The fall of communism in eastern Europe marked the beginning of a long bonanza for Austria. From the late 1990s it recorded growth rates well above the eurozone average thanks to its massive engagement in the economies of its by then booming neighbours. As recently as January this year, the European Commission predicted that the country would be less affected by the global economic downturn than Germany or Italy.

Yet Austria's luck may have finally run out. Of particular concern is the huge exposure of the three major banks, Bank Austria, Erste Bank and Raiffeisen, to central and eastern European economies now in the grip of a deepening financial crisis. Shares of Erste Bank and Raiffeisen International, once the heavyweights on the Vienna stock exchange, have tumbled over the past two weeks, losing about 90 per cent from its 1997 peaks before recovering slightly.