Invest in Bulgaria - The Preferred Partner of Investors Seeking Opportunities in Bulgaria
Follow:
GUGUSHEV & PARTNERS is among the leaders on the Bulgarian legal market Comprehensive Organization of MBA and EMBA Study Trips in Bulgaria
NEWS BY TOPIC
FDI in Bulgaria (13)
Health (4)
Macroeconomic Data (49)
Business (361)
Investments (155)
Infrastructure (97)
Financial (126)
Economy (350)
Construction (14)
Politics (62)
Real Estate (27)
Interesting Facts (24)
Sports (10)
NEWS BY SECTOR
Software and Information Technology (28)
Real Estate (56)
Tourism (112)
Waste Management (9)
Automotive (23)
Electronics (3)
General (81)
Renewable Energy (66)
Agriculture (22)
Construction (90)
Food and Beverage (20)
Textile (2)

Subsidiaries in Bulgaria, Romania Fund Greek Parent Companies - Nomura
SUBSIDIARIES IN BULGARIA, ROMANIA FUND GREEK PARENT COMPANIES - NOMURA
Date: 24/06/2011
Source: novinite.com
Subsidiaries in Bulgaria, Romania Fund Greek Parent Companies - Nomura

Romanian and Bulgarian subsidiaries of Greek banks have been funding their parent companies in the local market, analysts at Nomura Research Institute have observed.

According to Joseph Cotterill from the Financial Times there are a lot of ironies here.

"Romanian and Bulgarian subsidiaries of Greek banks are pretty well capitalized but largely that's because their parent institutions supported their subsidiaries under the original Vienna Initiative, in 2009," he writes in an article in his FT blog.

"After all, these countries' property markets were set to tank at that point, and there have been lingering doubts on the region's private balance sheets ever since."

The share of Greek banks in the Bulgarian bank system is about 30%.

Nomura proposes six scenarios, in which the troubles in the Greek banking sector could turn into a problem for Bulgaria or Romania:

- A new Vienna Initiative: Despite an event in the Greek banking system those same banks are still required to maintain capital exposure into Emerging Europe. EBRD and EU provide support and other incentives to make this happen. Such a move however would be difficult and impose additional burdens on an already highly stressed Greek banking sector.

- Business slowdown (least bad outcome): Greek banks severely constrain lending in domestic subsidiaries as parent company funding crowds out domestic business. This is anti-growth for Romania and Bulgaria, though arguably it has already started to occur.

- Greek bank consolidation (bad outcome): Greek banks are forced to consolidate, perhaps into some form of good bank/bad bank set-up. Consolidation causes asset sales in Bulgaria and Romania. With limited foreign interest likely, government or domestic money would be needed, meaning net currency outflow. If a sale was not possible capital withdrawal would then be likely.

- Capital withdrawal (very bad outcome): Greek banks are forced to draw down capital from subsidiary banks to shore up their own balance sheets. The capital flight causes balance of payments stress (requiring reserve utilisation and in Romania's case potentially tapping the precautionary SBA).

- Subsidiary default threat (very bad outcome): Removal of parent company support causes domestic banks to default but EBRD and the Romanian/Bulgarian government step in and nationalise or cause consolidation within Romania to absorb the bank.

- Outright parent company default (worst outcome): Parent company support is removed, capital is withdrawn, there is a fire sale of Emerging Europe assets. (Even if Greek banks were nationalised or bailed out would the Greek government really want to support Romanian and Bulgarian subsidiaries?)


Topic: Business



Featured District
SMOLYAN DISTRICT AND CITY INFORMATIONSmolyan
Invest Bulgaria Charts
Gross External Debt of Bulgaria
Gross External Debt of Bulgaria

Gross Value Added of Bulgaria (million BGN)
Gross Value Added of Bulgaria (million BGN)

See all charts
Did You Know?
Bulgarians Abroad
Bulgarians Abroad
More than 100,000 Bulgarians live in Chicago ... More

The Razgrad municipality is situated along the valley of the Beli Lom River in the direction southeast - northwest, 60 km away from Rousse, 130 km away from Varna, 55 km away from Shoumen and 36 km away from Targovishte.

Intelligence Pathways - Outsource your Business, Competitive Intelligence or Back Office to Bulgaria

Bulgaria Translation - Full service Bulgarian Translation company

© Copyright 2004-2020 Invest Bulgaria Group Ltd, Sofia, Bulgaria. All rights reserved.

 
Please read Conditions of Use, Copyright Statement and Privacy Policy for this web page and web site.


SEO оптимизация Bulgaria Translation Bulgarian Agriculture Bulgarian Textile BestFlowers.bg Sofia Web Works Bulgarian Coins Intelligence Pathways Bulgarian Outsourcing

Crafted by Sofia Web Works. Maintained by Website Maintenance, the kings of Website Migration.


Our Featured Members