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Posts Tagged ‘Estonia’

40% Of Estonian Companies Failed To Submit Annual Report

In Financial Markets, International Econnomic Politics, National Economic Politics on 07.07.10 at 03:39

For the first time ever, all companies in the new euro zone country – Estonia – were required to submit an online annual report. But only 60% of Estonian businesses managed to do so, the web site aripaev.ee reports.

“Not all businessmen know that they are required to submit an annual report.”

Piret Meelind

Although all 93,402 companies registered in Estonia were required to submit their annual report by July 1, only about 60% did so. However, the percentage of complying companies went up slightly since a year ago it was 58.6%.

For the first time, all companies were required to submit an online annual report, reported aripaev.ee

As in earlier years, the lion’s share of annual reports were submitted in the last days of June. For instance, in the last three days, 23,378 companies uploaded their reports and signed them digitally.

For the first time, also non-profit organizations were required to submit their report.

As of 27,631 non-profit organizations, only about 49% had complied with the requirement.

Another 3,212 companies had uploaded their reports online, but not yet submitted them.

Piret Meelind, deputy manager of the Centre of Registers and Information Systems, said that there have been no technical problems with the submission of reports. “The system enables up to 20,000 users to operate in this online environment simultaneously, but the number of users who had logged in was much lower,” she said.

Meelind said that, historically, many companies will submit their annual reports in the first week of July.

A representative of the justice ministry said that although the law allows to fine business owners who fail to submit their annual report by the deadline, the authorities would send out a written warning instead of imposing an actual fine.

“In many cases, companies fail to submit their annual reports by the deadline because of unawareness or carelessness. For instance, not all businessmen know that they are required to submit an annual report also if the company had no operations during the financial year,” she added.

Source: balticbusinessnews.com

Related by the Econotwist:

Welcome To The Euro, Estonia! Here’s Your 4,5% Extra Risk Premium

Businessman To Declare Hunger Strike If Not Paid

Estonia: Banks Lost USD 23 million in Q1

Morgan Stanley To Buy Bad Baltic Loans?

Finns Outraged By Swedish Plans To Bring Estonian Builders To Finland

Estonia: Something Doesn’t Seem Right

An Estonian Mystery

Estonian Newspapers Protesting With Blank Front Page

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Norway Takes Over Presidency Of Baltic Council

In International Econnomic Politics, National Economic Politics on 30.06.10 at 19:10

On July 1th 2010, Norway will take over the presidency over the Council of Baltic Sea States from Lithuania, according to representatives of the Lithuanian Ministry of Foreign Affairs.

The Lithuania-Nordic-Cross-Border Banking Flag

The Lithuania-Nordic-Cross-Border Banking Flag

The most important event during the period of Lithuanian chairmanship over the CBSS, was the meeting of the heads of the Council of Baltic Sea States that was held on June 1-2 in Vilnius and was one of the largest international events in Lithuania recently, The Baltic Course writes.

During the meeting, the Vilnius Declaration Baltic Sea Region Vision 2020″ was adopted that defines ecological, economic and social aspects of development in the region, and establishes political commitment to turn this vision into a reality, informed BC Lithuanian Foreign Ministry, The Baltic Course writes.

The Baltic Development Forum that took place simultaneously with the meeting of the heads of the Council of Baltic Sea States attracted the region’s business elite to Lithuania. At the forum, Lithuanian experience in overcoming the consequences of economic downturn and steps in addressing the current economic problems and using the experience of other countries were presented and discussed.

According to the representatives of the Ministry of Foreign Affairs, during the year of its presidency Lithuania mainly focused on promoting innovations, strengthening cooperation across borders, fostering a clean environment and ensuring of safe living conditions in the region. A number of events dedicated to these topics were held in Lithuania and abroad.

Credit Still Contracting

However, Lithuania’s recession is still ongoing, with domestic credit still contracting.

Domestic credit volume contracted by 244.8 million litas in Lithuania in May 2010: credit to general government diminished by 99.8 million litas, while credit to other residents went down by 145 million litas, of which lending to non-financial corporations and households went down respectively by 375.5 million litas and 95.2 million litas, while loans to financial intermediaries increased by 292.1 million litas, the Bank of Lithuania reports.

