Bank deleveraging in euro zone worrying for CEE, says Simor

London, May 17 (MTI) – There is not a region in the world that depends more on euro-zone banks than central and eastern Europe (CEE), and one of the reasons for heightened concern is the possible effects on the region due to a process of deleveraging taking place in Europe, the governor of Hungary’s central bank told a conference on Thursday.

Speaking at an event ahead of Friday’s assembly of the European Bank for Reconstruction and Development (EBRD), Andras Simor said that owner banks, when under pressure to repair their balance sheets and reduce lending, rank assets accordingly. Subsidiaries in the CEE region are in a “relatively prominent place” on the downscaling list, especially since reducing lending in a bank’s own country is “politically less comfortable”, he said.


While the European financial sector has received a large amount of public money since the start of the crisis, and the politicians of the mother country are also concerned about the potential for a domestic credit crunch, political considerations could have a big influence on owner banks, he said. It is for this reason that worries are growing that the asset side of balance-sheet adjustments are disproportionately high in the CEE region, Simor said.

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