Banking association denies Reirs' remarks over 'bank cartel'

The Finance Latvia Association (FLA) categorically rejects the claims made by the former Finance Minister Jānis Reirs that banking activity in Latvia resembles a cartel, the association said in a statement on November 10.

Meanwhile, the Latvian central bank (Bank of Latvia, LB), which supervises commercial banks, invites the Competition Council (KP) to assess if there are concerns about a possible cartel in the banking sector.

“These are false statements aimed at mitigating the growing, data-based objections to the currently Saeima-directed amendments to the law in support of borrowers,” the association said, stressing that banks, as well as several leading economists, entrepreneurs, and their merging organizations, have in recent weeks pointed to loopholes in amendments to the law in support of borrowers, which could potentially have negative long-term consequences for the Latvian economy.

“These arguments are data-based and in no way constitute a threat to the industry, as Mr Reirs tends to position it. It is one of the myths spread by politicians that the laws passed will not affect future credit,” FLA noted.

Lauris Mencis, Chairman of Swedbank Latvija, a member of the FLA, told

“Mr Reirs' statements generally tend to be not only misleading but also blatantly absurd. Rather than listening to the data-based criticism of commercial banks for amendments to the law, which is a scrap from the very beginning, he accuses banks of cartels.”

He noted that commercial banks warn about the consequences of irresponsible politicians' actions for the future of Latvia's economy, supporting this criticism in data and business logic.

Asked to comment on Reirs' concerns about a possible cartel in the banking sector, the LB told questions regarding the cartel of market participants are in the hands of the Competition Council (KP).

LB consulted the CC in the spring, but the responsible institution did not see any basis for an in-depth assessment of the activities of commercial banks. If politicians have new information, LB invites them not to delay and to refer the matter to the authority responsible – KP.

Portal has not yet been able to contact Reirs about whether he will turn to KP in connection with the suspected cartel in the banking sector. He didn't answer a phone call or text message.

The comments by the five-year former Finance Minister about the banks resembling a cartel are unlikely to boost Latvia's current ambition to be a European center of financial propriety.   

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