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Thursday, July 26, 2007

Hansapank in the Baltics

One of the topics which is rapidly becoming clear is that one of the banks which is most exposed to any correction in the Baltics is the Swedish AS Hansapank. According to Bloomberg this morning:

The governments of the Baltic states of Lithuania, Latvia and Estonia aren't doing enough to counter threats to economic growth, according to AS Hansapank, the biggest lender in the three countries.Tallinn, Estonia-based Hansapank cited a ``lack of policies aimed at limiting the risks of overheating'' in Lithuania and a ``contradictory'' budget policy in Estonia.

``The major risks we see are government economic policies, while current global economic developments are favorable in general,'' Hansapank Chief Economist Maris Lauri said in an e- mailed quarterly Baltic Outlook report.

The lender called for a budget surplus this year in Latvia ``to support a soft landing.'' The Latvian government plans to balance the budget in 2007, after having planned for a deficit of 1.4 percent of gross domestic product.

All of this may very well be true, but as indicated in the recent BICEPS report these governments now have very little policy room to play around with.

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