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Mixed blessings of foreign ownership for Black Sea banks

Levels of foreign ownership vary widely among the banks of the eastern Black Sea countries. While foreign-owned banks went too far, too fast before the crisis, they may be more resilient than locally owned players in a downturn.
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Although there are growing economic ties among the countries of the Organisation of the Black Sea Economic Co-operation (BSEC), their banking sectors are at widely varying stages of development. The Banker has looked at five of the more eastern members of BSEC, namely Ukraine, Moldova and the three Caucasus countries of Armenia, Azerbaijan and Georgia.

Ukraine is by far the largest banking market among these countries, with Tier 1 capital accounting for 78% of the total. This is not so surprising, since its population is five times the size of the next largest country (Azerbaijan), while its gross domestic product (GDP) is almost eight times the size of Azerbaijan’s.

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