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Tuesday 19.09.2017 | Name days: Verners, Muntis
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Economic Diary of Latvia. Banks are combining their efforts

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUThis week, it became known about the biggest merging process in the banking sector in the past several years. Nordea and DNB have announced their plans to combine their experience, knowledge and efforts in Baltic States.

«Nordea and DNB banks have signed an agreement on combining efforts in Estonia, Latvia and Lithuania to create a new leading bank in these countries with strong Nordic roots,» – this announcement was received by the banks’ clients on Thursday.

It is emphasized that the two banks will combine their efforts. Nordea, for example, has good positions in the segment of large companies. DNB, on the other hand, is a strong player in the segment of small and medium-sized companies. By combining their resources, the banks will become more powerful and influential players in terms of client services as well. In addition, the new bank will have wide accessibility and geographical range, considering the strong positions of Nordea Bank in Estonia and DNB Bank in Lithuania, as well as their equal positions in Latvia, as mentioned in the two banks’ reports on the planned merging.

The deal on the two banks’ merge will be concluded in Q2 2017. Until then, Nordea and DNB will continue working as separate, competing banks.

The merging of the two banks will create a powerful player in Latvia, which will benefit to the general level of competition on the financial market, as noted by President of Latvian Commercial Banks Association Maris Bicevskis.

To have fun and to undergo treatment

This week, the Central Statistical Bureau of Latvia announced results of Latvian hotels and other places of accommodation for the first half-year of 2016. As it turned out, foreign guests have spent 1,892 million nights in Latvia, which is 6.5% more in comparison with the same period of 2015. In Q2 2016, the number of foreign tourists in Latvia reached 432.7 thousand people. 29.6% of them came from neighbouring countries: Russia (10.9%), Lithuania (8.6%), Estonia (8.1%) and Belarus (2%). There has also been an increase in the number of guests from USA (+56.6%), Spain (+33.4%), UK (+27%), Lithuania (+17.9%), Poland (+17.4%) and Finland (+13.5%).

It is possible that many of those who travel to Latvia do so not just to enjoy the country’s beautiful nature and tourist attractions, but also to fix up their health. According to data from Latvia’s Medicine Export Association, the volume of medical services provided to foreigners in Latvia last year had increased 18%. The amount of money foreign guests spend on medical services in Latvia has reached EUR 5 billion.

Virotherapy as a new method for treatment of oncological illnesses is considered one of the most perspective segments of medical services. The same applies to diagnostic of illnesses and dentistry, according to the association’s president Olaf Strautins. According to him, Latvia’s trump card is the balance between price and quality. High level of specialization is also an important factor.

The issue is exhausted

This week, the meeting of the three UGF ministers with Russia’s Vice-Prime Minister Arkady Dvorkovich was discussed at the meeting of Coalition Parties Council. Participants of this meeting decided…to close the matter for good.

Agriculture Minister Janis Duklavs presented his explanations to the members of the council. He now says the matter has exhausted itself. Prime Minister Maris Kucinskis has noted that Duklavs had provided reasonable arguments in favour of the aforementioned meeting. Kucinskis added that this meeting has had no effect on Latvia’s official external policy. The meeting should instead be viewed as assistance to Latvian producers.

Partners of the coalition, on the other hand, criticized the three ministers and expressed hope that it will not happen again. Foreign Affairs Minister Edgars Rinkevics assured that everyone learned their lesson from this meeting, and nothing of the sort will ever happen again.

President of Latvia Raimonds Vejonis has said that ‘it is in the government’s competency to decide who meets with whom and in what context’. In spite of this meeting, Latvia’s stance in regards to economic sanctions has not changed, the president said.

In general, the most common words used by politicians in regards to the meeting were ‘lesson’ and ‘not happening again’. According to Rinkevics, the Foreign Ministry had been informed in advance of the meeting between Duklavs and Dvorkovich. He did not know, however, about other ministers taking part in the meeting. Rinkevics also mentioned that the situation was played out very suspiciously and more resembles efforts of Russian diplomacy, considering that the this whole story has cast a shadow over Latvia as an ally of the European Union in terms of sanctions against Russia.

Green gold

While the matter regarding exports of goods with added value remains questionable, Latvia continues increasing the volume of green gold abroad. According to Agriculture Ministry’s data, the total value of goods exported by Latvia’s forestry sector was EUR 1,053 billion in the first half-year of 2016, which is 3.2% more in comparison with the same period of 2015.

Since the beginning of the year, Latvia has exported wood and wooden goods worth a total of EUR 904.44 million – 4% more in comparison with the first half-year of 2015. Most of the export consists of wood pellets. Latvia has so far exported 993.8 thousand tons of wood pellets worth EUR 117 million in 2016.

As before, UK, Germany and Sweden remain the largest markets for goods exported by Latvia’s forestry industry.

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