VIENNA (MNI) – Fears that Austria’s AAA credit rating will be
downgraded because of its banks’ exposure to weak central and east
European economies are “wildly exaggerated,” European Central Bank
Governing Council member Ewald Nowotny said in an interview published
Tuesday.
Nowotny, who heads the Austrian National Bank, told the Financial
Times that operating in favor of Austrian banks were their “traditional”
lending practices in central Europe, with a higher proportion of “loans
to the real economy” than other European banks in the region.
Also, he argued, Austrian banks were not highly exposed to troubles
in southern European economies.
“I would prefer to have an Austrian bank financing a building in
Prague than financing a building in Costa Brava,” Nowotny said.
Regulations announced by Austrian authorities on Monday to limiting
the country’s banks’ future lending to CEE countries were not a response
to market fears, Nowotny asserted.
The regulations are also “not a limitation on growth, it is a
limitation on risk,” he said. “In countries where they have a stable
funding situation, there is no limitation to growth.”
“This is really in the interests of both the Austrian banks and of
the host countries, because basically it is about strengthening the
sustainability of the business model in these countries,” he said.
Frankfurt bureau tel.: +49-69-720142. Email: dbarwick@marketnews.com
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