“The impression that I have is that the presidency [of the Council of the EU] is very good for Latvia, because if you are the EU presidency you suddenly have many friends in Europe and they see that this is a very professional, well educated and ambitious country, and of course we know that all the other Baltic states are as well. So there is certainly economic interest, and the presidency has only promoted it," Mijs said, adding that the sell-off of the state-owned shares in Latvia's Citadele bank was proof there was interest from other parts of the world as well.
However Mijs said that the geopolitical situation had caused concerns. "Wherever in the world there is a small state with a big neighbor there is always a bit of tension," he said.
Europe’s banking sector head also praised Latvia’s resiliency since the financial crisis, saying that “crises are a normal part of life and the economic cycle, so should not deter investors.”
"The question is about your ability to restructure the economy. If we look at the way Latvia has recovered, it is quite impressive," Mijs said.
Remarking on why several multinational banks left Latvia in recent years, Mijs said that practically all banks withdrew to their home markets after the crisis, but that for Scandinavian banks Latvia essentially is their home market.
"All the banks after the crisis withdrew to their home market. This was a general effect. There were two reasons for that. The first was bank managements needed to reduce risks. Secondly, it was also a requirement by the supervisors directly after the crisis to bring the liquidity back to the country. That is something banks and regulators need to think about in the future, namely, how to restore the cross-border stream of liquidity and capital.
You can have all the regulation you want, but if the supervisors start saying that you need liquidity in the country then of course you get a lack of investment, a lack of interest. This is why we are so positive about the creation of the European banking union. The banking union will also provide a single supervisory space and the supervisors will feel safe about liquidity streams within the eurozone. I think this will create renewed interest in the Baltic region," said the CEO of the European Banking Federation.
The European Banking Federation unites banking associations of EU member states and the European Free Trade Association (EFTA), including the Association of Latvian Commercial Banks.
