* Bank supervisors issue joint statement
* Hungary says also signed after forint falls further
* Unicredit CEO pledges support for regional units
* Polish central banker attacks "speculators"
By Michael Winfrey and Gareth Jones
PRAGUE/WARSAW, March 4 (Reuters) - East European banking
supervisors complained on Wednesday about negative press over
their financial sectors, while the region's biggest foreign
lender said its situation was "much better" than has been
suggested.
Currencies and stocks in the EU's eastern wing were battered
as long-building concerns over banks, growth and external
financing reached the front pages of mainstream western media
last month, including references to it as "the sub-prime of
Europe".
Policymakers have tried to fight that with public statements
and policy moves, and Polish, Czech, Romanian, Bulgarian and
Slovak bank supervisors on Wednesday decried "publicly announced
initiatives" about banks' exposure to central and Eastern
Europe, which they said undermined efforts to uphold stability.
"The published information... are often oversimplified and
misleading, and it can have a negative impact on banks that are
operating in these countries," the supervisory authorities said
in a statement published on the Slovak central bank's website.
"Such self-fulfilling speculation totally disregards
fundamental economic developments in the CEE countries and
creates misperceptions that could inevitably be detrimental to
both the CEE region and Europe as a whole."
Analysts, who note the once-booming region is facing at best
a sharp slowdown in growth, were unimpressed and said the
statement would do little to calm market nerves.
Hungary, long the region's sick-man, also said later that it
had signed the statement, but only after markets punished the
forint currency, which fell 1.25 percent to a lifetime low
against the euro.
The Polish zloty and Czech crown were roughly stable and
some analysts said that could be a first sign that investors
were starting to favour the region's stronger economies over
those which look more vulnerable to a credit squeeze.
They also said the statement looked at odds with Polish and
Czech policymakers' efforts to underline their better prospects
for growth and lower reliance on external financing than Hungary
or Latvia, which have already sought IMF-led bailouts.
The supervisors' statement did not specify what it meant by
"publicly announced initiatives", but the Czech central bank has
criticised publications including the Economist and the
Financial Times for using erroneous data and painting too bleak
a picture. Full text at [].
SPECULATORS
One concern is the high number of Swiss franc and euro-
denominated loans in Hungary, Romania and Poland that have
jumped in price for borrowers who are struggling to pay them
back with domestic currencies that have fallen by as much as a
third against those units since last summer.
That has sparked speculation that the handful of Western
banks that provide most of the region's funds outside of the
Czech Republic, Poland and Slovakia may pull back financing.
The head of Italian bank UniCredit <CRDI.MI> said it would
support its units in eastern Europe, echoing statements by
others including Austria's Erste <ERST.VI> and Raiffeisen
<RIBH.VI>.
"Clearly we support the banks that make up part of the group
in the area," Chief Executive Alessandro Profumo said. "Today,
no defaults are foreseen for these countries and, looking at the
data, the good performances continued in January as well."
But the gloom has led to a selloff in assets and prompted
some players to bet against the region's most liquid currencies
as the economic slowdown tightens its grip and growth suffers.
Polish central bank Governor Slawomir Skrzypek criticised
"speculators", a growing trend in the region's largest economy
where media and politicians have blamed foreign investment banks
for a 33 percent drop in the zloty currency since July.
"Our aim should be to implement measures that would limit
incidence of granting public help to financial institutions that
speculate on financial markets of the new member states and
emerging economies," Skrzypek said.
"I shall endeavour to initiate a discussion on this subject
within the ECB and the European Commission."
Analysts were sceptical such a move could gain any ground,
particularly with western EU members scrambling to uphold their
banking sectors with billions of euros in capital injections and
in some cases the outright nationalisation of flagging lenders.
EU leaders shot down a Hungarian proposal for an 180 euro
regional bailout package at the weekend, but diplomats say some
sort of deal could include EU and IMF funds, ECB credit lines,
and other measures to help countries deal with financing needs.
(Additional reporting by Warsaw and Budapest bureaus; editing
by Patrick Graham)
