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Briefing

Central Europe: Banking Sectors

Critical Issues

Background:

The Czech Republic, Hungary and Poland all have relatively low credit penetration, with credit-to-GDP ratios in the 40% to 60% range as of 2010, which suggests room for continued loan growth. Western European parent banks dominate Central Europe's banking sectors via subsidiaries.
These banking sectors are relatively well-capitalized. Meanwhile, banks in Hungary and Poland are heavily dependent on wholesale or parent bank funding, as evidenced by average loan-to-deposit ratios over 100%, and the global finance crisis that has exposed this as a structural vulnerability.

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Associated Readings

Analysis Commerzbank Barbara Nestor Aug 13, 2010 EM Country Briefing: Eastern Europe: Are banks ready to support growth?