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BANKING

Estonia signs loan deal with Swedbank

Estonia has signed a multi-million euro loan deal with Swedish bank Swedbank, the Tallinn government confirmed on Wednesday.

Swedish-based Swedbank, a key player in the Baltic state’s financial market, signed up to the 50 million euro ($69 million) loan deal to help shore up public finances hit by the global downturn.

“Estonia will borrow 782 million kroons (50 million euros, 69 million dollars) from Swedbank,” finance ministry spokesperson Piret Seeman told AFP.

Finance Minister Ivari Padar said in a statement that one of the aims of the deal was to increase the liquid assets of the state, which is trying to tackle a deep economic slump.

Estonia regained independence from the crumbling Soviet bloc in 1991 and later earned a reputation as a “tiger” in the European Union, which it joined in 2004.

But after years of stellar growth it plunged into recession last year as rampant inflation dented consumption and the global economic crisis battered exports of goods and services.

The economy in the country of 1.3 million people contracted by 3.6 percent last year and Estonian authorities forecast it could shrink by 15.3 percent this year.

Estonia earned a reputation for prudence, putting funds aside when the economy was growing, and has been reluctant to use up its nest-egg to bridge a budget gap.

“The reserves Estonia collected in the boom years have been partly the guarantee of the current credibility of Estonia, so using a loan we get on good terms in order to keep some money in the reserve fund is a very reasonable choice,” Padar said.

According to the agreement, Swedbank will transfer the funds to the Estonian treasury at the beginning of June.

“The government gave the finance ministry the right to borrow 2.3 billion kroons during 2009. In light of the ongoing budget planning decisions and budget talks, it is reasonable to borrow a smaller sum,” Padar said.

The Estonian government has already slashed spending in the face of the crisis and is currently wrangling over further cuts, with the arguments raising the spectre of a collapse of the country’s three-party coalition.

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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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