Bank of Estonia head: resilience of private banks good, a few risks remain

Ardo Hansson Photo: Postimees/Scanpix
12/29/2014 3:20 PM
Category: Economy

Bank of Estonia Governor Ardo Hansson said the health of private banks in Estonia is good, but there are three risk areas.

In an interview to Postimees, Hansson said private banks operating in Estonia have a very strong capital base, loans are backed by own funds, not by loans from abroad, an opposite situation compared to the boom period before 2008, the proportion of sour loans is low and profitability high.

He said private banks face three risks, including the export orientated Estonian economy, which translates into economic vulnerability, the connection to Scandinavia, meaning that if real estate prices fall there, especially in Sweden, it affect banks in Estonia, while the third risk is the nation's own real estate market, which saw the highest growth rate in Europe only six months ago.

J.M. Laats

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