The ins and outs of eurozone regulation
Lithuania and its fellow Baltic republics are in an unusual position when it comes to euro adoption. Whereas in the rest of emerging Europe the majority of banks are outside the eurozone, but owned by lenders within, in the Baltic states the situation is reversed.
Four Scandinavian banks – DNB, SEB, Swedbank and Nordea – dominate the banking sectors of their Baltic neighbours. All come from non-euro countries, while two of the Baltic republics – Estonia and Latvia – have already adopted the euro and Lithuania is expected to follow suit in January 2015.
In some respects, this might work to the Baltic states’ advantage. Unlike in central and southeastern Europe, there are no fears of deleveraging as parent banks adjust their balance sheets in the run-up to the European Central Bank’s asset quality review later this year.
Bank of Lithuania
It does, however, present a unique challenge for the region’s regulators.