Latvian economy has experienced fast growth and major inbalances recently (to the point that Latvia is now 1st on the list of countries vulnerable to a financial crisis). This has been largely fueled by large amount of low-interest credit from abroad, most of which has gone into consumption, rather than productive investment.
Latvian-language media have started to break down the role of various banks in this process. This blog post by Gatis Kokins, vice-president of Parex Banka, has a graph of loan portfolio increase for various banks in 2007 vs. increase in deposits by their customers. Two of the Nordic-owned banks (Hansabanka and Nordea) have had loans increasing 4 times as fast as deposits. So, 75% of their borrowing has been financed from abroad.
The print edition of Diena newspaper also has a graph which breaks down the increase in home loans in 2007 by month and bank. There are interesting trends there. Two biggest Scandinavian-owned banks (Hansabanka/Swedbank and SEB Unibanka) have now cut back on lending in a major way. Their loan portfolio increase in July is 3-6 times less than it was in January. Meanwhile, the next two banks (Norwegian owned DnB Nord and Finnish owned Nordea) have increased their lending by about 50%.
When some Nordic-owned banks decides that the Latvian economy is overheating and they should cut back, others view it as a chance to grab a bigger market share. Developing...