Finance watchdog: There are too many banks for size of Latvian market

With the decrease in non-resident deposits, Latvian banks will have to start offering niche products, as the number of banks in Latvia is too big for the local market, said Pēters Putniņš, head of the Financial and Capital Markets Commission (FKTK), appearing on LTV March 19.

According to FKTK data, by year-end 2018 foreign deposits in Latvian banks had decreased to €3.3 billion, shrinking 73% against late 2015.

Asked if any banks are to quit due to changing regulations over accepting foreign deposits, Putniņš said that the matter is still on the table as the current number of banks is too big for the Latvian market.

At the same time he pointed out that no bank is working with local clients exclusively. But it's clear that not all banks will be able to work with local clients. Therefore they'll have to seek for new niches, he said.

"It's the free market. It's business, and it's in the shareholders' hands," said Putniņš. 

Asked about possible attempts to push Scandinavian banks out of the market, Putniņš said that there are worries in Estonia over the possible "repatriation" of these banks, but currently there is no evidence such a thing is to unfold.

Putniņš also used the interview to voice confidence that Latvia is on course to meet Moneyval recommendations over anti-money laundering on time. The same sentiment was earlier voiced by Latvia's chief anti-money laundering official.

Latvia's finance sector has come under increasing scrutiny after ABLV Bank folded itself in the wake of US money-laundering accusations. Earlier, LSM published a guide to the rest of Latvia's non-resident banks

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