Republic of Estonia: Financial System Stability Assessment
IMF Staff Country Reports, March 9, 2009
Source details
- Canonical URL
- Republic of Estonia: Financial System Stability Assessment
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Bibliographic details
- Published: March 9, 2009
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781451812565.002
Summary and key findings
- 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.
Vulnerabilities and risks identified
- Significant vulnerabilities arising from real-estate lending.
- High exposure to short-term foreign borrowing from parent banks increases vulnerability to disruptions in international financial markets.
- Concentration and foreign ownership present structural characteristics influencing stability and cross-border risk transmission.
Subject coverage and keywords
- 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