FACTBOX-Nordic banking groups' exposures in Baltics
STOCKHOLM, June 2 (Reuters) - Nordic banks have substantial exposure in the Baltic region after lending heavily in Latvia, Lithuania and Estonia during several years of booming growth.
But markets have grown concerned as those economies are in deep recession.
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Sweden's central bank said on Tuesday it expected loan losses in 2009 and 2010 at major Swedish banks to total 170 billion Swedish crowns ($22.81 billion) [ID:nWEA5094].
Economies in Latvia, Lithuania and Estonia are expected to contract at double-digit rates this year. The countries are holding on to currency pegs, adding to the economic challenge.
Some analysts think Baltic countries ultimately may be forced to devalue. This would not only set back their long-held desires to join the European single currency bloc, but also push many borrowers into default and send banks' loan losses soaring.
The Riksbank last week said it was boosting foreign currency reserves to enable it to lend to Swedish banks if needed, a measure which analysts linked to the Baltic situation.
But a Reuters poll [ID:nLT109308] taken after the move showed most analysts thought a Baltic devaluation was possible but unlikely this year.
SWEDBANK (SWEDa.ST)
- The Baltics' biggest lender had 207 billion Swedish crowns ($26.5 billion) of loans to the region at end-March. Around 86 percent of this was in foreign currencies, mainly euros.
- Estonia accounts for 83 billion crowns of the total, Latvia 65 billion and Lithuania 59 billion.
- First-quarter provisions for loan losses were 4.1 billion crowns for the Baltics with gross write-offs of 271 million. That marked a surge from fourth-quarter provisions of 840 million crowns and write-offs of 171 million.
- The first-quarter loan-loss ratio in the Baltics was 7.50 percent annualised, against 1.91 percent in the fourth quarter and 0.39 percent in the first quarter of 2008.
