Banks and banking system in Latvia

Latvian banks have always been considered one of the most reliable financial institutions in Europe. For the last 10-15 years, they have been conducting stable work largely due to constant control by the Central Bank, as well as a fairly liberal legislative framework. Despite the collapse of the country's largest financial institution ABLV bank, Latvian banks are still among the most popular credit institutions not only among the local population, but also for non-residents. What contributes to this degree of trust, we will consider below.

Latvian banking system

The first national credit organizations began to form on the territory of Latvia in 1988. Prior to that, the country had a centralized financial system headed by the State Bank of the USSR. The branches of the Sberbank of the USSR were located in large numbers in the Republic of Latvia.

Currently, the banking system of Latvia consists of two levels, the first of which belongs to the Central Bank of Latvia, the second to commercial banks. The latter are the main element of a competitive credit and financial infrastructure. Some of them have already received high international ratings. Thus, the Association of Latvian Banks has become the National Banking Association.

The Central Bank of Latvia was founded in 1990. He is independent from the government and exercises control over the activities of other financial institutions.

The main functions of the Central Bank are to manage monetary policy and ensure the stability of the national currency and the banking sector as a whole.

The financial structure of Latvia is classified as a licensed type of activity. Therefore, to provide financial services, you first need to obtain a license issued by the Financial and Capital Market Commission.

There are about two dozen commercial credit organizations in the country. However, only ten of them provide a full range of services, including brokerage account insurance.

Baltic banks are among the best in Europe in terms of the speed of transactions. Their services are inexpensive, fast, convenient and accessible from anywhere in the world. This is what attracts individuals and entrepreneurs from other countries.

What banking organizations are there in Latvia

On the territory of the republic there are both international primordially Latvian financial institutions and representative offices of foreign banks. Despite the high level of competition, international credit organizations are not inferior in popularity to the same European branches.

In addition, a number of Latvian banks have entered the international market and provide their services outside the country, for example, Baltikums Bank, Norvik Banka, BlueOrange bank.

European branches

The favorable climate for the banking system in the Latvian financial market facilitated the opening of representative offices of large European banks in the country. These include:

1. Swedbank is a large financial institution that positions itself as a universal bank providing a wide range of services. It is this parameter that attracted a considerable number of individuals and corporate clients to cooperation with the bank. For the first category, a variety of loan products are offered, including student loans, credit and debit cards, and deposit placement. Businessmen can use such services as issuing cards for company employees, working with currency options, and assistance in preparing reports. Another plus of the institution is a good level of Internet banking.
2. DNB banka has been operating in the republic since 2021. The institution provides many services to private clients, including mortgage loans. Loans can be obtained both for consumer purposes and for investment. A wide range of banking products is also offered for businesses, including leasing services.
3. Rietumu Banka can rightfully be called the largest credit institution in the Baltics. In addition to standard financial transactions, such as issuing loans, placing deposits and opening card accounts, the bank provides investment and brokerage services. A separate niche is occupied by servicing foreign clients, among which such products as international lending, loan portfolio financing, trade financing, overdraft and many other services are popular.
4. SEB is one of the most influential financial institutions in Northern Europe. It is distinguished by a high level of work of the Internet banking Seb Ibanka, with the help of which you can remotely manage your accounts. A variety of products are offered to individuals and legal entities, including receiving a pension, providing insurance services and leasing operations. The bank has a fairly wide network of branches and ATMs in the territory of Latvia.

National Latvian banks

Despite the many European structures, local banks firmly hold leading positions in the rating among the population.

1. Latvijas pasta banka, now called AS LPB Bank. It was included in the top list of the best banks in the country by the Latvian Association of Commercial Banks. Among the services offered, prevailing are opening accounts and issuing card products, placing funds on deposits, issuing loans, including leasing, as well as renting safes, providing investment services, etc.
2. ABLV Bank has long been the largest financial institution in Latvia. The main area of ​​his work is serving clients from the CIS. By the decision of the European Commission, it will be liquidated. The official website of the bank, where you can find out about the rules of liquidation and the procedure for repayment of obligations: https://www.ablv.com/.
3. Citadele is not just a bank, but a powerful credit union focused on increasing the number of services that customers can use remotely. The institution's product line includes offers for both individuals and businesses.
4. Meridian Trade Bank. It is a universal bank with European capital, which has been operating since 1994. The central office is located in Riga, but for the convenience of clients, the organization has branches in Moscow and Vilnius. The bank closely cooperates with pension funds, conducts transactions for the placement of funds, opening card accounts, maintaining individual safes, and issues loans. For legal entities, in addition to standard banking products, the bank offers acquiring services (this is a banking option that allows you to pay for purchases using bank cards).

