Analytics, Banks, Covid-19, Crisis, Financial Services, Latvia

International Internet Magazine. Baltic States news & analytics Friday, 10.07.2020, 18:59

Idelsons: Banks in Latvia coping relatively well with Covid-19 crisis

BC, Riga, 03.06.2020.Print version
Banks in Latvia have been coping relatively well with the crisis caused by the Covid-19 virus, as Signet Bank CEO Roberts Idelsons says in an interview with LETA.

"I believe that the banking sector has been coping quite well with the crisis caused by Covid-19," says Idelsons, adding that it is too early to judge what the banking sector's performance will be like this year.

Idelsons explains that banks' profits this year will depend on the situation in the economy - the duration and depth of the recession. "It seems that the total profit in the banking sector in 2020 could be much lower than in 2019," says Idelsons.

In the meantime, one positive trend is that banks have become more experienced, more understanding and, together with customers, they are looking for solutions to overcome the crisis and no longer use the methods they were using in the previous crisis.

When asked what challenges banks face both in organization of internal operations and in financial services due to the Covid-19 crisis, Idelsons points out that the main challenge in the organization of internal operations has been remote work, while in the field of financial services, there have been no major challenges.

"Financial markets have continued to work, any transactions can be done remotely. Given that banks are digitized institutions after all, this has certainly helped the banking business during this crisis. Further challenges will depend on the overall economic situation in the country. As we all know, banks are a mirror of the economy. If the crisis is deep and long-lasting, it will be bad for banks, while if everything goes well, banks will also be better off," Idelsons points out.

Quality of the banks' loan portfolios will also depend on the general situation in the economy, but a significant deterioration is unlikely, says Idelsons.

"The government's measures to contain the epidemic and support the economy appear to be working and the economic downturn, although very rapid in the short term, will not last long," says Idelsons. Support measures offered by the banks, support tools developed by Finance Development Institution Altum, as well as the Financial and Capital Market Commission's flexible approach to banking supervision during the Covid-19 crisis will certainly mitigate the impact of the crisis and allow the economy to recover faster, says Idelsons.

He also points out that at the end of April the Financial Capital and Market Commission revised and reduced capital adequacy requirements for several banks, including Signet Bank.

Search site