FKTK: bank business model change process is not over in Latvia

The bank business model change process is not over in Latvia, said the chairperson of Latvian Finance and Capital Market Commission (FKTK) Santa Purgaile.
She said several years ago it became clear a number of banks in Latvia would need to transform, change their business model and strategy. It was also clear not all banks would go through with it.
Purgaile also said that Rigensis Bank, whose shareholders decided to perform reorganisation by re-registering the bank as a commercial association that is not engaged in operations typical for a credit institution.
After that the bank assessed the situation and concluded the existing business model is unsustainable and shareholders then made a more beneficial decision.
«I don’t want to say this in any way indicates unwillingness to work in Latvia. This is a specific bank with specific assets. The bank managed to successfully realise its assets and settle its commitments before its creditors on its own. If it happens this way, it becomes a story of success about how it is possible to correctly and honestly cease previous operations and continue operations in a different field that is not related to a licenced credit institution,» said Purgaile.
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When asked if there are signs of any banks having problems with continuing operations after changing their model, the head of FKTK said the commission can comment cases that are already in the finishing stages. The commission refrains from discussing banks that are in the stage of consideration.
«The business model change process is not over. We can also see that in recent years there has been a process observed in Europe, when small banks consolidate. It is possible something like that could happen in Latvia,» said Purgaile.
Purgaile says Swedish TF Bank has been engaged in cross-border business operations in Latvia since 2016. The opening of a branch was the next step in their strategy, which had an expanded presence effect. «I hope this year we will see some other bank that voices plans to expand to Latvia,» she said.