Austria | Czech Republic

Banks battening down the hatches

Published on 11 October 2011 at 12:30

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Confronted with a euro crisis that is not going away, a leading Austrian bank has decided to act. "Erste Bank is getting ready for the euro crisis", leads Die Presse, explaining the reasons why the bank’s CEO, anticipating a write-down of Greek debt of up to 50 percent, doubts an early end to the crisis. Highly exposed in eastern Europe, the bank has consequently devalued its portfolio in Hungary and Romania; in doing so, its 800 million euros in declared profits have morphed into 800 millions in losses. On October 10 the bank’s share price tumbled by 9 percent, and the bank has announced that its pay-back of state aid provided in 2008 after the collapse of Lehman Brothers will have to wait another year at least. It is not Greece that is the problem, the Vienna daily stresses, but rather the bad credit situation in eastern Europe, “where dormant credits equal the GDP of Austria”. In the Czech Republic, “the Prague Stock Exchange has been hit again by the crisis,” leads Hospodářské noviny. The Prague business daily reports on how the decline of Erste Bank, the largest financial group in central and eastern Europe, has dragged several Czech securities into the red despite good results earlier this year.

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