Portrait of an Ascending Sovereign Credit
Well capitalised and liquid banking sector
The Latvian banking sector entered Covid-19 crisis as well capitalized, liquid and profitable, with a high presence of large
Nordic and Baltic banking groups
Key Highlights
Capital Ownership of the Banking System (3Q 2021)
•
The Latvian banking sector is dominated by subsidiaries and branches of
banks from the European Economic Area, mostly from Nordic countries
.
Capitalization and liquidity ratios are well above minimum requirements
Since Latvia is a part of the European Banking Union, the three largest
banks are directly supervised by the ECB and are under the remit of the
SRB
Negative effects of Covid-19 outbreak on the financial stability have been
mitigated by the government support package for businesses (incl. loan
guarantees and subsidized loans) and households, private forbearance
measures, accommodative monetary policy and greater regulatory
flexibility
Capital Adequacy (%)
Source: Bank of Latvia
400%
350%
300%
250%
200%
150%
100%
50%
0%
2014
2015
2016
2017
2018
2019
2020
2021
TTTTTT
18
16
14
12
2222986 & 20
17%
■Domestic
■Nordic
29%
Other
54%
Liquidity Coverage Ratio
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2017
2019
2020
2021
2018
Total capital ratio
CET1 ratio
Minimum requirement for total capital ratio (8%)
Average LCR, LV
Average LCR, EU
Source: FCMC | Note: Tier 1 ratio matches CET 1 ratio. The minimum TCR requirement is the regulatory
minimum and doesn't include capital buffer requirements and supervisory Pillar 2 requirements.
Source: FCMC, EBA
14
Minumum requirementView entire presentation