Bank delever­ag­ing slowed down in Eastern Europe

The Pak Banker - - FRONT PAGE -

The banks in Cen­tral, Eastern and South­east­ern Europe (CESEE) re­duced the pace of delever­ag­ing in the first quar­ter of 2015 com­pared with the pre­vi­ous quar­ter, and the re­lated cap­i­tal out­flows mod­er­ated. Credit growth con­tin­ued to di­verge across the CESEE re­gion, ac­cord­ing to the latest re­port from the Vi­enna Ini­tia­tive Steer­ing Com­mit­tee. Banks re­port­ing to the Bank for In­ter­na­tional Set­tle­ments (BIS) re­duced their ex­po­sure to the re­gion by 0.3 per­cent of GDP in the first quar­ter of 2015, fol­low­ing a 0.7 per­cent re­duc­tion in the fourth quar­ter of 2014. Ex­clud­ing Rus­sia and Tur­key, the fall in ex­po­sure in the first quar­ter of 2015 was also 0.3 per­cent of GDP.

BIS re­port­ing banks low­ered their ex­po­sure in about half of the coun­tries in the re­gion, mostly to­ward South­east­ern Europe and the Com­mon­wealth of In­de­pen­dent States. They in­creased or main­tained their ex­po­sure else­where.

In line with de­vel­op­ments in the BIS banks' ex­ter­nal po­si­tions, over­all net cap­i­tal out­flows from the re­gion mod­er­ated in the first quar­ter of 2015 rel­a­tive to the pre­vi­ous quar­ter.

Credit growth re­mained un­even across CESEE coun­tries, re­flect­ing dif­fer­ences in growth prospects and dif­fer­ent de­grees of cor­po­rate bal­ance sheet re­pair. While eco­nomic re­cov­ery con­tin­ues in many coun­tries in the re­gion, in about half of the coun­tries out­put re­cov­ery is ac­com­pa­nied by con­tin­ued con­trac­tion or stag­na­tion of credit to the pri­vate sec­tor.

The CESEE Delever­ag­ing and Credit Mon­i­tor is pre­pared by the staff of in­ter­na­tional fi­nan­cial in­sti­tu­tions tak­ing part in the Vi­enna Ini­tia­tive's Steer­ing Com­mit­tee. It is based on the BIS's In­ter­na­tional Bank­ing Sta­tis­tics pub­lished to­day.

The Vi­enna Ini­tia­tive was es­tab­lished at the height of the global fi­nan­cial cri­sis of 2008/09 as a pri­vate-public sec­tor plat­form to se­cure ad­e­quate cap­i­tal and liq­uid­ity sup­port by Western bank­ing groups for their af­fil­i­ates in Cen­tral, Eastern, and South Eastern Europe (CESEE). It was re­launched as "Vi­enna 2" in Jan­uary 2012 in re­sponse to re­newed risks for the re­gion from the Euro zone cri­sis.

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