RIGA - Sweden's financial regulator in its latest report says that the Baltic region's troubles still look severe despite signs that the economic downturn is softening, report news agencies LETA 's ELTA.
"The large Swedish banks, which are the major players on the Baltic banking market, appear to be able to handle even the worst possible scenarios in the region," says Financial Supervisory Authority General Director Martin Andersson. He added that the crisis has exposed a fundamental flaw in the relationship between society and banking systems, and that this 'contract' needs to be rewritten.
Recent economic data have been encouraging, with gross domestic product figures coming in better than expected in many areas around the world, but "there are lots of losses still to be taken globally" by banks, warns Andersson.
Andersson says that banks have yet to reveal vast amounts of toxic assets that were rumored to be on their books when the financial crisis hit. "It might be that the rumors were wrong or it might be an indication that there's more to come," he said. Most worrisome is the state of the Baltic countries as they suffer from both homemade and external economic challenges. Their economies are 'still deteriorating' and circumstances are 'enormously severe,' he said, adding that "The situation is not under control there."
Recent data on the region shows that the recession has grown deeper, though it also revealed for Estonia and Latvia that the pace of decline was slower in the second quarter than in the first quarter, indicating that worsening conditions may be stabilizing.
