Latvia fears prompt rollercoaster ride for Swedish bank shares

Share prices of Sweden’s leading banks recovered somewhat on Thursday after major drops on Wednesday in the wake of fears that Latvia may devalue its currency.

Swedbank and SEB of Sweden, both of which are exposed to the economic crisis in the Baltic states, shed 15.9 and 11 percent respectively on Wednesday.

Nordea was down 5.2 percent and Handelsbanken 4.0 percent while the Norwegian lender DnB lost 8.1 percent on the day.

As of noon on Thursday, however, Swedbank shares were up 3.5 percent on the day, while SEB shares have gained nearly 2 percent in morning trading.

The Latvian treasury failed on Wednesday to sell its debt at a public auction, according to a statement to the stock exchange, increasing speculation of a possible devaluation of the lat.

Such a move would make repayments by Latvian lenders to Swedish banks more expensive, thereby increasing default risks.

The auction failure “increases the likelihood that the Latvian government will be forced to devalue its currency, and that of course would hit the banks,” said Öhman bank analyst Francis Dallaire, cited by Dow Jones Newswires in Stockholm.

Despite such speculation Latvian Prime Minister Valdis Dombrovskis ruled out a devaluation for social reasons.

“The devaluation solution is even more painful than the solution to cut the budget,” Dombrovskis told Latvia’s Diena daily.

“Now we’re discussing how we can protect the pensioners and others because a devaluation would affect every layer of the society simultaneously.”

A Baltic nation of 2.3 million, Latvia warned on Monday that its economy was set to contract by 18 percent this year — the worst in the 27-member EU — and overspending will soar to 9.2 percent of output, despite deep spending cuts.

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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.