For bankers in the Balkans, there was an unwelcome sense of déjà vu at the start of 2010. A year earlier, some economists had warned that the economic downturn stemming from events in the US would lead to a tidal wave of non-performing loans (NPLs) sweeping the immature banking markets of central and eastern Europe (CEE).
NPLs certainly rose in 2009, but they remained within manageable levels in almost all CEE countries. Then Greece unveiled a budget deficit that was double previous estimates, its sovereign bond spreads began to widen, and economists once again started speaking of collateral damage on the hinterland of the eurozone.
