He said that FKTK at the request of Prime Minister Maris Kucinskis has prepared draft legislative amendments, providing for a ban of bank operations with shell companies. At the same time, there will be a transition period set - six months or longer.
"At present non-resident deposit portfolio is about 35%. In Lithuania it is about 3%, in Estonia - 12%, and Estonia also plans to reduce this share," said Putnins.
He informed that there are ten banks focusing on non-resident deposits. "It is now in the hands of bankers. There is a possibility to change, look for new business niches. We have started a dialogue with banks, pointing them in the right direction. In two weeks we expect the banks to present their new business strategies," he said.
Putnins admitted that some banks might leave the market. "Some might decide to leave the market, some might decide to stay in the payment business, but in a different status. Some might reduce their business, understanding that non-resident sector is in the past. There might be mergers of some banks. There are numerous opportunities," he said.
Putnins told LETA earlier that the allowed non-resident business in Latvian banks should be around 5 percent. "That is the share of non-resident business Latvian banks should have now – around 5 percent. That is today our requirement, considering the changes in the global financial system and the national security aspects. Latvian banks should revise their strategies, develop different business models and look for new business niches. There is no other possibility. There is no time. It is important to be aware that non-resident business has always been a high risk zone," he said.
As reported, there are 26,081 shell companies among clients of Latvian banks, including two companies of Latvian origin, according to FKTK data. Shell companies account for 36.57% of the Latvian banks’ aggregate loan turnover, while their share in the non-resident segment is 44.5%.
