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Glencannon Group Ltd. wrote:
> It really quite odd that the other banks
> in Latvia allowed this to happen? Don't they understand that
> the fall of
> Paritate, in such crude and unsophisticated manner, will only
> reflect ill on
> those more functional banks? I think everyone in that area
> needs to learn a
> few things about managing marketing issues and particularly crisis
> situations.
Although I'm from Estonia (northern neighbor of Latvia), I can't see
what other banks should have done. Should the tellers of Parex and
Saules banks have stormed the Paritate with automatic rifles and take
control before the "crisis situation"? The fact is that there isn't
much you can do except giving your best servicing your customers when
you see your competitor going belly up. But I'm still eager to listen
to your suggestions, what the other banks should have done.
The state has gave some thought of these kind of situations and their
response has been the institution of Central Bank. CB's duty is to
monitor the private bank and revoke their license when they see that
bank is becoming insolvent. This seems to pretty efficient, although
I personally think that the free market system is even more
efficient. When Soviet occupation ended in Estonia we had 0 banks.
Some 9 years ago we had near 40 banks (in a country with population
of 1.5 million people!). Today we have only 7 or 8 banks, out of
which 5 are really small ones or branches of foreign banks.
It is natural process, please bear in mind that countries in Baltic
region has been building capitalism only for 10 years, while Western
countries have done it fro 200 years. I hope this gives you some
perspective.
For the record: I'm not customer of any Latvian banks and I'm don't
know details of that particular incident. I'm just living in the
region :-)
Regards,
Paul Vahur
IceGold
P.S. It actually reminds me a good anecdote (a true story): When one
old lady from some Western country was told how after the WWII NKVD
(the old name for KGB) deported overnight some few hundred thousand
peoples from Baltic states to Siberia, she asked: "But why didn't you
called the police?!?".
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