The Ministry of Finance is updating a bill under which savings and loan associations (SLAs) in Estonia will have to comply with the same regulations in the future as banks, meaning they must align their operations with Estonian Financial Supervision and Resolution Authority (FSA) requirements.

"Within a certain number of years, you will have a choice: either convert into cooperative banks by order — which is completely unthinkable; it isn't feasible to hire 70 employees when we currently have 1.5," noted Uno Silberg, chair of the Põlva County Savings and Loan Association supervisory board and chair of the Estonian Union of Credit Cooperatives (EHLÜL). "Or, on the other hand, if we cannot become a bank, then SLAs must be liquidated."

According to Silberg, right now is a calm and quiet time, making it a good opportunity to formally end the existence of an SLA in Põlva as well.

However, he noted that winding down the association's operations will take years.

"The process depends on the duration for which loans have been issued," Silberg explained. "The law states that issues should be resolved within a maximum of ten years, but we ourselves believe that five to six years should be enough to carry this out smoothly, ensuring that both depositors and borrowers are protected in the process."

The actual beneficiaries of the Põlva County Savings and Loan Association are Helle Virt-Lenk, Heimar Lenk, Olev Raju, Heli Karuse, Janno Rüütle, Liina Kuuse and Uno Silberg.

As of the beginning of 2024, 21 SLAs were operating in Estonia. This year, just 14 have planned to continue operations.

According to Thomas Auväärt, deputy director of the Financial Services Policy Department at the Ministry of Finance, the ministry remains concerned that many people who have deposited money in SLAs have not been able to withdraw their deposits in time.

"This is certainly concerning for the state," he said. "We still plan to regulate the operations of SLAs to ensure that people can receive their deposits in time, which may mean that in the future, SLAs will have to come under the supervision of the FSA."

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