There’s an interesting round-up of Austria’s banking sector a couple days back in the FT, much of it devoted to how it barely survived the losses it ran up in CEE. It sure is tough to keep straight whether central Europe is being propped up by Vienna or the other way around. Consider: Ceska sporitelna had a bad year last year and only made CZK 15bn in profits. But what caught our eye was a different, broader issue. The paper quotes a certain Josef Christl as saying Ukraine’s difficulties called the whole Central European project into doubt…
And even Austrian banks that are not directly involved in Russia and Ukraine are quite likely to be affected by the conflict, says Josef Christl, a consultant and former executive director of the Austrian central bank (OeNB).
“One of the problems with the situation in Ukraine and Russia is that it calls into question the whole central and eastern European story, which is so important for the Austrian financial sector,” he says.
Europe as a whole may be downplaying the potential threat to its fragile recovery posed by the situation, but is it really correct to say CE’s future is in doubt?