Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Estonian Banks Lead Effort To Create Pan-Baltic Market

RIGA -- Estonian banks and investment firms are leading the charge to forge a regional Baltic financial market spanning Latvia, Lithuania and Estonia, analysts said Thursday.

The latest cross-border cooperation move in the region, populated by 8 million people, involved Estonian investment house Talinvest's purchase of 87 percent of a leading Lithuanian brokerage, Suprema.

"We are trying to market ourselves as one big region so that foreign investors take us more seriously," said Talinvest's sales and trading director, Aare Tammemae.

"The combined turnover of the three markets comes close to the turnover of other eastern European markets," he said.

Since breaking free from the former Soviet Union in 1991, the Baltic states have been committed market reformers with a pro-Western orientation.

Leading Estonian banks have spearheaded the move to create a pan-Baltic market. Hansapank began the process last year when it bought a bank in Latvia. Estonia's Tallinna Pank has just bought a 20-percent stake in Latvia's Saules Bank.

Both Hansapank and Tallinna Pank have said also plan to expand to Lithuania, the southernmost Baltic state.

"This process will not necessarily speed up, but an important part of the transition will be to create a more integrated financial market," said Vlad Sobell, senior Eastern Europe economist for Daiwa Securities.

The Latvian and Estonian stock exchanges also have discussed the possibility of allowing trade on each other's market.

Analysts said Estonians are setting the pace because their financial sector developed faster and because growth of the domestic market is limited by the country's size. It is the smallest of the three Baltic states.

Analysts also say Estonia emerged from its banking crisis in 1992, earlier than its neighbors, and learned valuable lessons from the shakeout that allowed swifter development later.