IMF Staff Country Reports

Republic of Estonia: Financial System Stability Assessment

March 9, 2009

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International Monetary Fund. Monetary and Capital Markets Department "Republic of Estonia: Financial System Stability Assessment", IMF Staff Country Reports 2009, 089 (2009), accessed November 25, 2024, https://0-doi-org.library.svsu.edu/10.5089/9781451812565.002

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Summary

This paper presents key findings of the Financial System Stability Assessment of the Republic of Estonia. The Estonian financial sector is highly concentrated and foreign owned. Financial indicators suggest a sound banking sector, and show particular strength in asset quality and earnings. The paper reveals that the Estonian banking sector has significant vulnerabilities from its real-estate lending. The rapid expansion of the banking sector has been funded, to a large extent, by short-term foreign borrowing from parent banks, making Estonia vulnerable to a disruption in international financial markets.

Subject: Banking, Commercial banks, Credit, Financial institutions, Financial sector policy and analysis, Loans, Money, Nonperforming loans, Pension spending, Stress testing

Keywords: Baltics, Bank license, Bank need ELA, Bank need ELA., Bank supervision, BoE staff, Commercial banks, CR, Credit, Credit risk, Exchange rate, Financial asset, Foreign exchange, Global, Insolvent bank, ISCR, Loans, Mortgage exposure, Nonperforming loans, Parent bank, Requiring bank, Resolution technique, Sensitivity analysis, Stress testing

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