S&P: Estonian bank supported

Standard & Poor's said in a report that the Estonian banking system compares well in a Central and Eastern European context.

In a global context, the Estonian banking sector is moderately risky, as denoted by its Bank Industry Country Risk Assessment ranking, which reflects the strengths and weaknesses of a country's banking system relative to other countries, the agency noted.

Estonia's rapid growth in terms of credit expansion, inflation and wages has brought the republic closer to European economic convergence, the report said.

Nevertheless, euro adoption is dependent on curtailing excessive inflation and the risks of potential economic overheating, S&P noted.

"The banking sector is the backbone of the Estonian economy, with good profitability, high capitalization and good asset quality," said S&P credit analyst Xavier Got.

"We expect foreign (mostly Swedish) parents to continue to be supportive, providing funds and capital when necessary to maintain growth and market share in a continuously profitable and progressively more competitive, diversifying market."

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