Pre-Crisis Landscape

Abstract

This chapter describes a pre-crisis economic environment — the landscape before ‘the storm’ — that is, the financial standing of the EU banking sectors and the legal framework for the financial support of banks. Economic growth in ‘new’ EU countries was noticeably faster than in ‘old’ ones, which stimulated expansion of banks from the ‘old’ EU countries on Central and Eastern European markets. Generally, developments in the economic environment had a positive impact on the pre-crisis financial standing of the EU banking sectors. The liquidity support was available from central banks, which acted as lenders of last resort. However, the legal framework did not allow for effective restructuring and liquidation of banks, especially in the case of cross-border banks.