The Balkan banking system should be able to stand up to the gradual withdrawal of credit lines from Greek banks to their subsidiaries but a Greek default might send neighbouring governments searching for extra help.

Greek banks account for 28 percent of assets in Bulgaria's banking system and about a sixth in both Romania and Serbia, the largest presence of countries in Eastern Europe.

Concerns over the impact on the banking sector of the Greek turmoil sent the Romanian leu to its lowest level in more than five months this week and the cost of insuring Romanian sovereign debt has hit a 3-1/2 month high.

Analysts say governments and central banks have the resources to cover the gap if Greek parent banks start reducing their credit lines.

"In Romania and Bulgaria's case the key point is that any recapitalisation that would potentially be needed would not pose a systemic risk to public finances," said RBS analyst Tim Ash.

"They have the resources to deal with these banks if they get into difficulty and ... they would likely get support from the IMF, the European Commission, the ECB in that situation."

The largest Greek banks in the region are National Bank of Greece, EFG Eurobank, Piraeus Bank, Alpha Bank and Emporiki Bank.

Some analysts say Greek bank subsidiaries are probably already sending some funds back to their parents but so far the banking sector has proved fairly resilient.

In Romania the subsidiaries' solvency ratio was at 15.7 percent in March, far above minimum requirements. Bulgaria's overall bank solvency ratio is over 17 percent and Serbia's over 22 percent -- neither discloses specific ratios for Greek units.

The Bank for International Settlements has a minimum capital adequacy ratio standard of 8 percent.

Central bank help

Funding lines in Romanian subsidiaries from their parents were some 4.2 billion euros, or 35 percent of their liabilities, central bank deputy governor Cristian Popa earlier this month.

That is less than the total 5 billion euros available to Romania under its IMF-led deal, which it does not currently plan to use. Serbia too is negotiating a new deal and Bulgaria has the EU's support and a tight fiscal regime.

Popa said those units also have enough state debt in their portfolios to secure refinancing from the central bank or the interbank market to compensate for any capital outflows in the short term.

"Four billion or so is very manageable," said Barclays Capital analyst Daniel Hewitt.

While parent banks could pull funds from Bulgarian, Romanian and Serbian units via financial market operations, tight national banking regulations would make it difficult to withdraw significant amounts.

Few analysts are expecting an immediate Greek default in the near term but in the longer term many see few alternatives.

Bulgaria, Romania and Serbia, all small economies, would suffer as it would probably require bailouts or nationalisation of Greek parent banks and their local units, which would pressure sovereign debt and ratings as well as fiscal deficits.

Greek banks could also sell assets to shore up their finances, even if there is no default. Raiffeisen Bank International already bought a majority of Poland's Polbank for 490 million euros from EFG Euro bank Ergasias.

"We believe that Greece will muddle through for some time yet but the risk of default will always be there," said Nordea's Elisabeth Andreew.

In case of default, "the EU and the IMF will probably help as to make as little damage as possible and in the end they will probably be taken over by other banks. But the road could be long, uncertainties high and risk aversion may rise further."