A year-on-year decrease in other monetary financial institutions’ (MFIs’) lending to non-financial corporations and households made up 9.8% and 4.8%, respectively.

Lending by other MFI’s to households shrank in May as follows: consumer loans went down by 47.4 million litas, lending for house purchase declined by 15.0 million litas, and other loans fell by 32.8 million litas. For the subsequent sixth month the annual growth rate of lending for house purchase was negative, making up –1.1% at the end of May.

Lending in euros prevailed in the lending structure of other MFIs by currency: by the end of May euro loans made up 69.5%, while litas loans made up 27.3%.

Related by the Econotwist:

Welcome To The Euro, Estonia! Here’s Your 4,5% Extra Risk Premium

Estonia: Something Doesn’t Seem Right

An Estonian Mystery

The Latvian Solution: Go Blonde!

Swedbank Buy Greek Bonds With Estonian Money

How To Make A Rat Look Like A Puppy

Latvia To Split And Sell Nations Leading Bank

Swedbank To Merge Baltic Subsidiaries Into The Group

Estonia: Banks Lost USD 23 million in Q1

Swedbank In Estonia: “Daylight Robbery”

Nordic Central Banks Agree On Baltic Bank Bailout

Morgan Stanley To Buy Bad Baltic Loans?

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Welcome To The Euro, Estonia! Here's Your 4,5% Extra Risk Premium

In Financial Markets, International Econnomic Politics, National Economic Politics, Views, commentaries and opinions on 25.06.10 at 00:00

As some might have noticed, the euro zone – also known as EZ16 – has now become EZ17. It happened last week, as Estonia officially joined the European disaster zone. And the financial markets gave their official approval this week by kicking the price on Estonian CDS’ up by 4,45%. The Baltic Euro newbee moves straight in among the Top 8 countries with the highest risk of default.

“Joining the euro is a status issue for countries seeking to cement their position at Europe’s top table.”

Simon Tilford

The funniest thing is that the first, and almost the only, newspaper outside the Baltic region  reporting the historical event was The New York Times; on Thursday June 17th the representatives of the 27 European countries hailed the sound economic and financial policies that had been achieved by Estonia in recent years, and signed the paper that authorize Estonia to shift from the kroon to the euro on January 1th 2011.

For the leaders of the bloc, expanding the euro zone to 17 nations is tantamount to a show of confidence at an inauspicious time for the battered euro, which has lost about 13 percent of its value against the dollar since the beginning of the year, James Kanter writes in the NYT,

With a debt crisis that appears to be spreading from Greece to Spain, membership for the country, Estonia, might seem more like a curse than a blessing.

There has been speculations about the countries might change its mind and abandon the single currency, and some have doubts that Estonia is even ready for the move.

“Maintaining low inflation rates in Estonia will be very challenging,” the European Central Bank warned last month.

Still, the euro remains among the strongest currencies in the world, and membership opens the door to a club with global influence.

For small and unsure countries on the fringes of the European Union, it doesn’t get much better than this – no matter the mounting downsides for countries already on the inside.

Political Prestige

Estonia becomes the third ex-Communist state to make the switch to the euro, after Slovenia and Slovakia, and the first former Soviet republic to do so.

Membership is also an important signpost that a country is on the way to achieving Western European standards of living, an important goal for a former Soviet republic like Estonia that has long been eager to develop.

“It’s a great day for Estonia,” Andrus Ansip, the Estonian prime minister, told Latvian state radio in an interview.

“We prefer to be inside, to join the club, to be among decision makers.”

And Estonia’s central bank governor, Andres Lipstok, will now be able to take a seat on the European Central Bank’s powerful council that sets interest rates.

Sheer Bloody-Mindedness

“Joining the euro is a status issue for countries seeking to cement their position at Europe’s top table,” says Simon Tilford, chief economist for the Center for European Reform, a research organization based in London.

“But you also could call it sheer bloody-mindedness of Estonia to join now with the outlook for the currency so uncertain,” Tilford says according to NYT.

