Emerging Europe

Focusing on the larger, fragile EMs has deflected attention away from worrying risk trends afflicting other borrowers.

Experts taking part in Euromoney’s Country Risk Survey were ahead of the game in predicting the increased default risk plaguing peripheral, eurozone sovereigns in the wake of the 2008 crisis, and repeatedly so across a range of issuers.

Lithuania and its fellow Baltic republics are in an unusual position when it comes to euro adoption. Whereas in the rest of emerging Europe the majority of banks are outside the eurozone, but owned by lenders within, in the Baltic states the situation is reversed.

Although the SME sector is frequently cited as a potential growth driver by bankers in emerging Europe, providing funding to smaller firms can be problematic for traditional lenders, particularly in the aftermath of recession and at a time when western European parent banks are under pressure to repair balance sheets.

Fallout from the Ukraine crisis has not yet hurt the country’s planned infrastructure development programme. But sanctions or not, Russia will be hard pushed to meet its long-term target in the domestic finance market alone.

Concerns about the Crimea crisis risk taking the gloss off euro entry for Latvia and Lithuania, but it is the legacy of recession that still poses the biggest challenges for the region’s banking sectors

Differentiation has become the name of the game in emerging Europe as regional banks fight to maintain profitability, but the region’s markets still have much in common.

Banks and their corporate clients are scrabbling to get up to speed and comply with a growing slate of US and European sanctions against Russia – or face unlimited fines and imprisonment.

Vodafone sparked a flurry of interest from bankers in emerging Europe last month with the launch of its M-Pesa payments service in Romania. But the firm’s director of mobile money tells Euromoney that traditional lenders would struggle to replicate its business model.

The battle between the west and Russia over Ukraine is intensifying amid a full-on financial war. Euromoney investigates the foreign-currency credit crunch for Russian borrowers.

More non-financial companies in Europe, the Middle East and Africa (EMEA) have had their credit ratings upgraded than downgraded by Moody’s Investors Service in the first quarter of the year – the first time this has happened since 2008.

Published in conjunction with: The Republic of Bashkortostan

Russia’s adventures in Ukraine are adversely affecting its international issuance. And at home they will stifle ambitions to develop an international financial centre.

Strong demand for Hungary, Azerbaijan; new corporate names to follow.

The crisis in Crimea should give the west pause for thought in its relations with eastern European states and with Russia.

As the political tensions morph into economic problems for Russia and Ukraine, other regional states are becoming embroiled in the crisis, notably Kazakhstan, which had been improving in Euromoney’s Country Risk Survey.

Russia is expected to launch its own nationwide card payment and processing system within months, potentially breaking the dominance of US companies Visa and MasterCard for making electronic payments in the country.

Turkey deserves an investment-grade status, according to data from Euromoney Country Risk, despite political risks, the impact of Fed tapering, Standard & Poor’s low rating and Moody’s downgrade threats.

Russia-US tensions over Ukraine could be the 'first major political conflict that is played out in international financial markets', according to Citi, as sanctions take their bite.

Bank of Lithuania deputy chief Ingrida Šimonyte discusses the country’s euro-adoption plans, the challenges for the foreign-owned banking system, and the asset quality review in a wide-ranging interview.

Enduring strength in the euro might derail any nascent recovery.

Five CIOs discuss asset allocation changes in light of the tension in the border countries.

While OTP and Raiffeisen are vulnerable to FX losses and a slowdown in Russia and Ukraine, the impact should be manageable, though there are some exceptions.

Expectations are growing that the European Commission is preparing to water down its controversial financial transaction tax (FTT) proposal, potentially as far as focusing the levy on share transactions alone.

Russia’s muscular posture on the Crimean region of Ukraine, re-awakening Cold War tensions, threatens to tip the economy into a mild recession and has put a spotlight on the country’s structural weaknesses amid political risk, say analysts.

Although current account deterioration, persistent capital outflows and the Ukraine crisis would seem to weaken rouble, the central bank’s flexible FX regime should keep the currency out of turmoil, say analysts.

The roller coaster in emerging markets threatens one of the few consistent bright spots for investment banks since the global financial crisis. If the rout spreads, they could be faced with a sharp decline in FICC trading and a collapse in deal flow. But bankers remain remarkably sanguine. Could this be the sell-off that finally proves the EM asset class has come of age?

Turkey has been in a state of turmoil for the past year. The political troubles are home-grown; the economic woes have come from abroad. Both problems appear worse than they really are and present opportunities for those who can hold their nerve.

Euromoney’s Country Risk Survey points to limited regional impact of the crisis in Ukraine, in spite of potential spill-over effects.

Privatizations in the country promise to further turbo-charge growth, a bright spot in emerging Europe. But worries about the stability of the ruling coalition and governance persist.