Moody's maintains negative view for Hungary banks

Moody's Investors Service said that it was maintaining its negative outlook for the Hungarian banking system to reflect the adverse domestic and global economic conditions that are weighing on the banks' operating environment and the risks embedded within the banking system.

Although the stability of the Hungarian banking sector has improved in comparison with the first half of 2009, Moody's said many risks remain for the system and its still one of the more fragile in Central and Eastern Europe.

The agency said the main risks are the country's weak, albeit improving, economic environment, a limited scope to use fiscal measures to support domestic demand and fragile market confidence due to high external and government debt.

Hungary's economic growth is expected to remain sluggish in 2010, relying primarily on exports as domestic demand remains weak, Moody's said.

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