegro subsequently cleaned up their act to a certain extent, but Moldova continues to be a festering soar on the rump of the Russian banking system.

Several of Moldova's leading banks have already been caught up in money-laundering scandals involving Russian money. Embezzlement on a massive scale was uncovered at Moldova's state-owned savings bank, Banca de Economii a Moldovei (BEM), earlier this year and there is convincing evidence it was used to launder funds embezzled from the Russian budget in the so-called "Magnitsky case".

According to a leaked International Monetary Fund (IMF) report earlier this year, BEM is heading rapidly to insolvency as bad loans, most resulting from corruption and embezzlement, mount. Although BEM is only Moldova's sixth largest bank by assets, with around 13% of total deposits, it holds a key position in the country's banking system because of its monopoly on paying out pensions and other social payments, thanks to its majority state ownership and extensive network of branches, particularly those in villages where a majority of inhabitants live. BEM also holds the deposits of almost all public agencies and institutions, such as hospitals and schools, with a total of MDL707m (€43.65m) in insured deposits, while the state's deposit guarantee fund contains a total of only MDL134m, read the leaked IMF report.

The country's banking sector ratio of assets/GDP was a moderate 58.1% in 2012, although the system would quickly be overwhelmed if all the loose Russian money trying to escape from Cyprus headed to Chisinau. The tax regime is not as favourable as that of Latvia, but the system is so corrupt this is unlikely to be a major obstacle. Moldova has a double taxation treaty with Russia, dividends are taxed at 10-15%, but there are no taxes on interest or royalties. Corporate taxes are charged at 18%. It would be an ideal candidate for the new Cyprus, except it is not in the EU.

More than one way to bake a cake

Slovenia caught the headlines because of the similar problems to Cyprus that it has with its banking sector - the en vogue way to get into trouble this season. However, as Carmen Reinhart and Kenneth Rogoff showed in their book, "This Time is Different", there are many ways to bake a cake: banking crises are only symptoms of deeper underlying economic problems and at least two other Eastern European states are a lot closer to full-scale economic meltdowns than Slovenia is to having the banking variety.

The economic consultancy Capital Economics said in March that while most attention focused on the impact that the Cypriot bailout could have on Russian depositors, the deal thrashed out with the "troika" (European Commission, European Central Bank and IMF) could pose much bigger risks for Ukraine, which is already on the brink of a balance of payments crisis. "Tiny Cyprus is the main source of [foreign direct investment] into Ukraine, accounting for around 30% of the total. The introduction of capital controls in Cyprus risks disrupting these flows, which may ultimately affect business activity and hit vital capital inflows into Ukraine... Wider vulnerabilities mean that the Cypriot crisis may still be enough to tip Ukraine into a financial crisis of its own."

Ukraine is running out of money fast. At the start of April its international reserves fell to $24.7bn, or enough to pay for just over two and a half months of imports. This puts Ukraine well into the red zone, as it is not enough to ensure the stability of the currency, say economists.

Luckily for Ukraine interest rates around the world are near zero and international bond investors are desperately casting about to find yield of any kind. When Kyiv's latest talks to restart its stand-by agreement with the IMF failed on April 12, the finance ministry rushed out a $1.25bn, 10-year Eurobond the same day, which has staved off disaster again - for now. However, with the economy slowing, tax revenues falling and government paralysed by infighting, the prospects for Ukraine's recovery are not good.

Belarus is in the same leaky boat. The country needs $3.1bn to repay its earlier loans and sovereign Eurobonds coming due, which is a lot given that foreign exchange reserves stood at just $8.1bn in April. The Eurasian Development Bank was due to pay out the next tranche of $440m from its anti-crisis fund in April, but Russia has been dragging its heels on another $2bn loan that Minsk desperately needs.

The World Bank arrived in Minsk in April to restart talks about financing options, and the government has tried to start negotiations on a new bail-out programme with the IMF, but so far without success. The IMF says any new programme would depend on the degree to which the government is committed to structural reforms like privatisation - something President Alexander Lukashenko's administration appears unwilling to commit to. Thus no one is seriously expecting the World Bank or the IMF to come to Minsk's rescue, leaving borrowing on the international market as the only real option left.

Like Kyiv, Minsk is pinning its hopes on issuing another Eurobond. In other words, it remains extremely vulnerable to international sentiment, and both countries are sailing very close to the wind, according to Moody's Investors Service. "There are no external liquidity constraints among investment-grade countries [in the CIS]... but [the situation is] critical in B-rated countries, in particular in Belarus and Ukraine... Belarus and Ukraine face a high risk of a multi-notch downgrade, which is mainly related to external liquidity shortages," the agency said in a recent report.