TALLINN - Sweden's SEB banking group, fearful of growing losses in the Baltics due to bad loans, has reportedly formed teams that will specifically focus on returning debt and minimizing losses.
The large Swedish banks such as SEB and Swedbank 's owner of the Hansabank Group 's that loaned billions of dollars to Estonians, Latvians and Lithuanians are concerned about their money and are now making efforts to recover debt that might be going bad, the Postimees daily reported.
One report states that SEB took a hit of 293 million kroons (18.8 million euros) due to bad loans in the first quarter of 2008, compared with just 20 million in the same period last year. Quarterly profit plunged to 57 million kroons as a result.
The SEB team, according to the paper, is already at work in Tallinn and is not showing much leniency toward businessmen.
Annika Falkenberg, managing director of SEB, told Swedish Radio at the beginning of last month that SEB had set up a "rescue unit" that would assist companies at early stages of difficulty.
The working group currently has about 20 people giving advice particularly in Estonia and Latvia where they tell companies how to restructure at short notice in order to survive periods of low economic activity, she said.
The group consists of specialists with experience in Sweden's banking crisis of the 1990s.
A number of bankruptcies have been announced as SEB, faced with delays with loan payments, has refused further financing, the paper said.
Litigation is becoming more common, and this week SEB Pank and Milstrand, a transit firm, were set to argue their case in front of a judge.
Estonian banks have always prided themselves in having some of the lowest bad loan ratios in Europe, but nowadays the situation is changing fast.
At the end of November the aggregate size of loans delayed by more than 60 days was just 405 million kroons, but by the end of April it had ballooned to 1.6 billion kroons, according to the Bank of Estonia.
The banks themselves have been reluctant to discuss any figures and say that the increase in bad loans is far from catastrophic.
Falkenberg said that the SEB "special unit" would be very busy in the next few years.
