INTERVIEW: A bank for all seasons

By bne IntelliNews January 19, 2009

Mike Collier in Riga -

"Look at it - great weather! Anti-recession weather!" laughs Martin Bondars, pointing out of the window of his sleek minimalist office on top of Latvijas Krajbanka's brand new headquarters.

Outside, it's blowing a blizzard and Rigans are skidding along the frosted walkways in search of shelter. Last winter was mild, grey and dark, so people got depressed, reasons Bondars. A bracing blizzard might be just what's needed to deliver some rare Baltic brightness to wake them up.

It's much the same story with the Latvian economy as a whole and the banking sector in particular. After years of mild conditions in which it seemed impossible not to make money, the new economic climate means banks that got fat and sluggish will struggle to survive. But Bondars' own bank, Latvijas Krajbanka, won't be among the victims of a harsh, bright new economic reality, he argues, while readily admitting that huge challenges lie ahead.

"In the old days - by which I mean before Lehman Brothers collapsed - we were all in the same boat. Nowadays, we are all in the same submarine," he tells bne. "The current world financial industry has failed to deliver two basic things: stability and sustainability. The new question is what kind of measures should be taken to provide these things?" he says.

"I think fundamentals don't change. Even in 2004, our then-president Vaira Vike-Freiberga was emphasising the need to run sound fiscal and economic policies. But society felt things were high and of course politicians just enjoyed the ride. The current situation will teach certain things to society about which are the right policies for the country and which should be avoided."

Bondars says that concluding deals such as an agreement with the International Monetary Fund (IMF) are very important. "Then it's execution, execution, execution - that makes it or breaks it. That's what Latvia needs - a roadmap to success."

If the president calls

When Bondars talks about presidents and politicians, he's not just your usual name-dropping bank boss, either. A former head of the president's chancellery himself, incoming President Valdis Zatlers turned to Bondars for advice on nominating a prime minister and the tall, elegantly suited banker could also be glimpsed flitting around the periphery of the Latvian government's IMF talks.

Bondars is seen as intelligent, perceptive and above all, completely honest - qualities that are badly needed on the Latvian political scene. But he prefers to play down his undoubted influence. "All capitals tend to be big and small. They are big because they are capitals and they are small because people who know each other there talk amongst themselves. There is a certain group of people that is communicating. It's not a secret society - anybody can be on board - but in order to be on board you have to try to understand the processes," he says. "If the president calls, there is a certain sense of responsibility and duty as a citizen of this country, not as president of the bank."

Krajbanka recently made unwanted headlines when a Latvian pop singer made some ill-judged remarks between songs at a concert, joking with audience members that they should wait until he had finished singing before taking their money out of Parex, which was being nationalised, and Krajbanka. Soon afterwards he was arrested and questioned by police, sparking outrage in the press and launching a debate about freedom of speech in Latvia.

Bondars takes an interestingly nuanced view of the affair that's been largely absent from the debate. "The young gentleman is young and talented, and no one in the bank wishes him harm. I think and hope he understands what he has done. You have to understand Latvia's recent history. In the late 1980s and early 1990s, the leaders of the singing revolution were journalists, singers and intellectuals and they still enjoy very high unconditional credibility in society."

"It's just the way things happen in the Baltics. People who have a microphone and a stage have more of a burden on themselves - including myself," he says.

Speaking of the bank, Bondars reckons its loyal and prudent customer base can be thanked for providing the stability lacking at local rivals such as Parex. "Our branch network has always been the largest in the country. Yes, they are substantial fixed costs and it's no secret that in the years other banks were making huge profits, we were profitable but didn't enjoy the same numbers. But we are very appreciative of our base customer, which is the small depositor in Latvia. We love them - especially when you see across the world that the interbank market isn't functioning. It's a very good customer to have on board," he says.

Even the bank's name has helped. "Krajbanka means "savings bank," and Bondars says that even two years ago, when everybody was hyped on spending and getting loans, his bank was saying people should save more. "We have always emphasised saving," Bondars says.

Lithuanian bank Snoras owns four-fifths of Krajbanka's shares, but Bondars says the links between the two Baltic banks shouldn't be overplayed. "Yes, there are synergies. We cooperate, but there are differences as well. There will not be Snoras Latvia. Latvijas Krajbanka is a brand by itself with a real value on our balance sheet," he says.

Send comments to The Editor

INTERVIEW: A bank for all seasons

Related Articles

Latvia’s Citadele Bank pulls IPO

bne IntelliNews - Latvia's Citadele Bank has postponed its initial public offering (IPO), citing “ongoing unfavourable market conditions”, the bank announced on November 11. The postponement ... more

BOOK REVIEW: “Europe’s Orphan” – how the euro became a scapegoat for policy ills

Kit Gillet in Bucharest - The euro, conceived as part of a grand and unifying vision for Europe, has, over the last few years, become tainted and often even blamed for the calamities that have ... more

Mystery Latvian linked to Scottish shell companies denies role in $1bn Moldova bank fraud

Graham Stack in Berlin - A Latvian financier linked to the mass production of Scottish shell companies has denied to bne IntelliNews any involvement in the $1bn Moldovan bank fraud that has caused ... more

Register here to continue reading this article and 2 more for free or 12 months full access inc. Magazine and Weekly Newspaper for just $119/year.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

IntelliNews Pro subscribers click here

Thank you. Please complete your registration by confirming your email address. A confirmation email has been sent to the email address you provided.

Thank you for purchasing a bne IntelliNews subscription. We look forward to serving you as one of our paid subscribers. An email confirmation will be sent to the email address you have provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

If you have any questions please contact us at

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

IntelliNews Pro subscribers click here

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

Thank you. Please complete your registration by confirming your email address. The confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.