Western European lenders must consider their “systemic” role in the region’s eastern nations as the financial industry responds to recent crises, said Piroska Nagy, director of country strategy and policy at the European Bank for Reconstruction and Development.
Eastern Europe remains at risk of a credit squeeze as western lenders cut funds to meet capital rules even after the European Central Bank’s discount loans, the European Bank for Reconstruction and Development said.
A revival of the Vienna Initiative is needed because there must be a recognition that “there is still a coordination failure” between eastern and western Europe to tackle banking risks, said Piroska Nagy, director of country strategy and policy at the European Bank for Reconstruction and Development.
Bad debt in eastern Europe, already exceeding a third of all lending in several countries, will stay at high levels and cast a pall over hopes of restoring credit growth, according to the region’s leading bankers.
Europe’s new risk watchdog may push eastern nations to tighten rules on foreign-currency loans that threaten economic stability throughout the region after making the issue one of its top priorities, banking officials said.
Less than two weeks ago, French bookstores began carrying a campaign biography intended to boost the front-runner for next year’s presidential election. It was entitled “The Real Story of Dominique Strauss-Kahn .”
The European Bank for Reconstruction and Development, lenders and officials from across the continent are in talks for a second time in three years to prevent funds for eastern banking units from drying up.