New Market Research Report: Latvia Commercial Banking Report Q1 2011

Jan. 17, 2011 - PRLog -- Piecemeal steps are being taken to try and shore up Latvia's beleaguered banking sector, including a new  insolvency law and the restructuring of the nationalised Parex Banka. We regard these as positive  developments but believe that more is needed to revive bank lending. We also still expect the industry to  contract in 2010, followed by positive but weak growth from 2012.  Having been a fundamental weak point of the beleaguered economy since the credit bubble burst, the  Latvian banking sector is set for significant restructuring over the medium term. Evidence that this  process is starting to get off the ground comes from the introduction of a new insolvency law, approved  by parliament in July 2010, which effectively shoulders banks with the responsibility of dealing with  defunct loans. The law provides details on how much debt can be written off and how long an individual  can be deemed insolvent, with time limits from one year to three-and-a-half years. This is in stark contrast  to the previous law that forced debtors to pay off the total liability and did not give a timeframe in which  to do so. By shifting responsibility on to the banks, the government hopes this will stimulate more  innovation in the sector when dealing with non-performing loans.    The restructuring of Parex, which was taken over by the government in 2008 and led to a EUR7.5bn  bailout from the EU and the IMF, is also a significant turning point for the industry. The higher quality  assets from the bank were stripped out and put into a new entity called Citadele, which was registered in  July and began operations in August. Chair Juris Jakobsons has indicated that the new bank could be sold by 2011, which would take the burden off the government and reduce the degree of state involvement in  the banking sector.    While these developments are certainly steps in the right direction, we stress that the industry's  restructuring still has a long way to go. A substantial misalignment between loans and deposits still exists,  with the loan-to-deposit ratio above 200%, leaving banks highly exposed to changes in depositor  confidence. In addition, with banks still in deleveraging mode, lending conditions are likely to stay  unfavourable for some time yet. Although the Bank of Latvia has cut the seven-day deposit rate to from  1.00% 0.50% in July, we do not believe this will be sufficient to encourage banks to extend fresh credit to  the economy at a time when balance sheets need to be reined in and uncertainties remain over  international financial market stability.  Given the substantial size of the Latvian banking sector, which measures up at 158% of GDP, we believe  the industry has further to contract. We forecast the amount of total assets to fall by 10% in 2010 and by  2.0% the year after, before returning to positive growth in 2012. However, over the medium term we  expect a marked slowdown in asset growth, with average annual expansion of 2.0% forecast for 2012-  2014, compared to 28.9% in 2006-2008.

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Partial Table of Contents:

Executive Summary
- Table: Levels (LVLbn)
- Table: Levels (US$bn)
- Table: Levels At September 2010
- Table: Annual Growth Rate Projections 2010-2014 (%)
- Table: Ranking Out Of 59 Countries Reviewed In 2010
- Table: Projected Levels (LVLbn)
- Table: Projected Levels (US$bn)
SWOT Analysis
- Latvia Commercial Banking SWOT
- Latvia Political SWOT
- Latvia Economic SWOT
- Latvia Business Environment SWOT
Business Environment Outlook
- Commercial Banking Business Environment Ratings
- Table: Latvia's Commercial Banking Business Environment Rating
- Commercial Banking Business Environment Rating Methodology
- Table: Emerging Europe Commercial Banking Business Environment Ratings
Global Commercial Banking Outlook
Emerging Europe Banking Sector Outlook
- Table: Banks' Bond Portfolios
- Table: Emerging Europe Commercial Banking Business Environment Ratings
- Table: Comparison Of Loan/Deposit, Loan/Asset And Loan/GDP Ratios
- Table: Anticipated Developments In 2011
- Table: Comparison Of Total Assets, Client Loans And Client Deposits, 2009-2010 (US$bn)
- Table: Comparison Of Per Capita Deposits, 2010e (US$)
- Table: Interbank Rates And Bond Yields, 2009-2010
Latvia Banking Sector Outlook
Economic Outlook
- Table: Latvia Economic Activity, 2007-2015
Competitive Landscape
- Market Structure
- Table: Protagonists In Latvia's Commercial Banking Sector
- Definition Of The Commercial Banking Universe
- List Of Banks
- Table: Authorised Banks In Latvia
Company Profiles
- Baltic International Bank
- Table: Key Statistics For Baltic International Bank, 2006-2008 (LVLmn)
- DnB NORD Banka
- Table: Stock Market Indicators
- Table: Balance Sheet (LVLmn, unless stated)
- Table: Balance Sheet (US$mn, unless states)
- Table: Key Ratios (%)
- Swedbank
- Table: Key Statistics For Swedbank, 2006-2008 (LVLmn)
- SEB Banka
- Table: Key Statistics For SEB Banka, 2006-2008 (LVLmn)
- Norvik Banka
- Table: Key Statistics For Norvik Banka, 2006-2008 (LVL '000)
- Danske Banka
- Table: Key Statistics For Danske Banka, 2006-2008 (LVL/DKK '000)
- Komercbanka Baltikums
- Table: Key Statistics For Komercbanka Baltikums 2006-2008 (LVL '000)

Full Table of Contents is available at:
-- http://www.fastmr.com/catalog/product.aspx?productid=1093...

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Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.