If you haven’t seen the recent Fitch report, or FT reporting around it, it’s probably a good one NOT to miss. To be honest, it sort of sums up the mood at MAPIC this year, was that the banks have suddenly seemed to to have gone missing. Privately, investors and developers in CEE are complaining that banks are pulling out of deals at frustratingly late stages. Eurohypo, of course, announced it would end new lending except for Germany and Poland. It was tempting to hope that would be restricted to real estate mortgage banks, but you get the feeling this goes just a bit deeper.
Anyway, back to the post on the FT’s blog:
Once upon a time foreign ownership of domestic banking sectors was deemed a “rating strength” in central and eastern Europe.
Before the financial crisis, foreign banks had demonstrated their willingness and ability to support their subsidiaries, according to Fitch associate director Michele Napolitano. But those days are now long gone.
As FT Alphaville has already noted, foreign bank ownership, if the owners are from western Europe, usually only means one thing today: deleveraging. That’s bad news considering the scale of foreign participation in the CEE region
In fact, while the article does a good job of trying to scare you, it’s not as black as you’d expect if you read the whole thing. But the bit about the pressure on Austrian banks was unwelcome:
Austrian bank supervisors have instructed the country’s banks to limit future lending in their east European subsidiaries, a further sign of the potential knock-on effects of the eurozone crisis for economies around the world.
The restrictions come as Austrian officials seek to defend the country’s AAA credit rating, amid concerns that the government might have to bail out its banks because of losses in central and eastern Europe, where they are the biggest lenders, and their exposure to Italy.
The moves by Austria, which appear to be unilateral, show how even the eurozone’s strongest economies are feeling the pressure of the sovereign debt crisis.
More on this — obviously — to come.