With a total output of about $17 billion, the Estonian economy is tiny.

It’s placed as the sixth poorest country among the (now) 28 EU nations.

Public debt in Estonia is currently estimated at an annual 7.2% of GDP –  a tiny deficit compared to most other countries in the bloc.

And right now it looks like the Estonian government will be able to keep its pledge to the euro.

But note; it looks like it.

According To Schedule

Just two days before the deal was to be sign in Brussels, the Estonian Ministry of Finance published it’s budget figures for the first five months of 2010.

The Ministry of Finance estimated that the Government sector budget deficit by the end of April was 5.1 billion kroons,  or 2.39% of the projected GDP of the year 2010, theBalticCource.com reports, quoting LETA/Postimees Online.

In five months of 2010 the State budget collected 32.5 billion kroons in revenue while the expenses amounted to 34.6 billion kroons.

The biggest State budget spending in five months are mainly social benefits – 15.3 billion kroons.

2.4 billion kroons were spent on investments. The payments on investments in the first few months of the year were by 10% higher than in the past couple of years due to improvements in the use of foreign aid.

Estonia’s operating expenses in total as well as the human resources spending have fallen, the Ministry of Finance says. And the State’s benefits paid to individuals, the private sector and to other Government authorities are on the same level as last year.

Now – compare that with the projections charted below:

The Estonian unemployment rate has increased by more than 150% between September 30th 2009 and February 19th 2010, to 14,3%, according to Index Mundi.

In addition, the Estonian credit agency, Krediidiinfo, estimates that the number of companies that will go bankrupt this year could amount to 1,700, especially in the construction business, accommodation business and catering business.

That’s up by 700, compared with the 1000 bankruptcies in 2009.

Just to put the topping on the cake; Estonian overdue loans rose in May to the highest level since at least 2008 as troubles in the commercial property industry outweighed improvements in mortgage asset quality, Bloomberg reports.

The share of loans overdue for more than 60 days rose to 7 percent of total credit issued to companies and individuals, compared with 6.7 percent in April, central bank says, according to the balticbusinessnews.com.

According To Schedule?

In For A Shock?

For the first time in many years, the average wages in Estonia fell (about 5%) in 2009.

Kalev Petti, head of research at Faktum & Ariko, says that othewise optimistic Estonians may become more pessimistic in January 2011 when Estonia adopts the euro.

“When the euro arrives, people and especially older population, will understand how poor they are.”

Petti says that while there were few other factors that are increasing pessimism among the older generation, it must be their feeling about the upcoming euro adoption and fear of prices continuing to rise. Pensioners are uneasy about the euro and the actual transition may cause psychological depression for many, the balticbusinessnews.com writes.

I guess the following statement made by Estonia’s prime minister, Andrus Ansip, in a radio interview will not help the situation:

“Our banknotes are more beautiful than euro banknotes.”

According to economists, the preparation to join the euro zone created some disadvantages for Estonia compared with neighboring countries, which enjoy a relative larger degree of flexibility by hanging on longer to their legacy currencies.

Wrong Place – Wrong Time

But that seems to be very, very short-term advantages.

Since last week the price of insuring the Estonian Medium Term Loans has jumped 4,45%, and the spread compared to German CDS’ has widened to nearly 8%.

The price on Estonian Sovereign CDS is now 113,01 basis points. That makes the insurance of Estonian government debt the sixth most expensive in Europe.

Source: Zero Hedge

Still, it a long way to go reach the Greek level that soared to nearly 1.000 basis points today.

Estonia is also an export-driven economy that quickly could be overshadowed by financial difficulties, particularly if the euro zone remains unstable, and neighboring countries like Poland and its Baltic neighbors insist on hanging on to their currencies.

“Investors will only be willing to lend to Estonia on favorable terms if Estonia can continue to compete,” Mr. Tilford, the London economist, says.

“That is where the biggest risks for Estonia now lie.”

Tallin In Trouble

And as all of the above is not enough; the Estonian capital – Tallin – is set to become the European Culture Capital in 2011.

