Eesti Pank: Domestic banks can weather storm of break in Russia trade

The Bank of Estonia building in Tallinn.
The Bank of Estonia building in Tallinn. Source: Siim Lõvi /ERR

Estonia's banking sector is sufficiently resilient to a halt in trade with Russia, Belarus and Ukraine, the Bank of Estonia (Eesti Pank) says, in the wake of Russia's invasion of Ukraine and the ensuing, wide-ranging western sanctions.

Fewer than 1 percent of loans issued by Estonian banks have been to businesses which are directly involved in transactions with Russian businesses, the central bank said.

More indirect links are harder to assess, however, the bank notes.

On the whole, however, the Bank of Estonia says it has the capacity to ensure the stability of the Estonian financial sector, a task it is working in close contact with partners such as the Financial Supervisory Authority, the finance ministry and private sector banks.

The banking sector as a whole also has enough liquidity and other buffers to cover any possible loan losses and to continue to loan domestically, the central bank says, adding it can provide liquidity loads to banks further, as needed.

Cash reserves both at the Bank of Estonia and with its Eurozone counterparts can be used to provide more cash to firms and private individuals where needed, the bank adds.

A fuller summary and FAQs on cash, the status of the Ruble and other issues, are here.


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Editor: Andrew Whyte

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