TALLINN - Chief of Swedbank's Baltic banking unit Hakan Berg said that this autumn the bank expects to complete an analysis on the legal structure that would be best for the bank for continuing its operations in the Baltic states, reports news agency LETA.
He says that "At the moment, [our] banks in Latvia and in Lithuania are subsidiaries of the Estonian bank, but that is not the best solution from the point of view of capital management." The current bank structure is a holdover from when the predecessor institution, Hansapank, was still an Estonian bank.
The reorganization would probably have the Latvian and Lithuanian banking units answering directly to the parent bank in Sweden. "The change is planned to take place in the autumn and the intended change in the legal structure will not affect the Estonian unit, but [would affect] the structural link between the Estonian unit and the Latvian and Lithuanian units," explained Swedbank Estonia's press spokesperson Mart Siilivask.
He added that this is a part of a long-term process, the objective of which is to form Swedbank into an efficient, singular organization. Customers will not be directly affected by the change.
The number of overdue loans in Estonia has increased, from 5.8 percent to 6.2 percent of all loans, reports the Estonian Central Bank. It adds that an increase in loans with short-term payment problems, in June, together with the current economic outlook, hint that the next few months will not bring about improvements regarding loan quality.
Loan quality is better than average in the housing loan portfolio, where 4.1 percent of mortgages were overdue for more than 60 days. The problems have worsened in the construction sector, where problematic loans now total 20.2 percent of all loans.
However, the total loan and lease portfolio size dropped by 0.7 percent, or 1.8 billion kroons (115.3 million euros), to 259 billion kroons.
The country's banking sector is still well capitalized, with the capital adequacy ratio falling by 0.6 percent, to 21.2 percent, which still exceeds the minimum requirement of ten percent.
Communications manager of the Financial Supervisory Authority Malle Aleksius said that nothing important will change for Estonia in connection with the reorganization. From the point of view of supervision, this change would mean that Swedbank Group's Latvian and Lithuanian subsidiaries would no longer be within the field of vision of the Estonian Financial Supervisory Authority.
Hansapank was sold to Swedbank in 2005.
