Austrian and Swedish banks and other financial institutions with branches in Eastern Europe may risk downgraded ratings, given the deteriorating economic environment in the region, the financial evaluation agency Moody's announced on Tuesday, according to Bloomberg, quoted by Romanian news agency NewsIn.

Banks from Austria, Italy, France, Belgium, Germany and Sweden account for 84 percent of bank loans in central and eastern Europe. Austria’s banking system is “most exposed” to the region, according to Moody’s.

When ratings are lowered, lenders also face higher funding costs, which would further erode the capital they may need to weather losses in Eastern Europe, Bloomberg adds.