We examine the drivers of foreign banks' lending patterns in the Central and Eastern European (CEE) region over the past decade. We analyze the relative roles of subsidiary and parent banking group traits in driving foreign bank lending before and during the crisis. The analysis relies on a newly compiled bank-level dataset on Western European banking groups and their CEE subsidiaries, with annual frequency over the 2002-2013 period. We find strong evidence that a bank's non-performing loans

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... io significantly lowers lending growth, a result which prevails through the crisis. There is a very strong and sizable positive relationship between the subsidiary's capitalization and lending activity during the crisis period. The subsidiary's parent's profitability encouraged subsidiary lending before the crisis, while lower liquidity of the parent hindered lending during the crisis. The host country's level of external debt acts as a significant deterrent of bank lending.