> > Helsingin Sanomat International > Business & Finance - Tuesday 22.10.2002 > > Swedish, German, and Russian capital meets in Latvia > > Nordea is participating in a fierce housing loan competition > > By Heikki Arola in Riga > > The impressive headquarters of banks dominate the prime downtown areas of > the Latvian capital Riga. This is a typical phenomenon in young market > economies. Industrial and service sector companies are still small, and > their offices are located on the outskirts of cities. > > Around the central square of Riga, the offices of Unibanka, Hansapank, and > the local Nordea branch stare at one another. > > The fact that all three banks have majority shareholders from Nordic > countries is reflective of the current development phase of the country. > The > owner of Unibanka is SEB, and Swedbank can be found behind the originally > Estonian Hansapank. > > Pan-Nordic banking group Nordea is the only bank to operate under its own > name in Latvia, as it does in the entire Baltic region. Nordea offices in > the Baltic states are not independent subsidiaries similar to the > competition, but bank branches under the guidance of Nordea in Finland. > > The state of competition in the Latvian banking sector is more complex > than > in the other two Baltic states. The largest bank in the country is Parex, > which is, surprisingly enough, locally owned. Also, Parex does not compete > with the Nordic players for the same clientele, as it mainly serves the > Russian-speaking population, and transfers money of Russian origin. > > The Swedes came to Latvia first, but over the past few years, German banks > have become increasingly interested in the country's financial markets. > Westdeutsche Landesbank bought its way into Latvia through Birmabank, and > Vereinsbank has also established branches in the country. > > Therefore, Nordic, German, and Russian capital now meets in the Latvian > banking sector. This fact has definitely benefited the country, and Riga > is > turning into a financial centre in the Baltic region. > > The Russian economic crisis of 1998 dealt a hard blow to the numerous > banks > of the region, and it was then that the Swedes realised their chance to > enter the market at a cheap price. > > However, Swedish banks never gained as sturdy a foothold in Latvia as they > did in Estonia and in Lithuania. The current number of banks in each > country > reflects this fact: there are now seven banks in Estonia and thirteen in > Lithuania, but 23 in Latvia. > > There are around ten banks in Latvia that have no type of public customer > service. They focus solely on brokering the funds of wealthy Russians and > Ukrainians, and investing this money in Western securities. > > Every so often, the Russian central bank has pointed out the tax haven > nature of these banking operations, but the Latvian regulatory authority > maintains that everything is quite legal, at least from the point of view > of > Latvian legislation. > > Money transfers are a significant business in Latvia, in addition to the > transit traffic that goes through the country's ports. > > Corporate customers have long been the most important source of revenues > for > banks in Latvia, but the battle for the "regular Latvian" has now begun > with > full force. > > Economic developments have been favourable, and wages have risen. People > have begun to feel secure enough in their jobs that a loan market for > households has taken shape. > > The local Nordea operation has so far been aggressive in the housing loan > market, with the goal of capturing a market share that is as large as > possible. The local Nordea is headed by Swede Anders B�ckman, who > transferred from Tallinn. > > Nordea is competing with price, or the interest rate charged on the > housing > loans. "Our goal is to get the country used to interest rates that are at > the EU level", B�ckman explains. > > This means that the margins banks charge are heading steadily downwards > due > to the tight competition. "People here are accustomed to margins of four > or > five percent, but we have dropped the level to below three percent, or > near > the Nordic level." > > B�ckman assures that Nordea's banking operations are profitable in Latvia > as > well as elsewhere in the Baltic region. "Even despite that fact that we > have > made considerable investments. Of course profitability is not at the > Nordic > level yet, as the balance sheet and clientele are still being built." > > Reaching private clients requires building a branch network. Nordea > currently has four branches in Riga, and one each in Sigulda and in > Liepaja. > Nordea's goal is to open ten to fifteen more offices within the next five > years, and attain a nationwide market share of fifteen percent. The market > share is now three percent. > > "The target is tough but realistic", B�ckman says. > > According to B�ckman, Nordea has come to Latvia and the Baltic region to > stay, and the same goes for Swedbank and SEB. "All have announced that the > Baltic region is their home market, and that they are here for keeps." > > As time goes by, the top management at the Nordic-held banks will include > more and more Latvians. "I will be here for a couple of years, and no one > will be happier than me when I relinquish my post to a local", B�ckman > observes. > > Helsingin Sanomat / First published in print 17.10.2002 > > HEIKKI AROLA / Helsingin Sanomat > [EMAIL PROTECTED] > > http://www.helsinki-hs.net/news.asp?id=20021022IE18 >
--- You are currently subscribed to e-gold-list as: [email protected] To unsubscribe send a blank email to [EMAIL PROTECTED] Use e-gold's Secure Randomized Keyboard (SRK) when accessing your e-gold account(s) via the web and shopping cart interfaces to help thwart keystroke loggers and common viruses.
