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text sizeBulgaria and Romania Most at Risk from Greece
Morgan Stanley
Bulgaria and Romania are among countries "most at risk" from potential spillovers from Greece after banks invested in central and eastern Europe, according to Morgan Stanley.
"Greek banks will seek to move away from the external funding model for their emerging Europe subsidiaries, and try to grow the local deposit base faster than loans, to reduce leverage; in the extreme, they may refrain from making fresh loans for a while," Morgan Stanley wrote in a report dated today. "As a result, CEE economies which are under-leveraged already may suffer from a severe shortage of credit, which derails the recovery. Bulgaria, and to a lesser extent Romania, look most at risk here," the crediting agency writes.
Bulgaria's United Bulgarian Bank is 100 percent owned by the National Bank of Greece, while Greece's EFG Eurobank owns Bulgaria's Post Bank that merged with DZI Bank some years ago. Also, Greece's Piraeus Bank, Alpha Bank, and Emporiki bank also have offices in Bulgaria.
Bulgaria and Romania are among countries "most at risk" from potential spillovers from Greece after banks invested in central and eastern Europe, according to Morgan Stanley.
"Greek banks will seek to move away from the external funding model for their emerging Europe subsidiaries, and try to grow the local deposit base faster than loans, to reduce leverage; in the extreme, they may refrain from making fresh loans for a while," Morgan Stanley wrote in a report dated today. "As a result, CEE economies which are under-leveraged already may suffer from a severe shortage of credit, which derails the recovery. Bulgaria, and to a lesser extent Romania, look most at risk here," the crediting agency writes.
Bulgaria's United Bulgarian Bank is 100 percent owned by the National Bank of Greece, while Greece's EFG Eurobank owns Bulgaria's Post Bank that merged with DZI Bank some years ago. Also, Greece's Piraeus Bank, Alpha Bank, and Emporiki bank also have offices in Bulgaria.
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