Banking Sector: Real Sector Deterioration Is The Key Risk Now

The immediate crisis risks facing the Central and Eastern European (CEE) banking sector in Q408 have subsided markedly through H109, with the stabilisation of global credit markets mitigating the risks of capital flight in the short term. That said, our core view is that the crisis risks have only evolved, not dissipated. The real sector impacts of the global financial crisis in 2008 are expected to play out through 2009, and this will add considerable pressures to asset quality across CEE banking systems. Moreover, we continue to highlight expectations of prolonged macroeconomic instability in the Baltics, Bulgaria and Ukraine as cause for concern for contagion effects across the region.

To read the full article, please choose one of the following options: