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Greek foreign claims on CEE

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Autor: Bancherul.ro
2011-06-27 10:32

In recent weeks contagion fears from Greece to Eastern Europe have resurfaced. There are three main contagion channels which could be looked at: First, contagion via reduced bank lending from Greek parent banks, second, contagion via reduced exports to Greece and third, contagion via foreign investors selling their portfolio equity and debt holdings given a general increase in risk aversion, according to Deutsche Bank analysts.

The chart visualises the first contagion channel, which is very relevant for Eastern Europe given the strong presence of Greek banks in South-Eastern Europe. The chart shows that after Cyprus, Bulgaria and Macedonia would suffer most from the potential withdrawal of Greek parent banks, as foreign claims by Greek (parent) banks account for 28% of GDP, in the case of Bulgaria. These foreign claims of Greek banks not only consist of cross-border lending of Greek banks to their subsidiaries but also domestic lending of those subsidiaries in the respective country.

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