TALLINN - Hansabank, the largest financial group in the Baltics, announced last week that it would use more external finance after the Baltics' accession to the European Union next year. Bank CFO Kristina Siimar, speaking Oct. 24 on an online news conference, said, "Now that all three Baltic countries are about to join the European Union, and the rating of Hansabank is on the same level with Scandinavian banks, we see that the share of external finance is gradually going to increase."
If in the past Hansabank tried to keep the ratio of loans to deposits at 100 percent, then with an increase in external finance the bank estimates that the ratio will rise to about 110 percent – 120 percent, Siimar explained.
Banks in EU countries maintain loan-deposit ratios in the range of 150 percent - 230 percent.
In the first half of 2003 Hansabank had a market share of 34 percent of the Baltic loan market and about 32 percent of the deposit market.
The respective ratios in Estonia at the same time were 51.1 percent and 57.3 percent, the bank announced.
Total loans stood at 4 billion euros at the end of the third quarter, of which half were issued in Estonia. Deposits amounted to 3.9 billion euros, including 1.8 billion in Estonia.
Board Chairman Indrek Neivelt expressed hope that the credit boom in Estonia would soon end, though there were no signs of this happening so far.
"Today's economic growth is mostly maintained by loan growth, and this cannot go on forever. The danger of over-borrowing is clearly there. One is very optimistic in what regards income growth and the European interest rates' staying low," Neivelt said.
