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Bulgaria and Romania are among countries "most at risk" from potential instability in from Greece after banks invested in central and eastern Europe, according to Morgan Stanley.
"Greek banks will try 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 even refrain from lending for a time," the report by Morgan Stanley states. The analysts of the American bank added that the economies of Central and Eastern European countries which are already under-leveraged may suffer from a severe shortage of credit, which would hinder their recovery. Bulgaria, and to a lesser degree Romania, seem to be the most exposed."
• Dragoş Cabat: "Greek banks may face issues all over the place"
Dragoş Cabat, the president of the Association of Romanian Financial Analysts (CFA Romania), says that Greek banks may have troubles in other countries where they have open branches, not just at home. They may also shrink their operations. He said that the situation of Greece, will have a significant impact on the Romanian market, since there is a significant number of Greek banks operating in Romania, and they own a significant share of the assets of the Romanian banking system.
He said that he expects pressure on other vulnerable European countries, such as Portugal, Spain, Ireland: "They may suffer in the coming period, but Romania"s economy won"t be hit as badly", Mr. Cabat added.
Daniel Daianu, former Finance minister, said that so far, banks that had exposure on Romania did not withdraw their funds: "Banks will remain passive, they won"t resume lending, but lending in Romania does not depend on the Greek banks. Greek banks have a greater exposure in Bulgaria than they do in Romania".
The former minister also said that Greece will be helped to overcome its current situation, to avoid contagion in the Eurozone.
On the other hand, the chairman of the CFA, Dragoş Cabat, feels that if problems spread to Austria, Romania will face major problems, since Greece and Austria own the bulk of Romanian banks. The main Austrian banks present in Romania are Erste Bank, Raiffeisen Bank and Volksbank.
The major Greek are also present in Romania: National Bank of Greece (NBG), which is the majority shareholder of Banca Românească, EFG Eurobank, which controls Bancpost, Alpha Bank, Piraeus Bank and ATE Bank (formerly Mindbank).
• EU asks Greece to reveal its swap agreements
European Union regulators gave Greece until the end of the month to disclose details of currency swaps it used to conceal its public debt, the spokesperson of the European Commission, Amadeu Altafaj said.
"The existence of the swap agreements, reviewed by the Greek Ministry of Finance in Greece in a report of February 1st, has also raised questions about transactions with investment banks, more specifically on whether they helped Greece conceal the truth about the true state of its finances", said Amadeu Altafaj.
• Germany doesn"t want a European fund for Greece
German officials reject the idea of creating a special European fund for aiding Greece.
The spokesperson of the German Ministry of Finance, Michael Offer, said: "It doesn"t seem that such a fund would solve Greece"s issues". Offer said that there is no way around the tough austerity measures that the government in Athens will be required to take.
Michael Offer also said that Greece needs to lower its budget deficit by four percent this year, from its 12.7% level in 2009.
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