Corporate banking in Eastern Europe, like many other financial businesses, grew very rapidly over the past several years, far faster than it did in the more mature markets of Western Europe. As this growth continued, many expected that the ways these two regions conduct this business—lending to companies and providing them with cash management, treasury, foreign exchange, and other services—would become increasingly similar. As the Eastern European business grew, the argument ran, the level of service, quality of products, risk sophistication, and especially profit margins would parallel those that characterized corporate banking in France, Germany, and other established Western European markets.

But the credit crisis and ensuing market turmoil have exposed the error of that argument. Corporate banking in Eastern Europe is on a different path, one fraught with difficulties for the unwary and unprepared. The region’s currencies are plunging, and its economic outlook is gloomy. Analysts have expressed fears that the corporate sector in some Eastern European countries may well be on the verge of widespread default.¹ The banks that serve these companies are also at risk. The crisis has brought into focus the substantial differences in corporate banking—size, stability, skills, and others—that persist between the East and West.