Potential risks for home and host countries stemming from activities of multinational banks in the CEE10 region

This policy brief analyzes whether the exposure to the CEE10 region is a risk for parent banks. Simultaneously, risks for the CEE10 countries implied by the strong presence of foreign-owned banks as well as possible feedback loops are discussed. Ongoing financial market turbulences within the euro area are likely to have a negative impact on the CEE10 region as a whole, which should, nevertheless, vary considerably across countries. Likely spill-overs into the real economy will affect the entire CEE10 region, as it was the case in 2008-09. However, the impact on banking sector performance should again vary considerably.