Banking crisis in Europe again

The world's leading credit rating agencies Moody's Investors Service recently issued a report warning that the risk of financial systems in Eastern Europe is intensifying, and the possibility of the spread of Western Europe. This warning triggered widespread European market investors worried about the banking shares dropped by the drag, on the 17th the three major stock market decline in Europe more than 2.4%. Fear the outside world, the European banking sector will suffer from the impact of a new round of Eastern Europe.

Moody's Investors Service report said, down sharply because of the economy do not change and lasting trend, coupled with the fragility of the macroeconomic aspects of existence, the current banking system in Eastern Europe is facing increasingly tough operating environment, the risk increased, as demonstrated by an increase in bad debts, banks borrowing costs rise and currency devaluation, which will lead to reduced profitability of banks and erosion of its capital funds.

Of particular concern is that the report believes that the risk of financial system in Eastern Europe may also be a negative impact on "spillover" to Western Europe, that is to say, will spread to Europe as a whole.

This is mainly because in recent years, including Credit Suisse Group and Societe Generale Bank (18.28, -0.77, -4.04%), including many in Western Europe to Eastern Europe to enter the large banks, such as through active investment and Eastern Europe formed the inter-bank inextricably linked, resulting in one loss will also be ruined, with all situation.

It is estimated that in Austria, Italy, France, Belgium, Germany and other euro-zone countries of central and eastern Europe, the bank owned up to claim the amount of 1.5 trillion U.S. dollars, equivalent to foreign banks in the region has a total debt of about 90%.

Analysts believe that banks in Eastern Europe scraped will endanger financial stability in the euro area, because once the banks are experiencing a serious problem in Eastern Europe, in Western Europe is bound to trigger a domino effect, leading to more European banks in this financial turmoil that originated in Eastern Europe in the inverted under.

In the early days of the EU's eastward enlargement, the Eastern European country had entered the economic fast track, fast-growing economy for the country won the European emerging economies, reputation, attracting Western European banks have introduced strategies east, Eastern Europe set off a "gold rush . "

However, in this process, the central and eastern Europe, there have been an overheated economy and signs of imbalance. When the financial crisis hit, the economic base of these countries have highlighted the vulnerability of exhaustive, on the one hand, foreign capital flight caused serious difficulties in financing, supporting economic growth on the other hand, exports also be a severe blow.

Recently, the Polish zloty, Czech koruna have seen substantial devaluations. So far, Hungary and Latvia and other countries have forced the country's economic predicament to the IMF is expected to Bulgaria, Romania, Lithuania and Estonia and other countries are also expected to follow suit. For financial institutions in Western Europe, Eastern Europe enormous risk exposure may signal a large bad debts.

Analysts also warned that Eastern European countries continued devaluation of the currency for the euro are like a time bomb, the euro will intensify the risk of instability.