Situation of Austrian banks is getting worse

The situation of the Austrian banks is getting worse. They are slowly acknowledging that the crisis in Eastern Europe will cost them a huge amount of money. They are repeating a typical mistake that most banks have done in past crisis. They are not recognising at once the risk of their portfolio, but pretend to be safe with the provision they have made, just to annouce a new amount of provision a few months later. There are many reasons to explain this difficulty to recognise the level of risk in their portfolio.

1. The first one is that they do not really have a balance sheets that would allow them to recognise their risks at once.
2. The second one is that they do not have an operating risk department allowing them to analyse their credit risks properly. This is especially the case in Eastern Europe where the credit managers have never gone through a capitalistic crisis.
3. The third one is of course that the overall level of risk is increasing with each annoucement nourishing a deadly loop.

In 1990 it took about 2 years for the Swiss banks to recognise the real amount of risk they had in their portfolio of simple Swiss credits. I am wondering how many more months will be necessary for the West European Banks in Eastern Europe to recognise the severity of the situation and take the necessary measures.

The problems of these delays is that they prolonge the crisis and will kill most of the production companies in the region. Our discussion with our Bulgarian customers do not give us hope that they have a future.