The report says that Baltic banking markets have been flourishing up to 2007 when the upward trend of the economy halted and the explosive expansion of lending and deposits reversed. However, despite the painful correction, the well developed banking infrastructure including: dense branch, ATM and POS networks, as well as common use of remote banking channels place Estonia, Latvia and Lithuania still among the most advanced banking markets in Central and Eastern Europe. This can be also confirmed by common banking penetration benchmarks, which despite the recent correction still exceed the CEE average.

In contrary to the rest of CEE, Baltic banking markets have been historically highly concentrated. Top 5 international groups present in all 3 countries control more than 77% of combined banking assets. On the other side, lack of major administrative entry barriers and current weakness of major players, makes Baltic markets still an interesting opportunity for new entrants, enabling both M&A or "greenfield" approach.

According to Intelace analysts, the recent economic tensions forced governments in Baltic countries to apply radical public spending cuts which contributed to accelerating growth in unemployment and resulted in a true collapse of private consumption. All those factors will obviously drag down the rate of growth in all Baltic countries in the near future. Nevertheless Baltic economies are relatively flexible, viable and of relatively small size, so after the temporary correction, they are likely to resume growth quicker than other larger countries. Intelace Research assumes that both GDP and banking volumes in Baltic countries will keep falling through mid-2010, when the trend is likely to reverse.

“Banking Market in the Baltics 2009-2011, CEE Banking Brief” analysis covers a wide range of perspectives including: market size, competitive structure, market shares and comparative analysis - benchmarking. The study has been upgraded with most recent forecasts of banking assets evolution through 2011, separately for each of the 3 Baltic countries in question.

Intelace Research is an independent and privately owned company specializing in value added research services and it is primarily focused on banking, insurance and asset management sectors.