VIENNA, Nov 23 (Reuters) - Market concerns about the exposure of Austrian banks to emerging Europe and the risk this could pose to the country’s triple-A rating are “wildly exaggerated”, the head of the country’s central bank told a newspaper.
Ewald Nowotny said Austrian lenders operate on a “traditional model” in central and eastern Europe (CEE) with a higher proportion of loans to the real economy compared to other European banks in the region, the Financial Times said.
Austrian banks also have little exposure to southern European economies, he said.
“I would prefer to have an Austrian bank financing a building in Prague than financing a building in Costa Brava,” he told the paper in comments published on Wednesday.
He said new regulations under which Austrian banks need to link CEE lending to local refinancing capacity and build up an extra capital buffer by 2016 would not limit their growth in core markets.
“This is not a limitation on growth, it is a limitation on risk. In countries where they have a stable funding situation, there is no limitation to growth,” Nowotny said.
Austrian officials have sought to persuade financial markets and debt ratings agencies that the country deserves to keep its AAA rating, which has come under the microscope as the euro zone debt crisis has worsened.
The government announced plans last week to introduce a constitutional debt brake to get a firmer grip on public finances and its finance minister expressed confidence the country would hold on to the rating after encouraging discussions with credit agency Moody’s.
“(The talks) went very well, there is no change to the status quo, namely the triple-A,” Maria Fekter told reporters on Tuesday before a cabinet meeting.
Nowotny also said contagion from the euro zone debt crisis was unlikely to lead to a crisis in eastern Europe as deep as during 2008-2009, the FT said. (Reporting by Sylvia Westall; Editing by John Stonestreet)