The development of the small banking sector could be faster, because at the moment the growth or drop of the banking sector is fully dictated by four largest banks in Latvia, says Finance and Capital Market Commission (FKTK) chairperson Santa Purgaile.
“Of course, we are able to say that numerically we have many banks. At the same time, some of them are relatively small banks, but tectonic changes on the market are mostly dictated by four largest players on the market. Growth or decline completely depends on these four banks,” said Purgaile.
She said FKTK would like to see development of the small banks segment more rapid to ensure consolidation and allow some large shareholder with major ambitions to enter the market instead of allowing only natural growth of a couple of percent every year, because this would provide larger competition for the largest banks.
“Right now we don’t have anything on the table to suggest we can see such a perspective, but we do hope to see it soon,” said Purgaile.
She also said it was not as though investors had no interest for small banks in Latvia.
“It’s not that they are not interested. However, we have to keep in mind that these banks have undergone a wave of second coming. The question is – has this lifted them up? If investors do not see this lift, there isn’t much hope to achieve this lift by exacting changes to their list of owners. Demonstrating this not just on paper but in actions as well is vitally important. Of course, there is the COVID-19 crisis, because the market is getting slower, which influences banks’ plans to grow their portfolios. This means what we see most of the time is small banks dividing the market among themselves, taking what they can from big banks. Yes, there are some big crediting projects in small banks, but they are few,” says the head of FKTK. (BNN/Business World Magazine)