The Greek crisis will most certainly affect Romania and Bulgaria, with the first signs already there, as Greek banks have slowed down lending to their subsidiaries, according to a report from Japanese bank Nomura, quoted on the Financial Times Alphaville blog in the post 'Old Greek bank risk in New Europe, again'.

According to Nomura, the Romanian subsidiaries of the Greek banks are already financing their mother banks, which could trigger the Bucharest authorities access the money from the cautionary agreement with the International Monetary Fund (IMF).

Greek banks National Bank of Greece, EFG Eurobank, Alpha Bank, Piraeus Bank, ATEBank and Emporiki are active on the Romanian market.

Nomura reminds of the Vienna Initiative in 2009, which stated that mother companies support their subsidiaries without withdrawing any capital, which is no longer the case for Greek banks. This was favored by the relatively good liquidity that Greek banks have in Romania, according to the article.

The high level of loans granted by the Greek banks' subsidiaries in Romania was one of the reasons for the relatively solid position of the Romanian currency lately, according to the Nomura report.

The Japanese bank sees six scenarios, with the most pessimistic being a default for Greek banks, lack of support for local subsidiaries and an urgent sale of Eastern European assets. Even if the Greek banks would be nationalized, the Greek Government would not be interested in supporting the Romania and Bulgarian subsidiaries, according to Nomura.

In another scenario, if Greek banks stop supporting their local subsidiaries, the European Bank for Reconstruction and Development (EBRD) and the local Government would need to either nationalize the Greek banks' subsidiaries, or consolidate them.

More on FT's blog Alphaville.

editor@romania-insider.com

(Photo source: Sxc.hu)