Banking sector in NMS (New Member States) of EU (European Union) has performed better than EU-15 on many parameters, like Net interest margin, capital ratio, intermediation level etc., during 1999- 2003. The presence of foreign banks has been so heavy that around 70% of bank assets are owned by them. On the deposit insurance regulation front, some countries are lagging behind EU-15. The supervision model in some NMS is at par with EU-15.
Banking system in NMS (New Member States has improved a lot during the last few years. Banks in NMS have performed better than those in EU on some parameters, but they still have a long way to go for a higher level of integration with EU. As these economies have had only a short time for transition, they have dramatically transformed themselves. In five years from 1999-2003, these economies have achieved a GDP growth rate of around 3.2% compared to 2% achieved by EU-15.
The countries having membership of the EU can be classified into two groups; the first group includes the Baltic states (EE, LT, LV, MT, SI)-where the exchange rate is managed tightly and the second group includes CEE-5 countries (CZ, PL, SK, CY, HU) where the exchange rate is managed with flexibility. |
