Bulgaria, Romania most at risk from Greece, warns Morgan Stanley

Bulgaria and Romania are among countries “most at risk” from potential spillovers from Greece, whose banks have invested in Central and Eastern Europe, according to Morgan Stanley.

“Greek banks will seek to move away from the external funding model for their emerging Europe subsidiaries, and try to grow the local deposit base faster than loans, to reduce leverage; in the extreme, they may refrain from making fresh loans for a while,” Morgan Stanley wrote in a recent report.

“As a result, CEE economies which are under-leveraged already may suffer from a severe shortage of credit, which derails the recovery. Bulgaria, and to a lesser extent Romania, look most at risk here.”

Anda Dragan

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