Poor-quality applications too risky to credit

Take note – story published 8 years ago

For banks to restart crediting more enterprises in the national economy, more attention must be focused on preparing higher-quality projects worthy of taking out available loan opportunities, head of wood-veneer firm Latvijas finieris and economic advisor to the Prime Minister Juris Biķis told LETA in an interview Wednesday.

Banks have money, he said – the amount of deposits is twice as large as the entire amount of credits given out. However Biķis said the question remains about how well-prepared the submitted loan project applications are and the level of risk undertaken.

“Learning from the previous crisis, the banks have raised their risk criteria, therefore perhaps causing credits to be handed out more cautiously. The question isn’t about money but rather about the quality of the projects prepared by the entrepreneurs and how the risks have been assessed,” he said.

He also objects to the practice of linking especially large projects to state guarantees, saddling the government with additional liabilities. The company head doesn’t believe that taxpaying citizens should be made responsible for such risky projects.

“An entrepreneur must prepare a project that can be seen to be sustainable. It’s no big deal to grab a bunch of money and then just go bankrupt,” he said.

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