EIB vice president warns against contagion of Greek exit to South Eastern Europe ->
has increased risks for Bulgarian banks with respect to the provision of liquidity and capital."
Romania has the second largest exposure to the problems of the Greek banking sector. At the end of 2011, Greek banks held 13.3 percent of Romania's banking sector assets, according to Unicredit Group's estimates.
In an extreme scenario of strong pressure in Greek banking system, there could be an acceleration of the deleveraging process in Romania, said Dan Bucsa, senior economist at Unicredit Tiriac Bank.
However, he added, "we don't expect a rapid drawdown of capital, since 70 percent of lines extended by Greek to local subsidiaries have maturities longer than one year and liquid assets are limited to less than 2 billion euros."
But if Greek banks are in a hurry to sell their liquid assets that would also affect the yields, warned Bucsa, adding that "the biggest two local banks with Greek capital held some 0.6 billion euros in Romanian government bonds in March 2012."
Elsewhere in the region, Serbia is now struggling to reach an agreement with IMF, which may act as a buffer to contagion troubles, since Greek banks have lent over 18.5 percent of Serbian GDP to local entities.
Tiny Albania is related to Greece and Italy not only via banking sector, but also through its remittances which provide an important source to feed the country's current account.
Last year Albanians workers sent back home more than 830 million euro, less than in previous years. Italy and Greece are the main commercial partners for Albania, amounting up to 70 percent of total merchandise trade by volume, so the economy could be affected by problems in peripheral eurozone.there is more
LONDON--The spread of bad loans because of Greece's long-running recession threatens the viability of the country's financial system and jeopardizes the already slim chances of success for the country's second bailout deal, senior Greek bankers warned.
Senior banking officials in the euro zone's most troubled country say that they are now labeling as bad 20% of their loans to the domestic economy, as the recession and successive waves of budget cuts deprive companies and households of the means to repay their loans. there is more