Bulgaria bank runs don't signal wider problem - IMF official (updated)

First Investment Bank AD

01/07/2014 11:37

* Austrian cenbank governor also sees no systemic problem 
    * Hungary bid to involve banks in FX loan losses under 
scrutiny 
 
 (Adds quotes from IMF official, Austrian central banker) 
    VIENNA, July 1 (Reuters) - The Bulgarian banking system is 
basically sound despite a run on two banks, an official from the 
International Monetary Fund and the head of Austria's central 
bank said on Tuesday.  
    "These bank runs were triggered by text messages and were 
not related to underlying problems of the banking system, which 
is well capitalised and liquid. There has also been a loan from 
the European Union," Bas Bakker, the IMF mission chief to 
Austria, said at a news conference in Vienna.  
    Worries about the health of some Bulgarian banks have eased 
since runs on two major Bulgarian lenders this month, the Balkan 
state's central bank said on Monday, adding that the banking 
system was functioning normally.  ID:nR5N0NF01U  
    Austrian National Bank Governor Ewald Nowotny took the same 
line and said Austrian banks - some of the biggest lenders in 
central and eastern Europe - were not affected.  
    "This is not a systemic problem of the Bulgarian banking 
system. It is a problem of specific banks and in fact what we 
see is deposits moving from these banks to Austrian-owned 
banks," he told the news conference. 
    UniCredit Bank Austria  CRDI.MI  and Raiffeisen Bank 
International  RBIV.VI  are big players in Bulgaria.  
    Bakker was asked about separate moves by the government of 
Hungary to get banks to swallow more costs for foreign-exchange 
loans that went sour on borrowers when the forint currency 
depreciated.  
    He said the IMF had "taken note" of the proposals but played 
down the impact on Austrian banks. 
    "Of course this could increase losses made in Hungary and 
any country where profits go down or losses go up of course does 
not help the Austrian banks, but in the bigger picture it is not 
the most important country," he said. 
    Nowotny said the measures risked putting "quite strong 
burdens" again on Austrian and other lenders in Hungary.  
    "The Austrian banks and other banks have clearly been 
willing to cooperate in solving the problems involved with this 
but ... it is also clearly in the interest of the Hungarian 
economy to have banks that are well capitalised and that are 
able to provide for adequate loans," he said.  
    "It is in the enlightened self-interest of the Hungarian 
government to have a coordinated (approach) in this field."  
    Hungary's government moved on Friday to reduce bank charges 
on foreign currency mortgages, submitting legislation to 
parliament that could also help people with similar concerns 
about their forint loans.  ID:nL6N0P81CT   
    Banks in Hungary include units of Belgium's KBC  KBC.BR , 
Austria's Raiffeisen and Erste Group  ERST.VI , Italy's 
UniCredit and Intesa Sanpaolo  ISP.MI , and German-owned MKB 
Bank  BLGGM.UL .  
 
 (Reporting by Michael Shields; editing by John Stonestreet and 
Tom Pfeiffer) 
 ((Michael.Shields@thomsonreuters.com)(+43 1 531 12 258)(Reuters 
Messaging: michael.shields.thomsonreuters.com@reuters.net)) 
 
Keywords: BULGARIA CRISIS/IMF