LONDON Jan 24 Western banks withdrew money from
emerging Europe at a slower pace in the third quarter of 2012
than in the second due to better financial conditions, a survey
found on Thursday.
Figures from the Vienna Initiative group of multilateral
lenders showed that bank withdrawals from the continent's
central and eastern region were equivalent to 0.5 percent of its
That figure fell to less than 0.1 percent including
investments in Russia and Turkey, though there are signs the
picture may have clouded since then as some western banks
battling persistently tough market conditions closer to home
look to repatriate assets.
The Deputy Chairman of Russia's central bank, Mikhail
Sukhov, said in Tula, Russia on Thursday that some foreign banks
might be preparing to exit Russia because of low profitability.
The Vienna Initiative said in its latest 'Deleveraging
Monitor' that the slowdown of deleveraging in the third quarter
likely reflected "improved financing conditions for cross-border
banking groups based in Western Europe".
It cited action by the European Central Bank last year to
keep a lid on the euro zone crisis.
Deleveraging amounted to 0.2 percent of GDP for the broader
emerging European region in each of the preceding two quarters,
the Vienna Initiative added.
Spearheaded by the European Bank for Reconstruction and
Development, the Vienna Initiative also incorporates the
European Investment Bank and the World Bank and aims to prevent
the disorderly withdrawal of bank funding from emerging Europe.
The three multilateral lenders launched a 30 billion euro
joint action plan for the region in November.
Central and eastern Europe has lost foreign bank funding
totalling 3.2 percent of GDP in the 12 months to the end of the
third quarter of last year, the group said.
There were losses of more than 5 percent of GDP for
Bulgaria, Croatia, Hungary, Latvia, Lithuania, Slovenia and
Serbia in that period.
Credit growth was also muted, the Vienna Initiative added,
with private sector credit growing by only 1.4 percent in
central and eastern Europe in the 12 months to Sept 2012.
The Vienna Initiative's steering committee also said in a
statement that it had formed a working group on European banking
The EBRD has previously said that European banking union
should be fully open to non-euro zone countries in emerging
Europe, enabling them to access bank bail-out funds.
(Reporting by Carolyn Cohn; Editing by John Stonestreet)