SeeNews TOP 100 SEE 2012 - SEE Top 100 - SeeNews

TOP 100
banks
Bad loans in SEE seen peaking
in 2011-2012, Greece remains the
region’s sore spot
by Maria Russeva
While being monitored regularly
by central banks within wider
reviews on the fi nancial system
health, credit quality issues usually
take centre stage in times of
crisis, bringing along more rigorous
measures to contain the damage
and pre-empt future adversity
and stress.
The onset of the global fi nancial
crisis in late 2008 caused huge
disruptions across the board,
leaving few economies with little
or no bruises.
The fi nancial distress aff ected Southeast
Europe as well, but the level of risk to which
each of the 11 countries in the region was exposed
and the national response to the challenges
varied from state to state, depending
on both global trends and idiosyncratic features.
Most SEE countries experienced rapid lending
expansion in the fi ve years to 2008, a
trend that came to a sudden halt with the
fi nancial turmoil of 2008-2009. In the boom
years, banks in the region relied mostly on
wholesale funding and on short-term capital
fl ows from their foreign parents. In addition
to hurting lending and economic growth and
curbing investments, the fi nancial contagion
pushed SEE banks to seek funding through
26
local deposits and focus on cutting their elevated
loan-to-deposit ratios.
The sovereign debt crisis in the eurozone,
which intensifi ed in the autumn of 2011,
brought more gloom and fuelled fears of a
credit crunch spilling over to the east. The eurozone
crisis made some western European
banks with signifi cant presence in central
and eastern Europe (CEE) revise their country
growth strategies and limit their exposure
in the region amid regulatory pressure to
strengthen their capital.
The rise in non-performing loans (NPLs) was
another ill eff ect of the fi nancial crisis, signalling
more serious problems in countries with