Krona slides further on Baltic economy worries

Concerns about economic developments in the Baltic region are the likely cause of the krona’s steady slide in recent days, according to several experts.

Krona slides further on Baltic economy worries

In just the last few days, the krona has slipped by 40 öre ($0.05) against the euro and 30 öre against the dollar, and experts are convinced the cause has a simple explanation.

“You can sum it up in one word: Baltics,” said Robert Bergqvist, head economist at the SEB bank, to the TT news agency.

However, the latest wave of concern about the fate of the Baltic countries likely originated back in Sweden.

The Riksbank’s decision on Wednesday to strengthen its foreign currency reserves by borrowing 100 billion kronor is being interpreted by some as a preparation for a devaluation first in Latvia, and then in the other Baltic countries.

Torbjörn Becker, head of the SITE research institute at the Stockholm School of Economics, thinks a currency devaluation in Latvia is likely.

“They’ve invested a lot of political capital to maintain their fixed exchange rate, but in the long term it’s unsustainable,” he said.

Meanwhile, the head economist at Swedbank, Cecilia Hermansson, believes a devaluation in Latvia will depends on an upcoming June decision from the International Monetary Fund about whether or not to grant the country another emergency loan.

Nevertheless, neither the central bank of Latvia or Lithuania have indicated they have any plans to devalue.

Currency devaluations in the Baltic would have negative effects for Swedish banks, especially Swedbank and SEB, which hundreds of millions of kronor in loans in the region.

That may be one explanation as to why the krona continues to weaken on international currency markets.

Pressure on the krona has also come from faulty information in the international business press which claim that Sweden’s National Debt Office (Riksgälden) plans to sell Swedish kronor.

In actuality, the Debt Office plans to lend 100 billion kronor worth of foreign currency to the Riksbank to strengthen the central bank’s reserves after having made substantial dollar-denominated loans to Swedish banks throughout the financial crisis.

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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.