(Fixes spelling of first name in paragraph 5)
TALLINN Oct 23 Estonia plans to set an
additional 2 percent buffer against systemic risk for its banks
when the European Central Bank's (ECB) new capital adequacy
requirements are implemented.
The country's central bank said on Wednesday that the
minimum capital requirement for Estonia's banking sector will
total 10 percent from next year, including the 8 percent
requirement set by the ECB.
"Estonian experience has shown that an unexpected
deterioration in the economic environment for a small and open
economy can lead to debt-servicing problems in the non-financial
sector and that the financial position of banks can worsen very
rapidly," the central bank said in a statement.
Estonia's banking sector is 95 percent controlled by large
Nordic banking groups such Swedbank, SEB,
Danske and Nordea.
Estonian central bank governor and ECB policy board member
Ardo Hansson also saw risks to the Estonian economy from a
possible real estate bubble in the Nordics.
The rapid rise of real estate prices in Nordic countries
could also bring a quick fall, Hansson told journalists at a
The bank added that such a fall could make it harder for
Nordic banks to access funds from the markets.
"This could also lead to a recession in the Nordic
countries, which are important export markets for Estonian
companies," it said in a statement.
(Reporting by David Mardiste; Editing by Alistair Scrutton and