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.
Estonia joined the Euro Area on 1 January 2011. The preceding national currency, Estonian kroon (EEK), was replaced by Euro.
|Nominal GDP (2016)||Nominal GDP per Capita (2016)||Real GDP Growth (2016)|
|20.9 bln EUR (+0.02%)||15 900 EUR (+0.02%)||1.6 % (2015: 1.1 %)|
According to Eurostat, nominal GDP of Estonia in 2016 was 20.9 bln EUR.
Estonia outperforms the European Union in terms of real GDP growth with the average annual differential coming to 0.8% over the past 10 years (2006 - 2016). In 2016 real GDP growth was 1.6% which was below the Euro Area average (1.8%) and below the European Union average (1.9%). Real GDP growth in 2017 - 2022 are IMF's estimates.
Chart 1. Real GDP Growth in Estonia. Source: Eurostat, International Monetary Fund.
In 2016, nominal GDP per capita in Estonia was 15 900 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 -20.2% over the past 10 years (2006 - 2016). GDP per capita at PPP in 2017 - 2022 are IMF's estimates.
Chart 2. GDP Per Capita at Purchasing Power Parity in Estonia; European Union = 100.
|CPI, MoM (Sep 2017)||CPI, YoY (Sep 2017)||CPI, Year Average (2016)|
|-0.2 % (Aug 2017: 0.4 %)||3.9 % (Aug 2017: 4.2 %)||0.8 % (2015: 0.1 %)|
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 - 2022 are IMF's estimates.
Chart 3. Inflation Rate in Estonia. Source: Eurostat, International Monetary Fund.
|Unemployment Rate (2016)|
|6.8 % (2015: 6.2 %)|
|A+ (high credit quality), outlook stable||A1 (upper medium grade), outlook stable|
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 1 January 2013 the date of coming into force is given in brackets):
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 1 January 2013 of signing the agreement is given in brackets):
There are 3 ways for jusrisdictions to exchange information on tax matters:
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.
Estonia has signed bilateral agreements with 58 jurisdictions to automatically receive information:
Estonia has signed bilateral agreements with 69 jurisdictions to automatically send 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).
|FATCA Status in Estonia|
|IGA in effect since 11 April 2014, Model 1|
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.
|Financial Market Development|
|4.9 (max 7.0), 22nd out of 138 countries|
|5.7 (max 7.0), 28th out of 138 countries|
According to World Economic Forum's Global Competitiveness Report 2017-2018, financial market development in Estonia is scored 4.9 out of maximum 7.0 and ranked 22nd out of 138 analysed economies, trustworthiness and confidence of financial market is scored 5.2 (23rd place).
Chart 4. Financial Market Development in Estonia. Source: WEF.
Soundness of banks is scored 5.7 bringing Estonia into the 28th place.
Chart 5. Soundness of Banks in Estonia. Source: WEF.
|Maximum Protected Amount|
|100 000 EUR|
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:
All these details about deposit guarantee scheme in Estonia are summarised in Table 1.
|Scheme Participants||all credit institutions operating in Estonia, branches of Estonian banks abroad|
|Scheme Exemptions||branches of foreign banks (covered by their home countries), savings and loan associations|
|Maximum Protected Amount||100 000 EUR|
|Paid In Currency||EUR|
Table 1. Deposit guarantee scheme in Estonia.
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)||Foreign Currency|
|Aaa (prime)||Aaa (prime)|
Local currency (Euro) deposit ceiling for Estonia is set to Aaa (prime), foreign currency deposit ceiling is Aaa (prime).
|Average Deposit Rate (Aug 2017, EUR)|
|0.33 % (Jul 2017: 0.30 %)|
Chart 6. Deposit Rates in Estonia. Source: ECB.
|Number of Banks|
|Consolidated Assets (2016)|
|24 808.05 mln EUR (+6.29%)|
|Recent Changes (2016)|
|new banks: 2, closed banks: 3|
Currently there are 37 credit institutions operating in Estonia.
In 2016 consolidated banking assets in Estonia were 24 808.05 mln EUR. The consolidated banking assets' evolution is shown at Chart 7 below.
Chart 7. Consolidated banking assets in Estonia.
Recent structural changes (2013 - 2016) of the banking sector of Estonia are summarised in Table 2.
|Number of Opened Banks||2||3||3||2|
|Number of Closed Banks||2||0||1||3|
Table 2. Recent structural changes in the banking sector of Estonia.
The list of the most recently opened banks in Estonia is provided in Table 3.
|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|
|Octotron Hoiu- