PRESS RELEASE 13 July 1998

EESTI PANK GAVE ITS CONSENT TO THE MERGER OF HANSAPANK AND HOIUPANK AS WELL AS ÜHISPANK AND TALLINNA PANK

On 13 July 1998 Eesti Pank gave its consent to the merger of Hansapank and Hoiupank as well as Ühispank and Tallinna Pank. The mergers mark the formation of two structures measuring up to large banks in Estonia. The central bank holds the view that it marks the beginning of a new stage in the development of the banking markets both in Estonia and in the Baltics.

Consolidation of the banking sector, reflecting the tightening competition both in the banking and financial sectors, is a global trend all over the world today. Thus, the two bank mergers can be seen as events strengthening the competitiveness of the Estonian banking sector and opening new perspectives for continuous strengthening and stable development of the Estonian banking sector.

Painstaking and lengthy for the merger helped to bring forth several problems which, if left unsolved for a longer period, would have greatly harmed the reputation and stability of the Estonian banking. The problems which arose in connection with the merger have been taken into consideration on all levels by now. It is especially important that concrete conclusions are reached on the basis of the events that have occurred. The changes taking place in the Estonian banking sector at the moment create a stronger basis for the further development. At the same time, new developments require new qualities both in the banking regulation and banking supervision. It is not accidental that it is now new steps are taken towards the consolidation of financial supervision.

It is most important that two comparable large banks will emerge on the Estonian banking market. It is certain that there is a place in Estonia, both now and in the future, for small banks and various specialized banks. At the same time, the Estonian financial market will remain open to international competition. Foreign banks coming on the Estonian market will secure the continuation of development based on honest competition and international requirements. These factors help prevent the abuse of the state of a market governing enterprise and are useful to both the banks' customers and the society as a whole.