Forbes: Economic Crisis Fears Overblown In Eastern Europe - by Parmy Olsen

Economic Crisis Fears Overblown In Eastern Europe - by Parmy Olsen

With the way Eastern European currencies and bank shares have dropped this week, it seems as if investors are expecting a full-blown financial crisis to hit the region and that Western European banks that had established themselves there are going to cut and run. Is such a nasty form of economic decoupling set to happen? The answer is no - "We really don't know what's going to be the peak cycle loan-loss charge," said Pedro Fonseca of Keefe, Bruyette & Woods. "A lot of these foreign banks have made a lot of money in this region. They are not going to exit these markets, which hold a lot more promise than at home," he added. "What you will see is more careful lending." BNP Paribas has started trimming back operations in Ukraine and refocusing its efforts on collecting loans. (See "BNP Stung By Ukraine.")