EC Sees CEE Economic Outlook Improving, Yet Challenges Persist

The European Commission, the International Monetary Fund, the European Bank for Reconstruction and Development, the European Investment Bank, the World Bank Group and the European Central Bank met Thursday with 15 systemically important EU-based parent banks of subsidiary lenders in the Central and Eastern Europe, fiscal authorities and central banks from Austria, Belgium, France, Germany, Greece, Italy, Sweden, Bosnia Herzegovina, Hungary, Latvia, Serbia, and Romania, the Commission said in a press release.

According to the release, another challenge would be to put in place policies to avoid future crises, while ensuring that recovery in the economy is supported by adequate supply of credit. Improvements in local regulatory frameworks, where necessary, will also help this process, the Commission added.

The participants took stock of crisis response and management in the context of the European Bank Coordination Initiative since the start of the crisis and discussed strategies to address jointly new emerging challenges.

The Commission said the banks, international financial institutions and policy makers will meet again during the annual meetings of the IMF and World Bank in Istanbul next month.

"Continued parent bank support has accompanied balance of payments support from the IMF and the European Union (about EUR52 billion to Hungary, Latvia, Romania, Serbia and Bosnia-Herzegovina) as well as from IBRD and bilateral donors," the release reads.

The support took the form of parent banks recapitalizing subsidiaries as needed and broadly maintaining exposures to countries, while bank groups have benefited from a stabilizing macroeconomic environment.

The parent banks of Romania's top nine lenders have signed early August bilateral agreements to keep exposure to Romania unchanged from March's level and maintain solvency rates above 10%.

The banks are Erste Group, Volksbank, Raiffeisen International, Societe Generale, UniCredit Group, EFG Eurobank, National Bank of Greece, Alpha Bank and Piraeus.

End March, the IMF representatives obtained the written agreement of the nine parent-banks of the main Romanian lenders which engaged not to withdraw their capital and to continue financing the Romanian economy.

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