The main drawback to the economic recovery of many Eastern European countries such as the Balkans, Hungary, Ukraine and Slovenia are the existing delinquent loans that are burdening these economies. A study showed that these loans are preventing capital from being spent properly.
Nearly Eur135 billion or US$175 billion in loaned amounts or nearly 10% of all borrowings have fallen past due during the term of the former communist bloc of Europe. This was the conclusion reached by the study conducted by the Raiffeisen Bank International AG. RBI is a lending institution based out of Vienna and is considered as the second largest in the region. It said that for countries that have rates above the threshold 10%, both regulators and lenders need to find ways to absorb these effects on the economy, according to the study.
According to Raiffeisen analayst Gunter Deuber during the study, "In southeast Europe, Ukraine, Hungary and Slovenia, fairly high non-performing loan stocks and double-digit ratios in the range of 15 percent to 25 percent seem to become more and more a burden for the banking sectors and the economic recovery, In these markets joint efforts to tackle NPLs and to improve the NPL workout would be 'reasonable."
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