CIS banks in Latvia

A separate place in the banking system of the republic belongs to Russian and Ukrainian banks. Russian banks in Latvia are represented by the following institutions:

1. Bank M2M Europe is the only bank in Latvia that specializes in serving only wealthy clients. It started its work in 2021 in Riga, and was created on the basis of Latvijas Biznesa banka. The institution provides capital management services and services current operations. Among the products for businesses are services such as investment strategy management, lombard loans, subordinated deposits (with an increased rate that are returned in the event of a lender's bankruptcy not through insurance, but after the sale of the lender's property) and fiduciary accounts, which the bank manages by proxy from client) deposits, brokerage services, etc.
2. "Alfa Bank". This largest Russian bank entered the Latvian financial market through the acquisition of Parex bank. The main direction of its activity is the provision of services to individuals. It is considered the most stable financial institution in the post-Soviet space.
3. Regional Investment Bank (RIB). Provides services for maintaining accounts, processing transfers, issuing payment and credit cards. In addition, in the arsenal of the organization's proposals there is such a service as opening accounts in various banks in other countries.

Sberbank branches in Latvia, unfortunately for many Russian citizens, are absent. This is not a complete list of the existing Russian representations in the Republic of Latvia. For example, Rigensis Bank, which was founded by famous Russian businessmen, is successfully operating at the present time.

Ukrainian banks also have their own branch network in Latvia. Their most prominent representative is PrivatBank, which has a wide range of financial products for all categories of clients. It is a leader among financial institutions in Ukraine, characterized by a high degree of reliability.

Until recently, Versobank AS, an Estonian bank with a block of shares owned by a Ukrainian company, also conducted its work. However, by decision of the European Council, the bank's license was revoked and the process of its liquidation continues in 2021.

Central Bank of Latvia

The main banking structure of the country combines the functions of a state and a commercial bank. The main purpose of the institution is to regulate the amount of currency in circulation in order to maintain stable prices in the territory of the state.

Among the key functions of the activity are:

• maintaining the smooth operation of payment systems;
• issue of national currency - lats;
• representing the interests of Latvia as a financial agent;
• issuance of licenses to legal entities that register financial institutions;
• management of foreign assets.

The central office is located in the capital of the state. In addition, there are representative offices of the Central Bank in Liepaja and Rezekne. The Bank of Latvia is the property of the country.

Reliability rating of Latvian banks

According to the Association of Latvian Commercial Banks, over the past couple of years, the volume of funds invested in credit institutions has decreased. However, the popularity of Latvian financial institutions among foreign investors remains unchanged.

As of the beginning of 2021, the rating of Latvian banks looks like this:

1. Swedbank with assets of 5 583 490 euros.
2. ABLV Bank - EUR 4,590,930.
3. SEB banka - 3,585,468 euros.
4. Citadele banka - 2,346,066 euros.
5. Rietumu Banka - 1,673,580 euros.
6. OP Corporate Bank branch Latvia - 650 545 euros.
7. Norvik Banka - 588,215 euros.
8. BlueOrange Bank - € 547,523.
9. Danske Bank Latvia branch - 424 320 euros.
10. Regionala investiciju banka - 330,392 euros.

The Baltic International Bank, PrivatBank and Meridian Bank are located just below the top ten.

The size of the equity capital of a financial institution determines its ability to perform active operations. In terms of capitalization, Swedbank is also the leader in Latvia. Thanks to equity capital, the guarantee of the safety of funds on deposits increases.

Accounts in Latvian banks

A bank account in Latvia can be opened by both residents and non-residents of the country. The attractiveness of opening an account for non-residents from Russia is due to a number of advantages:

• prompt establishment of a current account;
• there are no restrictions on the number of transactions performed;
• the ability to remotely manage your account;
• low service rates;
• state guarantee of compensation for deposits (not exceeding 100 thousand euros);
• the possibility of service in Russian.

The issued account is assigned a number in the IBAN format, which complies with international account numbering standards for the countries of the European Union.

Opening a current account

To open an account in a Latvian financial institution, you first need to choose a bank that cooperates with foreign citizens. After that, you should collect a package of documents, without which the invoice cannot be drawn up.

Different banks have their own requirements for a set of papers, but general ones can also be distinguished.

To open an account in a Latvian bank, a non-resident legal entity will need:

• internal and foreign passport of the beneficiary (original plus copy);
• power of attorney for the right to carry out operations on behalf of the company or a protocol of appointment as the head of the company;
• company documents - articles of association, articles of association, registration papers;
• completed forms on the activities of the company.

All corporate documents must be apostilled. The Bank reserves the right to require additional documentation.

Individuals will need:

• internal and foreign passport (original plus copy);
• TIN;
• forms with the purpose of establishing a current account.

Usually, opening an account in a Latvian bank for legal entities is carried out on a paid basis. Payment depends on the chosen financial institution.

On average, the commission is 100-250 euros, but most often this amount is spent on servicing the first year of using the account.

The timing of opening accounts is also different. The average period during which a current account will be opened is 10 days, but in case of an urgent request, it can be reduced to three days. It also depends on the internal rules of the lending institution.

