BUCHAREST/LONDON, Nov 17 (Reuters) – Hungary’s unorthodox policy drift makes it the most exposed of central Europe’s developing economies to the euro zone’s debt storm but the bigger worry for the region is a withdrawal of banking investment that could cripple growth and force some to seek IMF support.

Most of the European Union’s new eastern members are yet to adopt the single currency, but looming recession for its main trading partners is prompting nerves even in economies like Poland which rode out the 2008 financial crisis without contracting.

Banking ties are the elephant in the room. The impact is tougher to predict than trade, but could be more serious for a region still struggling to get back on its feet after its 2009 crash landing.

Since the collapse of Lehman Brothers in late 2008, Western banks have slashed their exposure to central Europe by a total of $100 billion, Bank of America-Merrill Lynch estimates.

That pullback could accelerate as Western lenders confront a 50-percent write-off on Greek debt holdings and face pressure to strengthen capital ratios, in turn straining local banking systems, forcing central banks to raise interest rates and potentially prompting problems with the financing of public debt due to the lack of funds for local investors to buy bonds.

Most vulnerable are those Balkan states where Greek banks have a substantial presence — Bulgaria, Macedonia, Serbia, Albania and Romania — though countries like Croatia with close links to Italy are starting to sweat too.

Banks having to ensure Tier 1 capital of 9 percent would imply an increase of capital of about 106 billion euros, according to Nomura analysts, of which 5-20 billion euros could come from emerging Europe.