While the Bank of Latvia (Latvijas Banka) believes that commercial banks in the country have become overly cautious in granting loans, its Estonian counterpart does not see such a significant problem here.
At the same time, the Bank of Estonia (Eesti Pank) acknowledges that local businesses perceive banks as not being very generous in issuing loans.
President of the Bank of Latvia Martins Kazaks and Chairman of the Seimas budget and finance committee Janis Reirs both criticized Latvian commercial banks in Latvia for being overly cautious in their risk assessment, adding they had done so both in respect of granting loans and in opening accounts.
Bank of Estonia economist Taavi Raudsaar told ERR that in the country the loan availability picture had in recent years been better than it had been south of the border.
“At the same time, Estonian companies’ assessments of banks’ willingness to offer them loans today are quite negative. This is likely due primarily to the challenging economic situation and rising interest rates, which affect both companies’ ability to borrow and banks’ risk assessments and caution in issuing loans,” Raudsaar went on.
However, the Estonian central bank has not seen any widespread problems with opening bank accounts over the past few years, he added.
“Financial inclusion in Estonia is very high – according to the World Bank, more than 99% of the population over the age of 15 has a bank account,” Raudsaar said.
The head of the Latvian parliament’s finance committee has argued that if local banks there do not start trusting their clients, Latvia may have to impose a new tax on banks as a result of their “aggressive” policies towards risk. (ERR)