Banks in Bulgaria and Romania remain vulnerable to shifts in global risk appetite and the capacity of parent banks to roll over debts, shows an analysis of Capital Economics.

"Capital levels have been rebuilt and loan to deposit ratios are falling," said Capital Economics analyst Neil Shearing in a note. "But familiar vulnerabilities remain, particularly in the Baltics, Balkans and Hungary."

"Banks in this group of countries will remain vulnerable to shifts in global risk appetite and much will depend on the willingness (and ability) of parent banks in the West to roll over debts," he said.

"This is a particular concern for banks in Bulgaria and Romania, where financial linkages to the beleaguered Greek economy are strong," he said.

"The upshot is that at best credit conditions in this group of countries will remain extremely tight as the excesses of the past decade are unwound," he said.

"At worst, however, there remains a real possibility that the deepening turmoil in the euro zone's periphery could trigger a fresh banking crisis," Shearing added in his note.

According to Capital Economics bank credit, which drove the boom years from 2003 to 2007, is growing only in a few countries in the region, including Turkey, Poland, the Czech republic, Romania and Bulgaria.

Greek banks hold nearly a 30% of the Bulgarian banking market, a 20% share of the bank loans and one-third of all deposits.

Some of the biggest lenders in Bulgaria are managed by Italy's UniCredit, Greece's National Bank of Greece, Hungary's OTP and Austria's Raiffeisen.

Other Greek banks present in Bulgaria include EFG Eurobank, Piraeus, Emporiki and Alpha Bank.

Experts have warned that Bulgaria, the European Union member boasting one of the the bloc’s smallest budget deficit, risks seeing its banks sucked under by the fiscal sins of neighboring Greece,

Earlier this year Bulgaria's central bank assuaged fears over funds outflow from Greek bank subsidiaries in the country to headquarters in Greece, saying this is part of the free movement of capital.