Moody's: Negative outlook for Estonia banks

The outlook for the Estonian banking system is negative, reflecting the growing risk of a decline in the asset quality and liquidity in light of the rapid growth in loans in recent years, said Moody's Investors Service in a new report.

Moody's also said it changed the outlook to negative for Hansapank, the largest bank in Estonia. However the outlook for Sampo Pank and Balti Investeeringute Grupi Pank remain stable.

Estonia's banking system remains highly integrated and characterized by considerable concentration, the agency said.

Moody's said its primary concern is that the rapid loan growth has led to unseasoned portfolios with high concentration on the mortgage and real estate sectors.

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