However, the number of banks in the Baltic region is still too large in proportion to its size, he said. Following the Swedish example, only four or five banks along with some smaller co-operative banks should be left in the Baltics.
"If two of Estonia's biggest banks, Hansapank and Uhispank are active in the whole Baltic region, there is no doudt that we can manage with only a few banks in this region."
"The two Estonian banks are expanding on the whole Baltic region, but at the same time can not neglect the local market," Schults said.
According to Schults, foreign banks are less eager to enter the Estonian market. Foreign investors are most interested in directly controlling possibilities like a strategic stake in a bank for example.
Foreign investors have already acquired almost half of the share capital of Estonian banks, and Schults takes it as a positive sign in the long-term perspective towards globalization and the European Union integration.
"You need a partner to be strong," Schults said.
Schults does not see investment banking as a weakness and said it should not be separated from ordinary banking activities.
"If the banks would take minimal stock risks and the risk was better managed, it would still be better if a client received the whole package of services from one bank," Schults said.
According to Schults, the number of small investors interested in stocks is still very small. There are about 40,000 stock account holders, the number of active traders is even smaller.
In West-European countries the number of investors is about 12 percent of the whole population, while in Estonia they make about 3 percent.
Schults said he thinks a larger number of small investors would make the market more stable. Also the stock exchange, which is presently dominated by the banks, will certainly become more attractive when big companies enter the market.
According to Schults, the situation on the stock exchange market is "poor."
Schults describes the Estonian stock market as "a year ago it was ultra optimistic and now it is ultra pessimistic." This is mainly caused by the developments in Russia.
Schults explained why depositing is so popular. "There are few alternative investment and risk management possibilities on the financial market so people are looking more on saving possibilities. Depositors receive a sufficient interest with a low risk, as interests are not taxable and the inflation is decreasing."