Closing a bank account

Closing a current account on the initiative of the owner does not differ from a similar procedure in Russian banks. The bank is notified of the intention to terminate the agreement, after which an order is drawn up for the withdrawal or transfer of funds that are stored in the account.

Latvian banks can independently initiate the closure of accounts. A similar situation occurred in May 2021, when Latvia began to terminate agreements with non-residents unilaterally.

Bank Rietumu became a pioneer in this matter. From his side, clients were sent letters of termination of the contract due to the fact that they fell under the definition of shell companies (so-called dummies).

This may be due to the transformation of the banking system of the Baltic countries as a whole, as well as to the strengthening of control over the European financial market by the United States. One way or another, Latvian banks have the right to terminate the contract with the client on their own initiative.

Service r / s

Terms of service of accounts differ in the context of each financial institution. On average, the payment for maintaining a bank account is 10-50 euros per month. At the end of the period, interest is charged on the balance in the amount of 1-1.5%.

Loan processing

The process of obtaining a loan in a Latvian bank always begins with an assessment of the client's solvency, regardless of whether he is a resident or non-resident. To take a loan in Latvia for a Russian citizen, the following documents are required:

• international passport;
• loan application form;
• certificate confirming earnings (at least for the last three months);
• a certificate from the tax office confirming the correct payment of taxes.

The credit institution may require additional papers. For example, a statement from a current account, which shows in detail the movement of funds. All documents must be apostilled.

For those who cannot document their income, there are offices that offer quick loan processing. Such loans do not require the provision of guarantors and are issued at any time from 7.00 to 23.00. The registration fee for registration is one euro cent.

To obtain such a loan, you must meet the following conditions:

• be a citizen of the republic or its resident on the basis of a residence permit, permanent residence;
• have an account in a Latvian bank;
• have a cell phone and email address;
• be between 18 and 75 years of age.

Of course, both the presence of a permanent job and the absence of overdue debt obligations are taken into account. However, such loans are usually issued within an hour, so the check cannot be called deep. Such loans are characterized by an increased interest rate.

The average consumer lending rate in Latvia is 3.77% per annum. A consumer loan can be issued at 10-15%.

It will be possible to obtain a cash loan at 6.5% per annum, if there are certificates of wages.

Obtaining a mortgage loan

Mortgages in Latvian credit institutions attract foreign citizens, first of all, with a pleasant interest rate. On average, it is 6% per annum. This is a rather low figure compared to the same Russian creditors.

Mortgages for non-residents are issued for a maximum of 10 years. The borrowed amount cannot be more than 60% of the cost of the purchased property. That is, you will need to make about 40% of your own funds as a down payment.

The maximum loan amount for foreigners is about 250 thousand euros.

Additional costs when applying for a mortgage loan:

• payment of the registration fee - 2%;
• payment of state duty for obtaining a mortgage - 0.1% of the loan amount;
• opening an account in a Latvian bank where you plan to apply for a loan in the amount of at least 200 euros.

A mortgage with a bad credit history can also be obtained, but on different, much less favorable terms.

Money transfers in Latvia

Transfer of funds is one of the most popular services in the country's financial institutions. Latvian banks actively cooperate with various payment systems and carry out both domestic and interbank transfers abroad.

Popular payment systems in Latvia:

• Westеrn Union,
• QIWI,
• Contact,
• WebMoney,
• MoneyGram, etc.

Latvian payment systems are represented by the actively developing national system Paysera LT, which has opened more than 300 points of acceptance and delivery of transfers throughout the country.

To make a transfer from a Baltic bank abroad, you need to specify the following information:

• Full name of the recipient or TIN and the name of the company;
• address of the recipient;
• the name of the beneficiary's bank and the number of his account with this bank;
• financial institution details (BIK, address, correspondent account);
• the purpose of the translation;
• date and amount of departure.

The average commission for a transfer is 10-70 euros, depending on the characteristics of the transfer. Cash items exceeding EUR 1,425 are subject to income tax.

The exception is transfers that are aimed at paying for medical services, getting an education, as well as payments addressed to relatives up to the 3rd degree.

Latvia and offshore

It's no secret that the possibility of opening offshore accounts in Latvian banks is the main reason for their increased popularity among foreign citizens. An offshore company in Latvia has a number of advantages, including:

• a softer screening process for incoming funds compared to the rest of the European Union;
• increased guarantees of the safety of investments;
• minimum requirements for a depositor and an easy set of documents;
• the possibility of remote establishment of a current account;
• quick opening (in some cases, an account can be opened in one working day).

The cost of opening a bank account is on average 200-250 euros. Almost no bank has requirements for the minimum account balance.

Outcomes

The banking system of the Republic of Latvia is distinguished by its simplicity and openness. Fast execution of transactions, a minimum set of documents for their implementation, as well as the ability to open an offshore account are the main features of the country's financial structure that attract non-residents.