November 17 (SeeNews) - Foreign bank funding to Central, Eastern and Southeastern Europe (CESEE) countries, excluding Russia and Turkey, rose in the second quarter of 2015 for the first time since 2011, a report issued by the Vienna Initiative on Tuesday showed.
The Vienna Initiative was established at the height of the global financial crisis of 2008/09 as a private-public sector platform to secure adequate capital and liquidity support by Western banking groups for their affiliates in CESEE. It was relaunched as 'Vienna 2' in January 2012 in response to renewed risks for the region from the Euro zone crisis.
Overall, funding for the group of 21 CESEE countries covered by the report shrunk by 0.3% of GDP in the second quarter, which was less than the 0.5% in the first quarter.
Excluding Russia and Turkey, which have recently undergone significant turbulence, exposure rose by 0.1% of GDP, driven by strong increases in Czech Republic and Poland. According to banks reporting to the Bank of International Settlements, inflows also increased in Estonia, Macedonia, and Moldova, but fell in the majority of countries, including Turkey and Russia (by 0.5% of GDP).
A split picture for credit growth continued across the region.
"A few Emerging European countries, such as the Czech Republic, Estonia, Macedonia, Poland and Turkey, are experiencing positive growth in credit to the private sector, including both non-financial corporations and households. In contrast, credit growth has remained weak or has contracted in the rest of the region. The strength of credit recovery is in part linked to the progress in the private sector balance sheet repair as reflected in asset quality of loans held by CESEE banks," the report said.