The banking groups that dominate the scene in Eastern European markets have been lobbying governments across the region to develop their own "stability packages", rather than rely on the Western home countries of the banks, Reuters reported on December 22.

The group is believed to include Italy's UniCredit and Intesa Sanpaolo, Austria's Raiffeisen International and Erste Group Bank, France's Societe Generale and Belgium's KBC, according to the report.

The banks fist met in November, agreeing on "issues in their common interest to safeguard financial stability in the region", which included lobbying Eastern European governments to draft stability packages, Reuters quoted a Raiffeisen spokesperson as saying.

Among the measures the bank group is lobbying for are reduced requirements to hold reserves at the central banks of the host countries, Reuters said. They also want to encourage the European Central Bank (ECB) to pledge liquidity support for those markets.

Four of the banks on that list have subsidiaries in Bulgaria: UniCredit Bulbank is the country's largest bank by assets, Raiffeisenbank Bulgaria is the fourth largest, while Societe Generale subsidiary Expressbank and KBC's Economic and Investment Bank (EIBank) are both in the list of the top ten lenders. Hungary's OTP Bank, which owns Bulgaria's second-largest lender DSK Bank, is not part of the group, Reuters said, quoting unnamed sources.

Bulgaria's central bank has already cut its mandatory reserves requirements this month and is considering other liquidity-boosting measures, but the Cabinet is strongly opposed to a wider-reaching bail-out package, saying that the banking system in the country is sound.

ECB's goodwill could be a more difficult asset to secure for Sofia after the idea of unilaterally introducing the euro as legal tender in Bulgaria has won the support of two Cabinet ministers, while Prime Minister Sergei Stanishev hinted repeatedly that the Government was unhappy with the political opposition inside the European Union against Bulgaria joining the ERM-2 exchange rate mechanism, the euro waiting room.

Foreign banks own more than 90 per cent of Bulgaria's banking system assets, which in the past has been interpreted by analysts as a positive sign, ensuring that Bulgaria would never again experience a banking crash on par with the 1996/97 crisis, which wiped out the savings of millions and caused the fall of the Zhan Videnov cabinet after thousands of protesters took the streets.

But with the global credit crunch widening, the reliance of Bulgaria's rapidly-growing economy on cheap and abundant cash flows from abroad is increasingly seen as a weakness, one that analysts fear could send the country into a recession in 2009.