LV: Baltics are not immune to eurozone financial risks-Fitch.

By bne IntelliNews November 22, 2011
Fitch Ratings that just started a mission to Latvia warns that although the Baltics are not directly exposed to eurozone banks, they are not immune to possible financing problems that could possibly be caused by a debt crisis in EMU. Fitch notes that Nordic banks that control Latvian, Lithuanian and Estonian markets have good capitalization and are not under as much pressure as credit institutions belonging to eurzone. However, their dependency on the financing of large clients makes them vulnerable against higher costs of capital on international markets. Fitch thus believes that there is a risk that banks these banks could cut financing to subsidiaries in CEE. At the same time agency notes that financing is not likely to be cut below the liquidity positions of the subsidiary banks. Fitch's report also forecasts that eurozone's banks will strive to retain strong presence in CEE due to high growth potential and profitability higher that in eurozone.

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