3 15 0,4 2  3 2  9 8  * Market shares of Controlled banks multiplied by their capital share, end of 2002  BIS Review 53/2003  Romania  7 1 0,6 6  7,5 1,2 2,3 5,9 2,2 1,5 4,3 6 3,3 3,9  Bulgaria  15  Croatia  5 1 3 3 16 9  18 4 9  3  CEEC 5- Total  Slovakia  15 0,2  Slovenia  7 9 8 6 5 3 3 3  Poland  KBC Bank Bayerische Landesbank Intesa Bci HVB Group Raiffeisen GE Capital Citibank Erste Bank Societe Generale UniCredito  Czech republic  Hungary  Role of Foreign Banks  0,1 14 6 7  7 4  2 4 3  7 27  5 19  8 0,5  20  5  As said above, the economic transformation had a large negative impact on balance sheets. Banks tended to lend to previously existing companies undergoing privatization that were faced with a sudden loss of foreign demand (mainly from Soviet Union) and had to restructure themselves by laying off a big part of their workforce. This proved to be a recipe for financial disaster. Financing of newly established companies with no track record, with business plans based more often on good intentions than on thorough analysis was no better. In addition, the political elite, who saw bank financing as the quintessential source of economic growth, encouraged this lending boom. Existing risks were widely disregarded.
Lastly, the challenges of population ageing must be tackled by means of a broad economic policy strategy. It is vital here that the path of fiscal consolidation should be resumed and that the public debt should return to a downward trend, so as to better position public finances to address the issues arising from ageing. The sustainability problems of the pension system may indeed be alleviated if employment and productivity in the economy trend favourably. In this respect, there is much room for improvement in the goods and services markets, in education and employee training, and in the labour market too. 6/6