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UPDATE 1-UK's Brown urges more help for E.Europe's banks

Published 04/28/2009, 05:21 AM
Updated 04/28/2009, 05:32 AM

(Adds background, Tusk quote)

WARSAW, April 28 (Reuters) - British Prime Minister Gordon Brown urged the World Bank, the European Bank for Reconstruction and Development and the European Investment Bank on Tuesday to do more to support the banking sector in eastern Europe.

The once-booming region has been badly hit by the global credit crunch as investors flee riskier assets and the region's banks, mostly owned by west European parent banks, have curbed their lending.

"I call on the EBRD, the EIB and the World Bank to do far more to support the banking sector in central and eastern Europe," Brown told a joint news conference with Polish Prime Minister Donald Tusk during a visit to Warsaw.

"These institutions must lend more and must lend faster," to assist the recapitalisation of banks in eastern Europe, he said.

Poland has weathered the crisis better than most of its neighbours, though it recently decided to tap into an International Monetary Fund credit line available for well-run emerging market nations to help steady its financial markets.

Currencies such as the Polish zloty have plummeted, compounding the pain for the many companies and households holding debts, including mortgages, denominated in foreign currencies, chiefly the euro and the Swiss franc.

Tusk told the news conference his centre-right government would stick to its prudent macroeconomic policies.

"I want to emphasise that banking sector supervision, abiding by the rules and not living excessively on credit are the surest ways of avoiding crisis," he said. (Reporting by Adrian Croft, writing by Gareth Jones, editing by Mike Peacock)

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