Swedbank in massive Latvia write down

Nordic banking giant Swedbank said Friday it was writing off nearly two billion kronor on its operations in Latvia, which has emerged from the world's deepest recession.

Swedbank in massive Latvia write down

In a statement, the bank described the decision as a “goodwill write-down” of 1.91 billion kronor ($275 million).

“It is important to note that the write-down of goodwill has no impact on our view on Swedbanks operations in Latvia, which is one of the bank’s four home markets. Our commitment to and outlook for the Latvian operation has not changed,” Swedbank chief Michael Wolf said in the statement.

The write-down will be included in Swedbank’s 2011 results.

Swedbank is the largest bank in Latvia, holding around 20 percent of a market which has been dominated by Nordic players following the collapse of another local bank, Parex, in November 2008.

It holds assets of more than four billion Latvian lats ($7.3 billion) in the nation of 2.2 million people.

In December, it was hit by rumours about the stability its Latvian operation, sparking a panic that saw depositors queueing at cashpoints to withdraw their money.

Latvian police are still investigating the source of the rumours which, although dismissed as “absurd” by Swedbank, underscored ordinary people’s jitters in the wake of the Parex collapse and last November’s failure of another local player, Krajbanka, amid a fraud probe.

Ex-Soviet Latvia joined the European Union in 2004 and posted double-digit growth stoked by rising wages and easy credit.

But its overheated economy went off the rails as the global crisis struck, shrinking by a quarter over 2008 and 2009 combined, sparking a draconian austerity drive.

An economic revival saw growth of at least 4.0 percent in 2011 although this is expected to slow to 2.5 percent this year.

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Swedish bank’s IT fault puts customer accounts in the red

A technical problem at Sweden's Swedbank on Thursday night gave customers a nasty surprise, with their account balances inexplicably going negative, payments impossible, and Swish payments no longer working.

Swedish bank's IT fault puts customer accounts in the red

By 11.30pm, more than 2,000 Swedbank customers had reported the fault to the site Downdetector, and the problem was still not solved by 17.00pm on Friday. 

“We have an ongoing IT disruption where certain customers see an incorrect balance on their accounts,” a message on the bank’s app read. “The reason is a planned update to our internal systems which went wrong. We apologise, of course, for that and are working as quickly as possible to fix the problem.” 

The Swish payment service has also been affected, with the service, which is owned collectively by Swedish banks, reporting on its site that there was a “technical disruption at Swedbank and Sparbank which might affect Swish payments from these banks”. 

Some Swedbank customers posted their negative account balances on Twitter, expressing shock at the incorrect figures. 

The disruption comes at the worst possible time for many Swedes. Many people are paid on the 25th of the month, meaning this Friday marks the start of the payday weekend. Many will have also scheduled their bill payments for this Friday. 

Marko Saric from Malmö saw his account balance drop by 1.2 million kronor, going half a million kronor into the red. 

“It’s just totally crazy,” he told SVT. “We were going to go out and shop for the weekend. It’s lovely weather and the kids want to go out, but we can’t use our card. We’ve got no cash. Everything is in the bank.” 

“You’re just completely blocked. Colleagues need to make emergency food parcels for you. It’s just crazy that something like this should happen.” 

In its statement, the bank assured customers that their money was “secure”, and that the bank still had the correct information on what their account balance should be. 

“Customers who feel that they have suffered economic damage as a result of the disruption should contact the bank,” the message said.