Lower credit activity region's "greatest problem"

BELGRADE The greatest problems of the banking sectors in the region are "the drop in credit activity and the high level of problematic loans." This is according to central bank governors from South Eastern Europe, who gathered in Belgrade. Lower credit activity region's "greatest problem" Governor of the central bank of Bosnia-Herzegovina Kemal Kozaric said at the international summit of governors, bankers and business people of the region that all the countries of Southeastern Europe were facing slow credit growth. Most banking groups find the region not that important, even when their subsidiaries there are significant for the local system, Kozaric said. "The greatest problem in the economy is high unemployment, and one of the main risks is the possibility of the crisis spilling over from the countries where foreign banks are based," he believes. Head of the central bank of Montenegro Milojica Dakic said that loans from abroad had decreased, adding that loan interest rates and low quality loans posed a problem. He also pointed to the increase in illiquidity in the real sector of the economy, which impacted the banks negatively in the past because of irregular debt payments. Croatian central bank governor Boris Vujicic stressed that the broadly held opinion among Europe's politicians that economic growth was absent because there was no increase in credit activity had not been confirmed. Credit growth mostly follows the recovery of the economy, he added. Head of the Albanian central bank Ardian Fulani thinks banks should be the main carrier of financial influence in the region, because the capital market has yet to be developed, and that it will take some time. "The region is hungry for capital and the banks can do a lot there," he noted, adding that in a situation where internal resources were lacking, outside funds were welcome, and that it was up to the authorities to provide a safe environment for their arrival. Vice governor of Macedonia's central bank Maja Kadijevska-Vojnovic stated that the countries of the region would remain exposed to withdrawals of funds from European banks, although the negative effects caused by trade relations were decreasing as Europe recovered. She also pointed to the drop in credit activity of banks, stating that it was mostly the result of the fear of risk in banks and banking groups' strategies, which limited credit growth through demands for consolidation. (Tanjug) Tanjug

Lower credit activity region's "greatest problem"

Governor of the central bank of Bosnia-Herzegovina Kemal Kozarić said at the international summit of governors, bankers and business people of the region that all the countries of Southeastern Europe were facing slow credit growth.

Most banking groups find the region not that important, even when their subsidiaries there are significant for the local system, Kozarić said.

"The greatest problem in the economy is high unemployment, and one of the main risks is the possibility of the crisis spilling over from the countries where foreign banks are based," he believes.

Head of the central bank of Montenegro Milojica Dakić said that loans from abroad had decreased, adding that loan interest rates and low quality loans posed a problem.

He also pointed to the increase in illiquidity in the real sector of the economy, which impacted the banks negatively in the past because of irregular debt payments.

Croatian central bank governor Boris Vujičić stressed that the broadly held opinion among Europe's politicians that economic growth was absent because there was no increase in credit activity had not been confirmed. Credit growth mostly follows the recovery of the economy, he added.

Head of the Albanian central bank Ardian Fulani thinks banks should be the main carrier of financial influence in the region, because the capital market has yet to be developed, and that it will take some time.

"The region is hungry for capital and the banks can do a lot there," he noted, adding that in a situation where internal resources were lacking, outside funds were welcome, and that it was up to the authorities to provide a safe environment for their arrival.

Vice governor of Macedonia's central bank Maja Kadijevska-Vojnovic stated that the countries of the region would remain exposed to withdrawals of funds from European banks, although the negative effects caused by trade relations were decreasing as Europe recovered.

She also pointed to the drop in credit activity of banks, stating that it was mostly the result of the fear of risk in banks and banking groups' strategies, which limited credit growth through demands for consolidation.