RIGA - The president of Swedbank, which controls the Hansa group of banks in the Baltic states, said in an interview that Latvia was unlikely to undergo a hard-landing as economic growth slows down.
"I do not think that a dramatic recession might take place," Jan Liden told the Lietiska Diena, a business daily, in an interview.
Still, he was quick to add a caveat. "It might happen only if everybody is not doing what they are supposed to be doing 's if the necessary measures are not taken, and banking circles are not acting responsibly, if people are not aware of the situation," Liden said.
He said it was only natural that Latvia's economy was slowing down and the task now was to boost export.
"At present there is a recession in the economic cycle, but it will go up again," he said.
"It should be understood that large growth cannot be kept going for long. Things should be done that have been done in West European countries to increase productivity," he said. "Latvia should continue increasing its exports."
He said the growth of banks' lending volumes would also decline as growth slowed.
"Last year the aggregate loan portfolio rose by 37 percent, this year the growth might be below 20 percent," he said.
The Hansa group is the largest financial institution in the Baltics in terms of assets. The group's financial results have skyrocketed in recent years thanks to the booming credit market. For example, in Latvia Hansabanka posted 100.3 million lats (142.7 million euros) in profit, up 57 percent from 2006.
Liden said that Swedbank's business in the Baltics accounted for about 20 percent of the parent group's turnover and almost 30 percent of its profit (of which 50 percent comes from the Estonian bank and 25 percent from each Lithuania and Latvia).
The banker was quick to dismiss speculation that Swedbank would abandon the Baltics.
"We will continue investing in Latvia as the company is developing successfully. The country is interesting and has an interesting future," said Liden.
Nor would the bank withdraw money from Latvia, he added.
"Hansabanka in Latvia is not financing itself 's it is done by us in Stockholm as we are borrowing money from the international capital market. The Latvian company has to say how much money it needs," he explained.
"Another thing, we are trying to catch as much as possible from saving products, including deposits 's we are financing loans in the local currency from that," he said.
