Identifier
Created
Classification
Origin
08RIGA705
2008-11-17 14:03:00
UNCLASSIFIED
Embassy Riga
Cable title:
DEPOSITS IN LATVIAN BANKS FALL IN OCTOBER
how-toVZCZCXRO2795 RR RUEHAG RUEHAST RUEHDA RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA RUEHLN RUEHLZ RUEHNP RUEHPOD RUEHROV RUEHSR RUEHVK RUEHYG DE RUEHRA #0705 3221403 ZNR UUUUU ZZH R 171403Z NOV 08 FM AMEMBASSY RIGA TO RUEHC/SECSTATE WASHDC 5388 INFO RUEATRS/DEPT OF TREASURY WASHDC RUCPDOC/DEPT OF COMMERCE WASHDC RUEHZL/EUROPEAN POLITICAL COLLECTIVE
UNCLAS RIGA 000705
SIPDIS
E.O. 12958: N/A
TAGS: EFIN ECON LG
SUBJECT: DEPOSITS IN LATVIAN BANKS FALL IN OCTOBER
Ref: Riga 690
UNCLAS RIGA 000705
SIPDIS
E.O. 12958: N/A
TAGS: EFIN ECON LG
SUBJECT: DEPOSITS IN LATVIAN BANKS FALL IN OCTOBER
Ref: Riga 690
1. In a November 14th flash report on the performance of the Latvian
banking sector in September/October, the Latvian financial
supervisory authority, the Financial and Capital Markets Commission
(FCMC),stated that deposits in October decreased by a considerable
4.6% or LVL 461 million (USD 819 million). Non-resident deposits
decreased more than resident deposits, 5.7% and 3.6% respectively.
The FCMC attributed the larger drop in non-resident deposits to the
fact that most non-resident depositors are businesses and many of
them would be feeling the effects of the global economic slowdown.
The FCMC also reports that bank profits in the first 10 months of
the year decreased by 28%. Liquidity in September fell, but still
ranged between 37% - 57%. The capital adequacy ratio of Latvian
banks at the end of September was 12.3%.
2. Comment: These numbers help explain some of what led to the
government bailout of Parex Bank (reftel) and it will be important
to see whether the November numbers show that the outflow has
slowed. The report does not indicate whether the withdrawals were
mainly from a few banks or spread equally across the system. But we
can expect that the report will raise new questions about the health
of other banks in Latvia. The FCMC's release of the numbers just
prior to the four day Independence Day weekend is probably not an
accident and designed to avoid a panicked reaction.
Larson
SIPDIS
E.O. 12958: N/A
TAGS: EFIN ECON LG
SUBJECT: DEPOSITS IN LATVIAN BANKS FALL IN OCTOBER
Ref: Riga 690
1. In a November 14th flash report on the performance of the Latvian
banking sector in September/October, the Latvian financial
supervisory authority, the Financial and Capital Markets Commission
(FCMC),stated that deposits in October decreased by a considerable
4.6% or LVL 461 million (USD 819 million). Non-resident deposits
decreased more than resident deposits, 5.7% and 3.6% respectively.
The FCMC attributed the larger drop in non-resident deposits to the
fact that most non-resident depositors are businesses and many of
them would be feeling the effects of the global economic slowdown.
The FCMC also reports that bank profits in the first 10 months of
the year decreased by 28%. Liquidity in September fell, but still
ranged between 37% - 57%. The capital adequacy ratio of Latvian
banks at the end of September was 12.3%.
2. Comment: These numbers help explain some of what led to the
government bailout of Parex Bank (reftel) and it will be important
to see whether the November numbers show that the outflow has
slowed. The report does not indicate whether the withdrawals were
mainly from a few banks or spread equally across the system. But we
can expect that the report will raise new questions about the health
of other banks in Latvia. The FCMC's release of the numbers just
prior to the four day Independence Day weekend is probably not an
accident and designed to avoid a panicked reaction.
Larson