IMF: Swedish banks won’t leave Estonia
20.03.2009, 08:59 International Monetary Fund considers that
Estonia’s economic situation goes difficult if Swedish banks refused to help
their subsidies in Estonia. This scenario is still unlikely, ERR News reports.
According to the information from Eesti Ekspress, IMF also considered what
would happen in Estonia devaluated.
IMF considers the main problem of Estonian banking to be that the money which
has been gotten in a short period of time, has been put under long-term real
estate loans. In the autumn Swedbank faced liquidity problems and it was saved
by the capital injection from its holding company. The situation might turn
critical is Swedish banks refused to help, but this scenario is unlikely.
Since Swedish banks have confirmed they support their subsidiaries in Estonia
and they’ve kept their promise despite of difficult time, it’s unlikely they’ll
stop supporting now, Christoph Rosenberg, the head of IMF’s mission to Central
Europe said.
“In addition there is an agreement between Swedish and Estonian central
banks, which promises to give additional money when things get difficult,”
Rosenberg said.
Estonian central bank said that the speculations as if Swedish central bank’s
EEK 14 bln aid package to Estonia was related to difficult situation of Estonian
banks are untrue. The agreement also isn’t an exchange for a promise to keep the
currency peg.
This was a preliminary agreement, meant to improve Estonian banks’ liquidity
in case of financial crisis, Jana Kask, head of the financial sector policy
division of Estonian central bank said.
Estonian central bank said they started to prepare the agreement a year ago,
but the international financial crisis stopped that process.
Rosenberg said that IMF analyzed possible situation, what would happen if EEK
was devalued. It was regular risk scenario.
“One of them was a test, which we make for each country – we’ll see what
would happen to banks if exchange rate was changed. It showed that in that case
banks have troubles with the loans issued in foreign currencies. It approves
once more that changing the currency peg wouldn’t be a good idea for Estonia,”
Rosenberg said.
Ivari Padar, the Minister of Finance said that the situation of Estonian
banks is stable today. Also IMF emphasized that if Swedbank had liquidity
difficulties on September, deposits din’t move out of Estonia, but to other
Estonian banks.