Bank of Estonia Supervisory Board to discuss sharp rise in banking profits

Tallinn. Source: Siim Lõvi /ERR

Politicians, who are members of Bank of Estonia's (Eesti Pank) Supervisory Board have confirmed to ERR, that they will discuss commercial banks' sharp rise in profits, at a meeting on Tuesday evening.

"Today, I am proposing a discussion to ensure that commercial banks operating in Estonia, which are earning anomalously high profits, contribute more to our society, be added to the agenda of Bank of Estonia's (Eesti Pank) supervisory board meeting," said board member Jaanus Karilaid (Center).

Fellow supervisory board member Ivari Padar (SDE) agreed, that the issue should be discussed at the meeting. "I think it would be extremely appropriate for Bank of Estonia's Supervisory Board to discuss this. The question is, whether or not this situation is temporary, and how to move forward from here."

The Conservative People's Party of Estonia's (EKRE) board representative Jaak Valge was also in favor of a discussion on bank profits. "This should indeed be on the agenda, and of course it should be dealt with. In Lithuania, the issue has been dealt with properly, but so far, we have overlooked it," Valge told ERR.

While the topic did not originally appear on the agenda for Tuesday's supervisory board meeting, Bank of Estonia spokesperson Viljar Rääsk told ERR, that board member always have the opportunity to add further items for discussion.

According to Jaanus Karilaid, the recent rise in the Euribor has led to increased interest rates, which at the same time places an additional burden on the Estonian people. "Banks should be even more flexible in light of the current crisis. Banks also have to behave as responsibly (in Estonia) as they do in the countries of their parent companies. We could consider strengthening the role of the Competition Authority here in the future," he said.

In a press statement released on Monday evening, Riigikogu member Taavi Aas (Center), called for a raise in banks' profit taxes and for Estonian residents to be offered government bonds as a way of putting pressure on banks to increase deposit rates.

"Banks operating in the Baltic countries earned a total of €1 billion in profit last year. Estonia's share of this was around a third. Most of this money comes straight out of the pockets of Estonian people and companies, and a large proportion is taken out of the country tax-free through a variety of different schemes," said Aas.

"According to the (financial) forecasts, banks' profits could triple this year and so the Estonian state must not stand idly by. Foreign banks are taxed at 14 percent one their profits, however, in the current situation this is clearly not enough," Aas said.

Aas estimated, that introducing a 20 percent profit tax on banks operating in Estonia would bring in an additional €150 million to the state coffers. He pointed out, that these funds could then be used to help fund the construction of new highways or contribute to a raise in emergency pension rates.

Last week, it was revealed, that banks operating in Estonia recorded a combined profit of €566 million in 2022.

Swedbank's profit increased by 25 percent on year and SEB's was up by 17 percent. LHV's revenues grew by 26 percent, while Coop Pank's saw a 51 percent rise. Luminor's profits were 67 percent higher in 2022, than for the previous year for the Baltics as a whole.


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Editor: Michael Cole

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