But now, it turns out, that the city may lose 23.5 million kroon granted by the European Union because it has failed to provide Brussels guarantees for financing the culture capital programme, ERR reports, according to balticbusinessnews.com.

The so-called Mercour prize in the amout of 23.5 million kroons, a direct EU grant, has already been included in this year’s budget revenues of the city, but right now that payment is doubtful.

According to Brussels, if Tallinn wants to secure the funds it needs to submit guarantees by 28 June at the latest when Tallinn is visited by Sir Bob Scott, chairman of the assessment committee.

This is unlikely to happen since the government has not plans to issue any such guarantees before September.

Estonian Minister Laine Jänes, on the other hand, claims that the commission has been informed of such circumstances.

Welcome to the euro disaster zone, Estonia.

And good luck!

Related by the Econotwist:

Estonia: Banks Lost USD 23 million in Q1

Estonia: Something Doesn’t Seem Right

Estonian Newspapers Protesting With Blank Front Page

Businessman To Declare Hunger Strike If Not Paid

An Estonian Mystery

Swedbank Buy Greek Bonds With Estonian Money

Estonia Put Pressure On Journalists

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Swedbank To Merge Baltic Subsidiaries Into The Group

In Financial Markets, International Econnomic Politics, National Economic Politics on 05.06.10 at 01:32

Swedbank plans to merge its Baltic banks that at present are subsidiaries into the parent group. A survey commissioned by Swedbank recently showed that it would be the most economic solution, balticbusinessnews.com reports.

“From the viewpoint of capital management, the most cost-effective solution would be to merge Baltic subsidiaries directly into the parent group Swedbank AB,” Hakan Berg, head of Baltic banking in Swedbank says.

Berg said that the company’s board of directors will make a final decision in this issue by the end of the summer.

At present Swedbank’s banks in Latvia and Lithuania are subsidiaries of Swedbank AS that is incorporated in Estonia.

Hakan Berg himself became the new chairman of the supervisory council of Swedbank AS from May 25. Priit Perens, the bank’s managing director in Estonia, is the chairman of the management board of Swedbank AS.

As part of the restructuring of the group’s management system, Michael Wolf who is CEO of Swedbank Group, left the supervisory council of the Estonian company.

Berg adding that Baltic banking remained a strategic business area for the group and that the objective of the changes was to free the Group CEO from the function of managing and supervision of subsidiaries.

“This will be my job,” he says.

Norwegian DnB NOR will shortly decide if they’re gonna acquire the full 100% of its Baltic subsidiary, DnB NORD,

The Norwegians currently holds a controlling stake of 51% of the Baltic bank.

Related by the Econotwist:

Estonia: Banks Lost USD 23 million in Q1

Morgan Stanley To Buy Bad Baltic Loans?

Swedbank Leaves The State Guarantee Program

Latvia To Split And Sell Nations Leading Bank

The Nordic Superbank Dream

Standard and Poor’s: The Baltic Are Stabilizing

Swedbank Buy Greek Bonds With Estonian Money

Swedbank In Estonia: “Daylight Robbery”

How Sweden sent Estonian economy into free fall

Nordic Central Banks Agree On Baltic Bank Bailout

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A Baltic Future For Greece?

In Financial Markets, Health and Environment, International Econnomic Politics, National Economic Politics, Views, commentaries and opinions on 06.05.10 at 11:51

Latvia and Estonia show us what Greece may look forward to if it follows the advice it gets from the IMF and European Union, Mark Weisbrot writes in a commentary at guardian.co.uk.

“No government should accept policies that tell them they must bleed their economy for an indeterminate time before it can recover.”

Mark Weisbrot


As I have noted previously, Latvia has experienced the worst two-year economic downturn on record, losing more than 25% of GDP. It is projected to shrink further during the first half of this year, before beginning a slow recovery, in which the International Monetary Fund (IMF) projects that it will not reach even its 2006 level of output by 2015 – nine years later, Mr. Weisbrot writes.

With 22% unemployment, a sharp increase in emigration, and cuts to education funding that will cause long-term damage, the social costs of this trajectory are also high.

