TALLINN - Mayor of Tallinn and Chairman of the Center Party Edgar Savisaar has publicly recommended that the government purchase Swedbank Estonia, nationalizing the bank and awarding either the state or the city of Tallinn a majority stake.
"I believe that Hansabank could be bought back with 1 or 2 billion euros at present. The government could buy back Hansabank and turn it into a bank in which the majority holding would be of the state or of the city," Savisaar announced during the Feb. 9 airing of ETV's morning show "Terevisioon."
The comments came while Savisaar brainstormed solutions to Estonia's current fiscal dilemmas. He expressed concern that substantial amounts of Estonian real estate may be lost to foreign banks if re-ownership doesn't take place.
"In a year, most of the real estate will be in the ownership of the banks and I want to know who will then own the banks?" asked Savisaar.
The Mayor of Tallinn said the banking system is responsible for circulating the Estonian economy and that it would be irresponsible to leave things to "take their own course."
"Banking is the blood-flow of the economy and if we could get it going then the entrepreneurship would also get a kick-start," he said.
Savisaar's conjecture is supported by the Chairman of the Estonian Development Fund, Indrek Neivelt, who has recently suggested that foreign owners are likely to start pulling out of the Baltics, allowing local owners to buy back businesses 's including banks.
"International businesses are wondering why they keep their affiliated companies here. There are no profits coming in, only expenses," said Neivelt.
In responding to Savisaar's speculation, however, Swedbank released a strong message that the branch of the Swedish bank is not for sale.
When quizzed about the possibility of selling to the Estonian government Swedbank's press agent Anna Sundblad said, "In brief, we haven't had such a discussion. Furthermore, we just changed our brand to Swedbank and we're in the Baltic states to stay."
Savisaar has also faced backlash from Estonian experts and analysts, who say the advice doesn't even warrant consideration. Kristjan Lepik, owner of financial advisory company Tark Investor, told the daily Postimees that even if Swedbank would sell its problem child at low cost, the price of the company's shares is currently second-rate.
"The question is who will bear the possible credit loss and how are the banks going to refinance their commitments," said Lepik.
Rain Lohmus, owner of financial advising firm Lohmus Haavel & Viisemann, also commented on the prospect, saying that buying a bank is one thing, but financing its operations is another.
"Even the bigger and more prestigious banks are having difficulties. We might as well say that we should buy Swedbank as a whole," Lohmus said.
The feasibility of the idea was summed up rather more abruptly by Minister of Economy Juhan Parts, who said "it's hard to comment on such rubbish."
