UBS analysts on Eastern Europe economies: Problems are not so big

Problems on emerging markets in Central and Eastern Europe are not as serious as they are generally portrayed to be, and losses that European banks could incur following their exposure to the area are limited, write analysts of the UBS, the largest Swiss bank, in their latest report. The small size of markets in emerging Europe allows for potential losses to be easily absorbed by the large European banks present in the region. Overall loans in the Romanian banking system amount to nearly 50 billion euros, while in Spain they amount to around 1800 billion, according to UBS analysts. This approach is radically different from that taken by the UBS in previous years, when the Swiss were very pessimistic with regard to emerging markets, Romania included. Over the last few weeks, a series of reports from foreign banks, as well as from major rating agencies Moody’s and Standard&Poor’s – painted a bleak picture of economies in Eastern Europe. The main problems noticed by analysts are the high indebtedness level and the very large foreign deficits.