Euro's fall will help banks hit target

  • 1999-12-09
  • Sandra L. Medearis
RIGA - Some of Latvia's 25 or so banks will face the music on Jan. 1
when a paid capitalization level set by the Bank of Latvia becomes
effective. Those who have not attained a statutory capitalization
level of 5 million euros will have to close their doors.

Still, the euro itself may give some banks an assist. The target
amount is currently worth 2.93 million lats ($5.05 million). The
euro's fall against the dollar is helping borderline banks edge up to
the line. The euro hit a new low Dec. 3 at 0.9990 per dollar, edged
up 1.001 Dec. 6 and at press time stood at 1.02. Five smaller Latvian
banks are close to the line or barely over it: Trasta Komercbanka
2.92 million lats, Baltijas Starptautiska Banka, 2.21 million lats,
Ogres Komercbanka 2.13 million lats, Latvijas Tirdzniecibas Banka, 2
million lats and Latvijas Biznesa Banka, 3 million lats.

His bank is home free, said Georgijs Dragilevs, president of Latvijas
Biznesa Banka.

"We have 3 million lats now and we are not waiting for God to give us
something," he said. " We are working on it. Our capitalization level
on Feb. 1 will be 4 million lats."

Banks close to the mark, but not on it, are working feverishly and
may merge to save themselves, the central bank's vice president,
Ilmars Rimsevics said.

Banks that hit right target without any surplus euro wiggle room will
not be put down immediately should the exchange rate put them below
the magic number, but will be given a deadline by which to raise
capital to the legal level.