Economy and Banking Sector of Estonia

Located in Northern Europe, Estonia is one of the Baltic States and a member of the European Union since 2004.

Estonia is a developed country with high-income economy. Main industries of Estonian economy are engineering, electronics, wood and wood products, textiles, information technology and telecommunications.

Estonian banking and financial system has been developing rapidly since 1991 when Estonia declared its independence from the Soviet Union. Estonian banking sector is relatively small, highly concentrated, with high share of foreign capital. Large banks in Estonia operate as universal banks, covering a wide range of market segments, while smaller banks concentrate on a specific range of services.

Location Northern Europe
Population (2016)1 315 944 ↑ (0.00%)
EU Status member since 2004
National Currency EUR (Euro) since 1 January 2011
    Nominal GDP (2015)20.5 bln EUR ↑ (+0.02%)
    Nominal GDP per Capita (2015)15 600 EUR ↑ (+0.03%)
    Real GDP Growth (2015)1.1 % ↓ (2014: 2.1 %)
Inflation Rate 
    CPI, MoM (Dec 2016)0.3 % ↑ (Nov 2016: 0.0 %)
    CPI, YoY (Dec 2016)2.4 % ↑ (Nov 2016: 1.4 %)
    CPI, Year Average (2016)0.8 % ↑ (2015: 0.1 %)
Unemployment Rate (2015)6.2 % ↓ (2014: 7.4 %)
Credit Ratings (as of Sep 2016)
    FitchA+ high credit quality, outlook stable
    Moody'sA1 upper medium grade, outlook stable
    S&PAA- high grade
Double Taxation Agreements 57 signed agreements
Information Exchange 
    Automatic Exchange starts in September 2017
FATCA IGA in effect since 11 April 2014, Model 1
Banking Sector
Financial Market Development 4.8 (max 7.0) rank: 22nd out of 138 countries
    Banks' Soundness 5.8 (max 7.0) rank: 28th out of 138 countries
Banking Industry Country Risk 6(1 - lowest risk, 10 - highest risk)
    Economy Risk 5
    Industry Risk 7
Deposit Guarantee Scheme 
    Maximum Protected Amount 100 000 EUR
Country Ceiling for Deposits 
    Local Currency (Euro)Aaa prime
    Foreign CurrencyAaa prime
Deposit Rates (Nov 2016, EUR)0.30 % ↑ (Oct 2016: 0.29 %)
Banking Sector Structure 
    Number of Banks39
    Recent Changes (2016) new banks: 2, closed banks: 3
    Consolidated Assets (2015) 23 340.78 mln EUR ↑ (+5.64%)
Major Banks
 AS Swedbank  AS LHV Pank
 Danske Bank A/S Eesti filiaal  Pohjola Bank plc Eesti filiaal
 Aktsiaselts DNB Pank
 List of Banks in Estonia

Estonian Economy

National Currency

Estonia joined the Euro Area on 1 January 2011. The preceding national currency, Estonian kroon (EEK), was replaced by Euro.



According to Eurostat, nominal GDP of Estonia in 2015 was 20.5 bln EUR.

Estonia outperforms the European Union in terms of real GDP growth with the average annual differential coming to 1.1% over the past 10 years (2005 - 2015). In 2015 real GDP growth was 1.1% which was below the Euro Area average (1.6%) and below the European Union average (1.9%). Real GDP growth in 2016 - 2021 are IMF's estimates.

Real GDP Growth in Estonia.
Chart 1. Real GDP Growth in Estonia. Source: Eurostat, International Monetary Fund.

In 2015, nominal GDP per capita in Estonia was 15 600 EUR.

Estonia has a below-average level of wealth in terms of per-capita GDP at purchasing power parity (PPP); this economic welfare indicator has, on average, fell behind that of the European Union by -21.0% over the past 10 years (2005 - 2015). GDP per capita at PPP in 2016 - 2021 are IMF's estimates.

GDP Per Capita at Purchasing Power Parity in  Estonia; European Union = 100.
Chart 2. GDP Per Capita at Purchasing Power Parity in Estonia; European Union = 100.

Inflation Rate

According to Eurostat, inflation rate in Estonia in 2016 expressed as annual percentages of average consumer prices was 0.8% which was above the Euro Area average (0.2%) and above the European Union average (0.3%). Inflation rates in 2017 - 2021 are IMF's estimates.

Inflation Rate in Estonia.
Chart 3. Inflation Rate in Estonia. Source: Eurostat, International Monetary Fund.

Taxation in Estonia

Double Taxation Agreements

Double Taxation Agreement (DTA) is an agreement between two or more countries for the avoidance of double taxation.

Estonia signed DTAs which already came info force with the following jurisdictions (for agreements which came into force after 01 January 2013 the date of coming into force is given in brackets):

 Bahrain (Dec 2013)
 Czech Republic
 Isle of Man
 Korea, Republic of
 Mexico (Dec 2013)
 Moldova, Republic of
 Thailand (Dec 2013)
 Turkmenistan (Mar 2013)
 United Arab Emirates
 United Kingdom
 United States
 Uzbekistan (Dec 2013)

There are also several agreements between Estonia and other jurisdictions which were signed but haven't yet come into force (for agreements signed after after 01 January 2013 of signing the agreement is given in brackets):

 Russian Federation

Information Exchange

There are 3 ways for jusrisdictions to exchange information on tax matters:

  • spontaneously;
  • on request;
  • automatically.

Spontaneous exchange of information is provision of information that is forseeably relevant to another party without a request being previously sent.

