Central, East Europe Needs ‘Firewall’ From Euro Debt Crisis, RenCap Says

http://www.bloomberg.com/news/2011-07-19/central-east-europe-needs-firewall-from-euro-debt-crisis-rencap-says.html?cmpid=

Southeast Europe, including Romania, Bulgaria and Serbia, is most at risk, because of its proximity to Greece, and an escalation of the crisis would hurt more western European banks, Erik Berglof, chief economist at the European Bank for Reconstruction and Development, said on July 14.

Greek Parents

Almost a third of Bulgaria’s banks and 17 percent of Romania’s are owned by Greek parents including Piraeus Bank SA, Alpha Bank SA and EFG Eurobank Ergasias SA. Greek lenders own 15 percent to 25 percent of the banks in the non-EU states of Macedonia, Serbia and Albania.

Romania, the largest Balkan country, is in a “strong fiscal position,” after making “tough” decisions to meetInternational Monetary Fund and EU demands, said Jennings, whose company is half-owned by Russian billionaire Mikhail Prokhorov. It has operations in Russia, Eastern Europe and the Commonwealth of Independent States.

Still, it needs to adopt further reform measures to ensure it is strong enough to survive, he said.
“If the fire spreads far enough and fast enough, what the markets will do, they will attack, and it will be devil take the hindmost,” he said “So it’s absolutely critical that Romania puts itself in a position where in a worst European case scenario it is a winner, not a loser.”