UniCredit: Banks will not hinder economic rebound in the region

With a modest profit and a doubling weight of bad loans in the overall portfolio, the Romanian banking system has been among the hardest hit by the financial crisis that has engulfed the CEE region since the autumn of 2008, reads a survey by Italy's UniCredit group. Yet, Italian analysts are upbeat and believe that banks, most of them controlled by international groups, are keeping their lending capacity and will not hinder an economic rebound in the region. "The vulnerabilities of the banking sectors in CEE have played an important role during the crisis. A year after the shock, all of them survived, not untouched, but functional," says Marco Annunziata, chief-economist with UniCredit group. Though banks in the region, including those of Romania, did not have toxic assets on their balance sheets, the crisis caught them with a series of vulnerabilities. The main problems were generated by the high dependence on external funding. Another problem was the high weight of foreign currency loans.