TALLINN - Banks are being forced to repossess property in ever increasing numbers as the economic crisis ravages Estonia and unemployment continues to rise.
Swedbank, the market leader in the country, has announced that it has about 96,000 clients who have taken credit for housing and are having long term difficulties 's more than three months 's making payments.
As of the end of March, Swedbank has approximately 1,100 customers who are not currently making loan payments 's nearly half of them are also not making interest rate payments.
Other banks are reporting similar difficulties.
Silver Vohu, a press officer with SEB, the country's second largest bank, said it had given out credit to 40,000 people 's 600 of whom are now having difficulties repaying their loans.
Furthermore, many analysts and bank representatives have raised fears that the number of people who cannot repay loans 's and subsequently the number of repossessions that take place 's is only going to increase as unemployment continues to rise.
In the week of April 13 alone, the unemployment rate increased by 2,431 people, bringing the total number of unemployed in the country, ranging from 16 year-olds to pensioners, to 58,661 people. The unemployment rate reached nearly 14 percent in some parts of the country.
Most major banks in the country have pledged that they will only follow through with property repossessions in the most extreme cases.
According to Tijni Kukke, a credit inspector with Nordea Pank Eesti, the decision on the sale of real estate is an extreme step for the bank and is actually preceded by a long period of negotiations with the client, during which both sides try to come to a satisfying decision.
Clients are also given the chance to sell the property themselves before the bank steps in.
Despite these efforts, most banks have reported that repossessions are on the rise.
THE LONG HAUL
Despite the difficulties faced by foreign banks that have become over extended in the three Baltic states, Swedbank has recently pledged that it will remain in the region and that it hopes to maintain its leading position.
In an interview with the Latvian-language business daily Dienas Bizness, the head of Swedbank's Baltic banking Hakan Berg said the crisis, in the long-term, can also be viewed as a time of opportunities.
Berg said the long-term plans of Swedbank include continuing operations in the Baltic States.
Berg admitted that over the past few years, the growth of Latvia has not been very balanced and did not deny the bank could take partial responsibility for the severity of the crisis in the country. The next task after overcoming the crisis should be ensuring sustainable growth of the country, he said.