By keeping its currency pegged to the euro, the government gives up the opportunity to allow a depreciation that would stimulate growth by improving the trade balance. But even more importantly, maintaining the peg means that Latvia cannot use expansionary monetary policy, or expansionary fiscal policy, to get out of recession. (The United States has used both: in addition to its fiscal stimulus, and cutting interest rates to near zero, it has created more than 1.5 trillion dollars since the recession began).

Some who believe that doing the opposite of what rich countries do – ie pro-cyclical policies – can work point to neighbouring Estonia as a success story. Estonia has kept its currency pegged to the euro, and like Latvia is trying to accomplish an “internal devaluation”. In other words, with a deep enough recession and sufficient unemployment, wages and prices can be pushed down. In theory this would allow the economy to become competitive again, even while keeping the (nominal) exchange rate fixed.

But the cost to Estonia has been almost as high as in Latvia. The economy has shrunk by nearly 20%. Unemployment has shot up from about 2% to 15.5%. And recovery is expected to be painfully slow: the IMF projects that the economy will grow by just 0.8% this year. Amazingly, by 2015 Estonia is projected to still be less well off than it was in 2007. This is an enormous cost in terms of lost actual and potential output, as well as the social costs associated with high long-term unemployment that will accompany this slow recovery. And despite the economic collapse and a sharp drop in wages, Estonia’s real effective exchange rate was the same at the end of last year as it was at the beginning of 2008 – in other words, no “internal devaluation” had occurred.

Yet Estonia is being held up as a positive example, even used to attack economists who have criticised pro-cyclical policies in Latvia. The reason is that Estonia has not had the swelling deficit and debt problems that Latvia has had in the downturn. Its public debt of 7% of GDP is a small fraction of the EU average of 79%, and its budget deficit for 2009 was just 1.7% of GDP. It is therefore on its way to join the eurozone, perhaps adopting the euro at the beginning of next year.

How did Estonia manage to avoid a large increase in its debt during this severe downturn? First, the government had accumulated assets during the expansion, amounting to some 12% of GDP; and it was also running a budget surplus when the recession hit. And it has received quite a bit in grants from the European Union: in 2010, the IMF projects an enormous 8.3% of GDP in grants, with 6.7% of GDP the prior year.

Greece, unfortunately, is not being offered any grants from the European Union or the IMF. Their plan for Greece is all about pain and punishment. And with a public debt of 115% of GDP and a budget deficit of 13.6%, Greece will be forced to make spending cuts that will not only have drastic social consequences but will almost certainly plunge the country deeper into recession.

This is a train going in the wrong direction, and once you go down this track there is no telling where the end will be. Greece – like Latvia and Estonia – will be at the mercy of external events to rescue its economy. A rapid, robust rebound in the European Union – which nobody is projecting – could lift these countries out of their slump with a huge boost in demand for their exports, and capital inflows as in the bubble years. Or not: Western European banks still have hundreds of billions of bad loans to Central and Eastern Europe from the bubble years. Some big shoes could still drop that would depress regional growth even below the slow recovery that is projected for the eurozone. And Germany, which has been dependent on exports for all of its growth from 2002-2007, could continue to soak up the regional trade benefits of a eurozone and/or world recovery.

No matter how you slice it, these 19th-century-brutal pro-cyclical policies don’t make sense. They are also grossly unfair, placing the burden of adjustment most squarely on poor and working people. I would not wish Estonia’s “success” on any population, simply because they avoided a debt run-up and are on track to join the euro. They may find, like Greece – as well as Spain, Ireland, Portugal, and Italy – that the costs of adopting a currency that is overvalued for a country’s level of productivity are potentially quite high over the long run, even after these economies eventually recover.

The European Union and the IMF have the money and the ability to engineer a recovery based on counter-cyclical policies in Greece as well as the Baltic states. If it involves a debt restructuring – or even a haircut for the bondholders – so be it. No government should accept policies that tell them they must bleed their economy for an indeterminate time before it can recover.

