Latvia: a year after

In the March of 2018, our team of experts got an insight into Latvian banking system, which was left facing rapidly growing problems after a number of scandals, involving high-ranking state and bank officials, rocked the former Soviet republic. Taking aside temperatures getting close to their historical maximum, it is safe to say that impressions of another set of meetings held in Riga fully met their expectations.

There is no doubt that glory days of Latvian banking, embodied by the simplicity of account opening and high level of service, nowadays sound distant and vaporous. „You just needed to show up”, recalls former banker while presenting his services, “and until the day I left everything became pointless”. Financial giants which managed to survive the shock therapy of comprehensive reorganisation and implementation of rigid procedures adopted not only more conservative, but rather restrictive approach to potential clients. Remarks given by senior U.S. official during official visit in May precisely describe the unceasing pressure that is put on a promised Western gateway to former USSR. Urgently needed legislation was “long overdue”, noticed head of department at the U.S. Treasury, never mind the chaotic, suicide-like efforts made by the system aiming to get itself in line with enforced standards.

While the banks continue to struggle, locals still haven’t taken proactive measures to tackle growing problems. There is an unfamiliar trend of assigning different jurisdictions to the programs of legal and similar companies, in order to somehow save existing clients. This is, of course, just one of the elements of defensive posture adopted by the individuals and companies whose solutions once ruled the European banking market. At the present time, no ideas or genuine solutions on the inevitable restructuring  of businesses have been encountered by our team and, most importantly, by the clients.

On the other hand, a growing number of former bank employees and associates continue to pursue their success as professional intermediaries. Well equipped with unpleasant experience, those enthusiasts are exploring the jurisdictions to which, as they say, the next wave of clients is getting closer. In that sense, acknowledging the difficulties of working without assistance of local expert structures, they are open to cooperation. “I’m glad you’re prepared”, points out potential partner, explaining his excitement about Serbian possibilities.

Bank crisis of 2018 not only destroyed the banking sector, but also cast a shadow over country economic landscape. Mass exodus of non-residents is reaching its peak and it remains to be seen will Latvians, primarily those who still maintain contact with former clients, find their place in the global business transposition.