Tax Information Exchange Agreements (TIEAs) enable exchange of information on request relating to a specific tax investigation, either criminal or civil.

Automatic information exchange allows jurisdictions to exchange information automatically, without having a specific tax investigation.

Estonia signed the automatic information exchange agreement on 29 October 2014 and committed to start the automatic information exchange in September 2017.

Further Information:
Automatic Exchange of Information on Financial Accounts
Countries Which Will Not Automatically Exchange Account Information



Foreign Account Tax Compliance Act (FATCA) which became law in the United States in March 2010, focuses on reporting made by foreign financial institutions about financial accounts held by US taxpayers or foreign entities in which US taxpayers hold a substantial ownership interest. The FATCA-reporting is facilitated by Intergovernmental Agreements (IGAs).

Estonia has FATCA agreement with the U.S. in effect since 11 April 2014 (Intergovernmental Agreement Model 1). Financial institutions operating in Estonia are required to identify U.S. taxpayers by January 1, 2017 and to report the information for 2017 and the subsequent years. The agreement is reciprocal: Estonian financial accounts hold in U.S. financial institutions will be reported to Estonian authorities.

Further Information:
FATCA and European countries


Estonian Banking Sector

Financial Market Development

According to World Economic Forum's Global Competitiveness Report 2016-2017, financial market development in Estonia is scored 4.8 out of maximum 7.0 and ranked 22nd out of 138 analysed economies. Soundness of banks is scored 5.8 bringing Estonia into the 28th place, trustworthiness and confidence of financial market is scored 5.2 (23rd place).

Financial Market Development in Estonia.
Chart 4. Financial Market Development in Estonia. Source: WEF.

Banking Industry Country Risk

Banking Industry Country Risk Assessment (BICRA) is a methodology designed by Standard&Poor's "to evaluate and compare global banking systems". A BICRA is scored on a scale from 1 to 10, ranging from the lowest-risk banking systems (group 1) to the highest-risk (group 10). The BICRA methodology has two main analytical components: "economic risk" and "industry risk". Each of the components is then further divided into 3 "factors" that result in an economic and industry risk score for each country.

Estonia is included into group '6' with economic risk scored '5' and industry risk scored '7'.

BICRA Group 6
Economic risk 5
    Economic resilience intermediate
     Economic imbalances intermediate
    Credit risk in economy high
Industry risk 7
    Institutional framework high
    Competitive dynamics high
    Systemwide funding high
Government support assessment supportive

Table 1. BICRA for Estonia. Source: S&P's.


Deposit Guarantee Scheme

Deposit Guarantee Schemes compensate certain deposits held by depositors of a bank that becomes unable to meet its obligations.

From a depositor's point of view it is important to know:

  • if the depositor is eligible within the terms of the deposit guarantee scheme;
  • if the depositor's bank is a participant in the deposit guarantee scheme;
  • if the depositor's type of deposit is covered by the deposit guarantee scheme.

All these details about deposit guarantee scheme in Estonia are summarised in Table 2.

Scheme Participantsall credit institutions operating in Estonia, branches of Estonian banks abroad
Scheme Exemptionsbranches of foreign banks (covered by their home countries), savings and loan associations
Maximum Protected Amount100 000 EUR
Paid In CurrencyEUR

Table 2. Deposit guarantee scheme in Estonia.

Further Information:
Deposit Guarantee Schemes in Europe


Country Ceiling for Deposits

Moody's country ceilings for deposits specify the highest rating that can be assigned to local- or foreign- currency denominated deposit obligations of a bank or other deposit taking institution domiciled within that country.

Local currency (Euro) deposit ceiling for Estonia is set to Aaa (prime), foreign currency deposit ceiling is Aaa (prime).


Deposit Rates

In Nov 2016, an agreed annualised deposit rate in local currency (Euro) of new contracts with agreed maturity up to 1 year between credit institutions and households was 0.30% which was below the Euro Area average (0.44%).

Deposit Rates in Estonia.
Chart 5. Deposit Rates in Estonia. Source: ECB.


Banking Sector Structure

Currently there are 39 credit institutions operating in Estonia.

Recent structural changes (2013 - 2016) of the banking sector of Estonia are summarised in Table 3.

Number of Opened Banks2332
Number of Closed Banks2013

Table 3. Recent structural changes in the banking sector of Estonia.

All the credit institutions operating in Estonia can be classified into several categories. Table 4 summarises the number of banks in each category.

CategoryNumber of Banks
Branches of foreign banks7
Central banks1
Savings and loan associations21

Table 4. Number of banks by category in Estonia.

The list of the most recently opened banks in Estonia is provided in Table 5.

NameStart Date
 Nordic Bankers HLÜ (new)December 2016
 HLÜ Geldex Eesti (new)September 2016
 Hea Koostöö Hoiu-laenuühistu (new)November 2015
 AS Inbank (new)April 2015
 Kodumaa Kapitali HLÜ (new)January 2015
 Intus Hoiu-laenuühistu (new)November 2014
 Eesti Arengu Hoiu-laenuühistu (new)July 2014
 Raha Hoiu- Laenuühistu (new)January 2014
 Põhja- Eesti Hoiu- Laenuühistu (new)October 2013
 Maarjamaa Hoiu- Laenuühistu (new)August 2013

Table 5. The most recently opened banks in Estonia.

There are 7 branches of foreign banks from 5 different countries in Estonia. Table 6 shows the number of branches grouped by the country of origin.

Country of OriginNumber of Branches

Table 6. Number of branches of foreign banks in Estonia grouped by country of origin.


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