Original post at guardian.co.uk

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Euro Area Under Massive Speculative Attack

86% of German Citizens Oppose To Greek Bailout

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Friday Morning Kickoff

In Financial Markets, Health and Environment, International Econnomic Politics, National Economic Politics, Views, commentaries and opinions on 16.04.10 at 01:35

Here’s some essential reading before markets open on Friday morning , provided by high5finance:

Top Stories:

* Trading Outlook: April 11 – 16, 2010

* Stocks in U.S. Advance on Earnings

* Group Calls for Greece to Stop Using Euro

* Athens Seeks Aid Talks With IMF, EU

* Confusion Reigns in Europe

* Iceland’s volcanic ash halts flights across Europe

* China’s robust growth fuels debate over policy

* U.S. investigates HP execs for bribery

* Japanese, Australian Stocks Drop in New York

* Senate panel says regulators ignored risks at WaMu

Latest News:

* Rise in jobless claims underscores wobbly recovery

* South Korea Says Economic Uncertainties Remain High

* Interest of Scandinavian investors in Estonia highest in years

* Economic Optimism Index Rises in April

* PC Market Rebounds in Quarter

* Senate extends jobless benefits

* US wants ‘realistic’ talks on EU bank data transfers

Latest Blog Posts:

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Zero Hedge: George Soros Warns Of Biggest Market Crash To Come

The Huffington Post: Another Reason Most Day Traders Are Deluding Themselves

Wall St. Cheat Sheet: 10 Interesting Things We Learned From Barack Obama’s Tax Return

The EUobserver: A Van Barroso?

* The Collector: Walking On A Tail Event Producer

Latest Analysis:

* Ignore the Technical Market at Your Peril

* Risk of 30-40% Drop in Stocks

* ‘Warning Signs’ That Market Is Tiring

* Capital: Europe Is Failing to Keep Up

* Why US Investors Don’t Need to Fear Higher Rates

* Rotten to the Core

* Google: The Market Is Unimpressed

Recommended Reading:

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* Currency Manipulation

* Wall Street reform: Washington’s next battle

* The Financial Crisis: Bailouts, Failures and Death Panels

* Building a Future With Sturdy BRICs

* Is a Bailout Enough?

* German Professors Take on the IMF and the EU

* China Faces `Close Call’ on Interest-Rate Rise


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Happy Trading !

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Swedbank Leaves The State Guarantee Program

In Financial Markets, International Econnomic Politics, National Economic Politics on 09.04.10 at 20:44

Swedbank´s Board of Directors yesterday agreed that the bank will leave the state guarantee program with immediate effect, the Swedish says in press release Friday.

Swedbank has through the state guarantee been able to fund itself on competitive terms.”

Lars Idermark

The decision has been made against the background of the improved funding market situation for banks, but above all due to the fact that the bank has not used the state guarantee program for its funding since July 2009, Swedbank writes in its statement.

“To achieve an independent funding was one of the main goals behind Swedbank´s rights issue in August 2009. Leaving the state guarantee program is one more step in this direction. The fact that the bank can fund itself on its own is a result of the support from the shareholders through the two rights issues, our ongoing efforts to reduce the credit and liquidity risk levels as well as a consequence of the market beginning to normalize,” says Michael Wolf, CEO of Swedbank.

“Swedbank has through the state guarantee been able to fund itself on competitive terms, also during the turbulent period from autumn 2008 to summer 2009. The guarantee has also implicitly benefitted all banks in Sweden and has been an important precondition for allowing the Swedish banking system to stand relatively strong during and after the financial crisis,” Swedbank´s Chairman of the Board Lars Idermark says.

Swedbank has since July 2009 borrowed SEK200 billion in long-term funding outside of the state guarantee program. During the first quarter of 2010, Swedbank borrowed SEK100 billion, representing two-thirds of the total amount of long-term funding maturing in 2010.

The bank will have outstanding loans previously issued under the guarantee until July 2014. Swedbank will, as soon as there is more clarity around the regulatory framework regarding requirements on banks´ liquidity, and should market conditions allow it, strive to buy back the longest dated government guaranteed debt.

Swedbank has borrowed a total of SEK421.2 billion under the state guarantee since 2008, including SEK234.8 billion in short-term funding with maturities of less than 12 months and SEK186.4 billion in long-term funding with maturities of more than 12 months. Swedbank had, at the end of the fourth quarter 2009, SEK241 billion in outstanding loans. At the end of the first quarter 2010, the amount of outstanding loans had declined to SEK201.5 billion.

