Italian financier opens Estonian bank

TALLINN - Preatoni Pank, a new commercial banking institution, was
granted an operating license by Estonia's central bank on Sept. 23,
making it the first new bank in Estonia in six years.

"The founders of the Preatoni Pank have fulfilled the requirements
set by the credit institutions' law, so the council of the central
bank has no reason to reject issuing the operating license," read a
Bank of Estonia statement.

The license will be issued in 10 days, said Andrus Kuusmann, the
central bank's chief spokesman.

Kuusmann said the share capital of Preatoni Pank, Estonia's sixth
independent credit institution, is 100 million kroons ($6.67
million). Preatoni Pank calculates its stock capital will increase to
150 million kroons during the first year, according to its business
plan, Kuusmann added.

Since 1993, the number of banks here has dropped from 21 to six.
There is also a branch office of a foreign bank. Decreasing the
number of banking institutions was part of the central bank's plan to
force bigger volumes in individual banks thereby raising Estonia's
banking standards to those of the European Union.

During the past six years, mergers and bankruptcies have dominated
the news surrounding Estonian banks as they combined or fell out of
the market while trying to meet additional capital requirements. Now,
as the banking industry has been stabilized and the market share of
savings and loan associations is a mere 1 percent, the environment is
ripe for new banking institutions, Kuusmann said.

The new bank, which takes its name from its largest share holder,
Italian financier and real estate developer Ernesto Preatoni, should
not pose any risks to existing credit institutions, analysts say.

"The niche they plan to operate in is specific. They don't want to
become a universal bank," Paavo Pold, analyst at Suprema Investments,
said.

Preatoni Pank plans on offering private banking services as well as
"less traditional banking," said Ott Karolin, managing director of
the new bank.

It is no secret, however, that one of the bank's main purposes will
be to finance mortgage loans to Pro Kapital customers, a real estate
development firm owned by Preatoni and listed on the Tallinn Stock
Exchange.

The founders have also said financing real estate projects and
channeling foreign investments into Estonia will be main services of
the bank.

"Above all we see ourselves as a private bank oriented toward the
private individual," Karolin told the Baltic News Service. "We assume
our customers to be namely such who want direct contact," he added.

Preatoni applied for the bank license in March after deals with two
other Estonian banks, Kreddidipank and the now defunct EVEA Pank,
failed. Normally, it only takes about three months to approve or
reject an application to start a bank, said Kuusmann, but the
introduction of new banking regulations in July delayed the process.

Preatoni is the largest Italian investor in Estonia. In addition to
commercial and residential projects in the Baltic states and St.
Petersburg, his firm has over 25 years of experience in real estate
ventures in Italy, Egypt, the United States and France. Pro Kapital
was founded in 1996 as an Estonian subsidiary of the larger firm,
Preatoni.

The latest development project by Pro Kapital in Estonia is an
exclusive residential neighborhood located near Tallinn's Old Town
and due to be completed in 2000.

Karolin said the next step before opening the bank office is to
receive the central bank's decision in writing and then presenting
the document to the registry of companies.

Preatoni Pank will have nearly 20 employees in its Tallinn office
according to Karolin.

"It's difficult to say how long it would take to make the entry, but
technically we are now ready to start business," he said.