Latvian banking system is relatively advanced and stable. All of the banks are operating based on the European system and banking legislation complies with the EU legislation. Considering this, and as well as transition of Latvia’s currency to the euro and favorable financial legislation, it can be concluded that a business can be actively conducted in Latvia, as well as in cooperation with other European countries.
Latvia has a two-tier banking system: Bank of Latvia (Central Bank) and commercial banks. Currently, 27 commercial banks are operating in Latvia. The Bank of Latvia is owned by Latvian country. In 2013 among the commercial banks in Latvia the most profitable was Swedbank with a profit of 112,846 million euro, Rietumu banka with a profit of 55,093 million euro and ABLV Bank with a profit of 44,415 million euro. The largest commercial banks in Latvia are:
- ABLV Bank, JSC
- Baltikums Bank, JSC
- NB banka, JSC Swedbank, JSC
- Norvik Bank, JSC
- SEB banka, JSC
- PrivatBank, JSC
- Regionala investiciju banka, JSC
- Rietumu Banka, JSC
- Trasta Komercbanka, JSC
- Citadele banka, JSC
As the banking activity in Latvia is licensed, to obtain the right to operate a commercial bank it is necessary to obtain license from the Financial and Capital Market Commission. To obtain a license it is required, that a start-up capital is not less than 5 million euro.
By choosing Latvia as the location of a foreign company it should be noted, that the services provided by the Latvian banks are relatively inexpensive and, at the same time, accessible from any country. Developed system of bank crediting and credit agencies, allows to conduct business by using loans with lower interest rates than in other countries. Most of the commercial banks, such as SEB Banka or Citadele Banka, calculate the interest rate for the businesses separately, but on average it is 6% per annum. The same interest rate is provided by PrivatBank, whereas the Rietumu Banka offers 8% per annum. For comparison, in Russia the average interest rate of credits given to legal entities in the Сбербанк России (Sberbank of Russia) is 15% per annum, which is also the average interest rate in Russia.
There is also a developed system of credit agencies in Latvia. Most of them are able to offer “quick loans” for legal entities. This can be particularly important, if the funds are urgently needed and they can be soon returned. However, when applying for a long term loan (e.g. one year), the interest rate will be much higher than in the commercial banks.
Additionally, the Latvian system of credit institutions may be used to obtain a residence permit in Latvia. This opportunity could be used by people who have invested in Latvian credit institutions at least EUR 280,000 for a period of not less than 5 years.
All banks in Latvia provide opportunity to manage a bank account remotely (via the Internet) in Russian and English language, and it also makes the banking system of Latvia favorable for entrepreneurs from different countries.
Banking system advantages may be important in selecting Latvia as a place to do business. Our company is ready to provide consulting services regarding company establishment in Latvia and business management.