Press Release No. 09/304

Press Release: Joint IMF, EC Press Release on the European Banking Group Coordination Meeting on Latvia

September 14, 2009

In a coordination meeting held on September 11, 2009 in Stockholm, the parent banks of the four largest foreign-owned banks operating in Latvia 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 European Union (EU), the International Monetary Fund (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.

In light of the adverse effects of the global financial crisis on the economic and financial situation in Latvia, the IMF, the EU and other multilateral and bilateral donors agreed in December 2008 on an international financial support package of €7.5 billion for Latvia which is backed by a comprehensive government macroeconomic reform program (see Press Release No. 08/345). The success of the reform program and medium-term balance of payments sustainability also depends significantly on the continued involvement of all banks operating in or with Latvia, including foreign-owned banks.

The key banks (DnB Nord, Nordea, SEB and Swedbank) issued a Concluding Statement on the principles of maintaining their overall exposure to the country and meeting liquidity and capital needs of their branches and subsidiaries in Latvia. They agreed to continue close cooperation and regular dialogue with a view to making progress towards more specific bilateral commitments to supervisory authorities. Along with the continued international financial support, this will help Latvia’s banking system weather the current crisis better and return the economy to a robust growth path.

The European Bank Coordination Meeting for Latvia was jointly chaired by the European Commission and the IMF. The World Bank Group, the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), the International Finance Corporation, the Bank of Latvia, the Financial and Capital Markets Commission of Latvia, the Ministry of Finance of Latvia, home country authorities (Denmark, Finland, Norway and Sweden), and the European Central Bank (ECB) also attended the meeting.