Concerns rise as Swedish banks suffer run in Latvia

Fears about the state of Swedish banks in Latvia, spread by text messages and on twitter, caused a sizeable number of customers to withdraw their savings from Swedbank over the weekend. A third of its Latvian cash machines were reported to be empty by Sunday night, although the situation was reported to be under control today.

The Swedish bank SEB also suffered a bank run, and stated that 10-15% of its cash machines were empty at any given time, but were continuously refilled.

Martin Noréus, head of supervision of large banks for the Swedish Financial Supervisory Authority, told local newswire TT that Swedbank would only suffer a short-term liquidity problem. He estimated a SEK 130m withdrawal, whilst Swedbank's total assets in Latvia amount to SEK 21bn.

Although the Swedish banking sector has previously been reported as having little exposure to the PIIGS countries, it has considerable involvement in the Baltics, which is thought to carry significant risk.

Latvian prime minister Valdis Dombrovskis was quoted in local media stating that the rumours were spread deliberately in an effort to destabilise the country's banking system. It is believed that these reports are currently being investigated by the Latvian police.

Baltic banks have struggled with public confidence after the recent bankruptcy of Lithuanian commercial bank Snoras and the arrest of its former owner, Russian businessman Vladimir Antonov, in an asset stripping inquiry.

Snoras was also main the shareholder in Latvian bank Latvijas Krājbanka, which was taken over by the government in November and is currently in liquidation.

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