Since the turn of the year, there has been no shortage of grim forecasts for the economies of Eastern Europe and dire predictions of a domino effect throughout the region should any of the countries in it flounder. One particular working paper, by International Monetary Fund economists Andrea Maechler and Li Lian Ong, said that financial instability in emerging European countries could have potentially devastating feedback effects on the home countries of the lenders dominating the region’s banking systems.

Greek banks have expanded aggressively in the Balkans, riding the wave of the lending boom, but the country’s central banker is not worried. "Greek banks have expanded in the area but not as much as banks from other countries. Total lending by Greek banks is about 55 billion euro, about 16-17 per cent of Greek gross domestic product. This shows that Greece’s banking system is not highly exposed in the area," George Provopoulos told the Greek parliament in February.

Provopoulos predictably warned against complacency and emphasised the need for continued monitoring of the situation, but if there was any country that posed less of a threat to Greek banks, Bulgaria was the one.

Although like the rest of the region, Bulgaria’s economy has been showing signs of slowing down, the risks caused by the devaluation of local currencies were nonexistent in Bulgaria, where the leva is pegged to the euro under a currency board agreement. And unlike Western European banks, who had to write off billions because of their exposure to toxic assets in the wake of the US subprime mortgages collapse, banks in Bulgaria and Greece had much higher capital adequacy ratios.

Five Greek banking groups operate in Bulgaria, four of them – National Bank of Greece, Eurobank EFG, Piraeus Bank and Alpha Bank – in the top 10 by assets and the first two in the top five. Only Emporiki Bank’s operations are lagging behind, but the bank is half-way into its ambitious five-year plan to expand its regional footprint, which will see its Bulgarian unit turn from a lender targeting mainly small and medium-sized enterprises into a universal bank.

With combined assets just short of 20 billion leva at the end of 2008, Greek banks in Bulgaria accounted for 28.7 per cent of the banking system’s assets and almost a quarter of the 1.4 billion leva profit, according to Bulgarian National Bank data.

A vote of confidence in Southeastern Europe and its economies, as Provopoulos put it. And whatever the current turbulence, "temporary problems will not chance this long-term outlook – Greek banks will continue to support these economies".