Countries in central and eastern Europe are being split in terms of their economic outlook, with Russia in deep recession but other countries benefiting from the low oil price.
Latest articles from Central & Eastern Europe
For years, Austrian lenders Erste Bank and Raiffeisen Bank have enjoyed strong profits at their central and eastern European operations, but with growth in these economies slowing, more recent results suggest that they may need to rethink their strategies in the region.
While the rapid devaluation of the rouble may have slowed, top Russian banks are still exposed to US dollar-denominated loans.
Central and eastern European banks in the EU faced a sluggish 2013, but Poland led the region in terms of growth and the Czech Republic in terms of returns. Baltic banks are also starting to rise to the challenge.
Russia’s central bank governor, Elvira Nabiullina, talks to The Banker about what is being done to address the inflation and devaluation of the rouble and the tools she is using to fortify the country’s economy against external shocks.
The stand-off between Russia and Ukraine, and the subsequent sanctions imposed on Russia and fall in the value of its currency, has negatively impacted upon the economies of almost all former Soviet republics. In Georgia, however, the country's banks are faring well, in no small part because of the central bank's conservative approach.
With the six-month drop in the global oil price stinging the Russian economy, it looked as if the country's government would introduce reforms to protect it against future shocks. But with prices on the brink of a recovery, this positive momentum towards change is in danger of being lost.
Banks in Russia are feeling the force of Western sanctions, with funds from international capital markets slowing and deposits experience a lull, but some institutions are finding ways to maintain commercial relationships with foreign investors.
Budapest is the new top financial services investment destination in central and eastern Europe, while Moscow retains its crown as the largest international financial centre for outward investment.
Global Risk Regulator
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