RIGA - SEB bank has announced plans to consolidate its operations in the Baltics within a single division in order to better manage the current economic slowdown.
SEB's lending to the Baltics amounts to 13 percent of SEB's total outstanding loans.
"The next few years will be challenging in all three countries and will continue to require considerable management attention. Therefore, for the time being, we are consolidating the responsibility for our Baltic operations within a single division," said SEB CEO Annika Falkengren.
The newly created SEB Baltic division will represent Estonia, Latvia and Lithuania.
Despite the double digit contraction in the Baltics this year, banks say they have no plans to withdraw any time soon.
"We have a long-term perspective with regard to our operations in the Baltic countries. We view the region as one of our home markets," said Falkengren.
Bank of Latvia president Ilmars Rimsevics recently attempted to squelch concerns about the withdrawal of foreign banks, saying despite rumors and ongoing debate over devaluation, he remained confident foreign banks, especially Swedish banks, would remain.
"I have no doubt that the Swedish and other foreign banks are here to stay. They will continue doing business in Latvia as usual, except right now they issue fewer loans, because they are afraid and do not know what the future holds for them," Rimsevics told Kapitals magazine.
Despite his confidence that banks would remain in the Baltics, Rimsevics said activity must not be one sided.
The bank head also added the future of Latvia depends on how much money is injected into the economy.
"Seeing how the national economy declines, it would be irresponsible not to provide guarantees and try to raise the Swedish banks' interest in such projects," Rimsevics said.
SEB said it is not concerned about the possibility of deflation in the Baltics as it would not lead to a bigger loan loss for Swedish banks. However, the losses may come quicker than they had previously expected.
"In total we would have the same size of credit losses, but if there is no devaluation they would be a little more regular and over a longer time frame," Falkengren told Swedish radio.
In May, SEB reported a 25 percent drop in its first-quarter operating profit, mainly due to provisions for possible loan losses which it may incur in the Baltics
Martin Johansson, head of SEB Client Relationship Management in the Merchant Banking division, will be responsible for the new and improved Baltic division. Responsibility for the Baltic operations was previously within the Retail Banking division.
SEB at this time has 200 branch offices and 5,800 employees in the three Baltic countries which serve over 2.5 million customers with lending, savings products and other financial services.
SEB is a Northern European financial group serving some 400,000 corporate customers and institutions and five million private individuals. SEB offers universal banking services in Sweden, Germany and the Baltic countries.