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BANKING

Sweden gives support to Latvian economic plan

Speaking on behalf of a group of Nordic and Baltic countries, Sweden said on Wednesday that Latvia’s economic structuring programme was credible and ambitious.

“The fiscal restructuring programme is … one of the most credible restructuring programmes we’ve seen. It’s very ambitious,” Swedish Finance Minister Anders Borg told reporters in Stockholm, speaking for the eight-nation constituency.

Latvia, which is in the grip of the sharpest recession in the 27-nation European Union, has said its priority is to cut state spending to try to fend off the worst and is slated to introduce economic adjustment measures aimed at cutting budgetary outlays, including salaries.

“We strongly support the implementation of the restructuring programme,” Borg said, pointing out that the plan, which is set to go to the Latvian parliament in coming days, would also help reduce “the cost level of the economy and at the same time increase their competitiveness.”

Latvia launched talks last month with the International Monetary Fund, the European Union, the European Bank for Reconstruction and Development, and countries including Sweden, a leading investor in the Baltic state, in search of help to shore up its ailing economy.

Borg said there would be contributions from the IMF, the World Bank and all the Nordic countries and a deal would be done by Christmas.

Last week, Latvian Finance Minister Atis Slakteris said that the IMF had suggested that Riga drop the peg linking its national currency, the lat, with the euro to help ease the country’s economic strains, but that the government did not want to go down that track.

Borg said Wednesday he supported that decision.

“We also strongly support the Latvian government’s ambition to stick to the currency peg and we believe that on the back of this very credible fiscal restructuring programme that the peg is highly credible,” he said.

Swedish banks, which dominate the Lativan market, could face big losses if the lat were devalued, because most customers have taken out loans in euros but are paid in lats and would therefore have trouble meeting their obligations to lenders.

Borg also called on the international community to help Latvia achieve its aim of entering the eurozone by 2012.

Riga had originally aimed to switch from its currency, the lat, at the beginning of this year but had to put the plan on ice because of its rocketing inflation, which must also be brought to heel by would-be eurozone members.

BREXIT

Brits in EU risk losing UK bank accounts ‘within weeks’

Some of Britain's biggest banks have begun contacting customers in European Union countries, warning them that their accounts will be closed down within weeks because the cost and complexity of operating without a continuation of pan-European banking rules is too much.

Brits in EU risk losing UK bank accounts 'within weeks'
Lloyds Bank expects to close at least 13,000 accounts. Photo: Lloyds Bank
According to a report in The Times, thousands of Britons who live in Europe face being stripped of their UK bank accounts and credit cards, because of the UK government's failure to agree rules for operating after Brexit. 
 
Each of the EU's 27 member states has different rules for cross-border bank accounts which will start to apply immediately the UK's transition period ends on 31st December 2020. 
 
“In some cases, continuing to serve customers would be incredibly complex, extremely expensive and very time-consuming, and simply would not make economic sense,” a source at one British bank told the newspaper. “This is passporting — this is the reality of Brexit.”
 
 
If a way is not found to continue pan-European banking rules, or passporting, UK banks will br breaking the law if they don't apply for new banking licenses in each European Union Country. 
 
 
Lloyds, Britain’s biggest banking group, began writing to customers in August, warning them that their bank accounts would  close down on December 31.
 
The bank estimates that 13,000 customers, including those based in Holland, Slovakia, Germany, Ireland, Italy and Portugal, would lose their accounts. 
 
“If customers have regular deposits into, or payments out of, their account, they will need to make other arrangements before their account is closed,” the bank said. 
 
Barclays and Coutts have also started contacting customers. 
 
“In light of the UK leaving the EU at the end of 2020, we continue to review the services we offer to customers within the European Economic Area (EEA), and any impacted customers will be contacted directly,” Barclays said in a statement. “The timings for account closure will depend on the type of product that a customer holds, but we will always give notice to customers.”
 
“In the event that no alternative to the European Economic Area passporting regime for financial services is agreed between the UK and EU, we have taken the difficult decision to withdraw from offering our services to clients who reside in the EEA,” Coutts said. 
 
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