As of end-March, the maturity profile for the remaining debt was SEK39.6 billion in 2010, SEK82.4 billion in 2011, SEK40.5 billion in 2012, SEK11.8 billion in 2013 and SEK27.2 billion in 2014.

Swedbank had, at the end of the fourth quarter 2009, paid SEK1.852 billion in fees for the state guarantee as well as SEK224 million in fees to the government´s stabilization fund.

Press Release.

Related by the Econotwist:


The Nordic Superbank Dream

Swedbank Buy Greek Bonds With Estonian Money

Swedbank In Estonia: “Daylight Robbery”

Swedbank Reports Record Loss of SEK 10,5bn

How Sweden sent Estonian economy into free fall


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Estonia: Something Doesn't Seem Right

In Financial Markets, International Econnomic Politics, National Economic Politics, Views, commentaries and opinions on 07.04.10 at 22:44

Of the three Baltic nations, Estonia is being held up as the most lucky one in the economic meltdown of 2008/2009. Recently the rating agencies upgraded their outlook for the Baltic region amid clear signs of recovery. Something kinda doesn’t seem right when the leading newspaper in Estonia reports that the number of insolvent companies in the country is at a record high level.

“2009 was the first year that we had more than 1,000 companies that went bankrupt.”

Alar Jäger


A total of 1,055 commercial undertakings and 14 non-profit organizations were declared insolvent in Estonia in 2009. This is 2.5 times more than in 2008 and means that one in every 133 companies in Estonia went bankrupt last year, the Estonian newspaper Aripaev reports.

And local credit agencies estimates that as many as 1700 Estonian companies may go bankrupt in 2010.

Half of the 1,055 companies were declared bankrupt and half did not have sufficient means to go through the proceedings, according to Aripaev.

“2009 was the first year that we had more than 1,000 companies that went bankrupt,” says Alar Jäger, deputy manager of private credit information provider Krediidiinfo.

Jäger says that, in comparison, only 202 companies went bankrupt in 2007 and between 2003-2005 and in 2008 between 400 and 460 companies went bankrupt.

Out of 1,055 companies that went bankrupt, 268 were construction companies, up from 68 construction companies in 2008. 149 manufacturing companies and 58 accommodation and catering enterprises also ended up in bankruptcy.

The list continues with the real estate sector, followed by wholesale and retail sector companies.

Krediidiinfo estimates that the number of companies that go bankrupt this year could amount to 1,700, especially in the construction business, accommodation business and catering business.

The “Recovery”

Both rating agencies and bank analyst have recently upgraded their outlook for the Baltic region.

Last week Moody’s Investor Service said that it raised outlooks for the three worst nations in the European Union in stipulations of financial turn down last year, Estonia, Latvia and Lithuania, thanks to the entire constancy in the market and enhanced predictions for revival.

Moody’s analysts were flattering Estonia’s “impressive fiscal performance” last year and that it has possibilities to adopt the Euro in 2011.

Estonia is seen of as the toughest of the three nations, and now has a A1 on investment rank and ratings.

Due to Latvia and Lithuania’s high deficits and extreme debt load, the agency has kept it under investment grade or ratings.

Moody’s says in their statement that Latvia and Lithuania hope to join the euro zone in 2014, with Estonia to join already next year.

Well, based on the last two years of experience; a lot can happen in a year…

Related by the Econotwist:

Latvia To Split And Sell Nations Leading Bank

Estonian Newspapers Protesting With Blank Front Page

Businessman To Declare Hunger Strike If Not Paid

Baltic Tax Authorities Increase Money Hunt

An Estonian Mystery

Standard and Poor’s: The Baltic Are Stabilizing

Swedbank Buy Greek Bonds With Estonian Money

Estonia Put Pressure On Journalists

Baltic Countries Remain In Recession

Swedbank In Estonia: “Daylight Robbery”

Nordic Central Banks Agree On Baltic Bank Bailout

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