Why is Tallinn city government so stirred up about creating a cooperative credit bank? Thus far, the public gets the impression that what we have here is another political campaign by Centre Party and its mayor/chairman Edgar Savisaar hegemony, the central message being to pit Tallinn against Estonia. By this, loyal electorate ought to understand: «we Tallinn» are forward-looking and do stand for the weak while life goes gloomily downhill for Estonian state.
The political flavour is provided by how the bank has to hurriedly be established before the elections. Also, the city management has been promoting slogans about the foreign banks being robbers, closed for local entrepreneurs, expensive services etc. Listing city government success stories at end of last year, Mr Savisaar presented preparations for cooperative credit bank next to municipal shop.
However, establishing a bank cannot be compared to opening a store. When opened and afterwards, while in operation, a bank must consider the increasingly stringent regulations and surveillance, while a shop will basically do with sanitary inspection. A shop might make losses, but a bank – selling trust to its clients – that does not do well on the market can in no way secure constant cheap flows of money.
It’s not the issue of the banking market not needing competition. The opposite is true: like in any other business, this would doubtless be in the interests of the clients. Of Estonian banking market, nearly 90 percent is held by the big four – Swedbank, SEB, Nordea and Danske. However, we don’t have easy answers here; this needs investments and lots of hard work. Look at the heavy lifting by LHV, for instance – success, should it come, will come after many years and is likeliest in a niche, not as a universal bank in every sector.
Ülle Mathiesen, elected as board member of the Eesti Ühistupank in question, is a person experienced in banking and, in interview to Postimees, she admits that the endeavour is risky. Also, Ms Mathiesen points out the lines that she as an executive would never cross. Still, in her assessment, the changing environment allows for successful competition with foreign banks.
Well, we’ll see. By the fiery bank-talk by Mr Savisaar and other Centre Party politicians, one can’t help but get the impression: it is absolutely feasible for a bank to offer super-cheap loans while offering hefty interests and also pocketing pretty profits – the latter the city which poured in a lot might merrily use for all kinds of other stuff. In other words, whatever sounds glorious and logical on slogans may not be possible in real life. The party claims to boost business, but will voters really buy it?