The financial services and capital markets in Central and Eastern Europe (CEE) continue to evolve within a dynamic regulatory and legislative environment. For incumbent institutions, emerging fintechs, investors and other stakeholders, staying ahead of these changes is crucial for strategic decision-making and compliance.
This blog post delves into recent developments, challenges and opportunities across various CEE countries, drawing insights from our recent gathering of legal professionals in Vienna for our annual CEE Finance and Capital Markets Workshops. We will explore how global economic trends, regulatory changes and local market conditions are shaping the investment climate across the region.
Navigating the New Global Order in 2024
Our brochure “CEE Finance and Capital Markets 2024-2025: Navigating the New Global Order: Legal Dynamics in Banking, Finance and Capital Markets Across the CEE Region” (see below) focuses on legal dynamics in banking, finance and capital markets and global political influences on financial regulations and legal risks in lending and investment activities across the CEE region.
We uncover regulatory and legal milestones that have left an indelible mark this year as we draw lessons that can form the foundation for strategic decision-making and compliance in the year ahead, including in the following areas:
Restructuring and Insolvency: The corporate recovery landscape in CEE is evolving. The Czech Republic’s new Act on Preventive Restructurings (effective September 2023) and Romania’s implementation of EU Directive 2019/1023 both aim to facilitate out-of-court restructurings and prevent insolvency through early warning systems and limited court intervention.
Lending and Investments: Addressing regulatory challenges in lending and investments remain a top priority. Latvia’s commercial lending has decreased due to de-risking, however, bond market activity has increased, with private placements becoming more common. Bosnia and Herzegovina’s new renewable energy law promotes renewable energy and aligns with EU standards, improving the investment climate. In Poland, the resolution of issues related to Swiss franc loans has made banks more attractive for M&A, as seen in the recent acquisition of VeloBank S.A. by international investors.
Energy and Infrastructure Financing: CEE countries are focusing on sustainable projects. Hungary’s renewable energy investments, particularly in solar, are supported by government incentives despite budget constraints. Bulgaria’s recent Energy Act amendments aim to simplify project development and promote offshore wind projects.
Tech-Driven Financial Services: Technology is transforming financial services. The Baltic states stand out in terms of leveraging digitalisation to attract foreign investments. Croatia’s implementation of the MiCA regulation defines regulatory standards for the issuance, public offering and trading in crypto-assets and enhances crypto-asset market transparency as well as investor protection.
Capital Markets: Capital markets in CEE are adapting to volatility and regulatory changes and, in line with overall market developments, benefit from increased activity and issue volumes. Türkiye’s market capitalisation growth is driven by increased investor activity, while Croatia’s implementation of corporate sustainability reporting is attracting ESG investors.
This summary highlights the interconnected legal themes and emerging trends across CEE, reflecting a region in dynamic transformation.
Country snapshot
A snapshot of the topics covered by each CEE country in our brochure is set out below:
- Baltics: The Baltic countries of Latvia, Lithuania and Estonia have added to their anti-money laundering (AML) and sanctions regulations. Energy and infrastructure projects remain attractive.
- Bosnia and Herzegovina: Energy law reform in 2023 has promoted renewable energy, though similar challenges to other countries in the region linger concerning dispute resolution, labour laws, environmental regulations and compliance requirements.
- Bulgaria: Bulgaria is aiming to streamline grid connection processes for renewable projects, facilitate offshore wind power plant installations and introduce a legal framework for geothermal projects. However, frequent legislative changes as well as other legal, administrative and bureaucratic hurdles pose a challenge.
- Croatia: With around 150 Croatian state-owned enterprises intended to be privatised, the opening up of markets previously monopolised by the state could offer investment prospects.
- Czechia: A new confidential, consensual and less formal process allows corporate debtors in financial difficulties (but not yet insolvent) to negotiate a solution with selected creditors confidentially and with limited court intervention.
- Hungary: Financing in Hungary is shifting from real estate to energy and infrastructure and investments in renewables, particularly solar, have been bolstered by government incentives and EU policies.
- Poland: Poland’s banking sector is increasingly in the spotlight and its banks have been generating record profits in 2024, making them increasingly attractive targets for M&A activity.
- Romania: Romanian legislation now recognises a number of formal court procedures covering a broad spectrum of distress, from companies 'in difficulty' to those that are actually insolvent, where the courts can approve either a re-organisation procedure (which saves the company) or initiate bankruptcy proceedings.
- Serbia: Increasing manufacturing, construction and installation costs in Serbia have caused delays in projects at the planning stage while negotiations with lenders and suppliers have accelerated in an effort to finalise commercial terms before economic conditions tighten further.
- Slovakia: A major change in Slovakia is the redefinition of 'impending insolvency', now meaning the existence of a reasonable expectation of illiquidity within the next 12 months, which allows for impending insolvency to be addressed exclusively through preventive restructuring rather than formal restructuring.
- Slovenia: Slovenia’s focus has shifted to pre-insolvency procedures, although the familiar challenges of bureaucratic and lengthy proceedings remain.
- Türkiye: Changing interest rate policy and increasing interest rates to combat high inflation has prompted an increase in initial public offerings as companies seek alternative financing options.
- Ukraine: To help Ukraine in its recovery, reconstruction and modernisation efforts, the EU launched a new support mechanism in early 2024 for the years 2024 to 2027, which allows the EU to provide Ukraine with up to €50bn and enables investors to take advantage of EU budget guarantees and a blend of grants and loans from public and private institutions.
Stay informed, stay ahead
The financial and capital markets in CEE are poised for continued evolution in 2024 and 2025. By understanding and adapting to the latest regulatory and legislative changes, businesses can navigate this dynamic landscape effectively.
In putting this brochure together, our Vienna team collaborated with local lawyers from our StrongerTogether network of relationship law firms in CEE who gathered in Vienna for the 2024 edition of our annual CEE Finance and Capital Markets Workshops.
Our Vienna team, in collaboration with our StrongerTogether network, is dedicated to providing insights and support to help you stay ahead of these developments.
For an in-depth view of the markets in CEE, view our financial and capital markets brochure, co-authored with 13 StrongerTogether law firms, here.
“This year’s publication focuses on legal dynamics in banking, finance and capital markets and the global political influences on financial regulations and legal risks in lending and investment activities across the CEE region.”
Feel free to reach out to us our for further discussion on CEE-related financial services or capital markets topics.
