Riga - Representatives of four of the largest Nordic banks said Monday in Stockholm that they were committed to continuing their presence in the Baltic state of Latvia despite its dire economic prospects and the threat of future losses. Following a coordination meeting chaired by the International Monetary Fund (IMF) and European Union (EU), the parent banks of DnB Nord, Nordea, SEB and Swedbank issued a statement saying they "reaffirmed their commitments to support their branches and subsidiaries in the country and to promote financial stability in the Baltic region."
"These commitments, along with the financial support that the Latvian authorities receive from the EU, the IMF, the World Bank and other bilateral and multilateral donors, will cushion the effects of the economic downturn, strengthen investor confidence, and help Latvia return to sustainable growth," the banks said.
At the meeting the banks agreed to continue close cooperation and regular dialogue.
Latvia is the recipient of a total 7.5-billion-euro economic bailout package from international lenders after its economy collapsed last year with the bursting of a property market bubble and the sudden end of cheap credit from mainly Scandinavian banks.
In order to qualify for the international loans, the Latvian government introduced budget cuts worth 500 million lats (1 billion dollars) for 2009, with similar amounts due to be saved in both 2010 and 2011.
Pension payments and wages have been reduced, and the unemployment rate has climbed to 17 per cent from 6 per cent a year ago.
The Latvian economy contracted 19.6 per cent year-on-year in the second quarter of 2009, with the figure for the year as a whole expected to be similar.
