IMF Staff Country Reports

Republic of Estonia: Financial System Stability Assessment

Publication Date:

March 9, 2009

Electronic Access:

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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.

Series:

Country Report No. 2009/089

Subject:

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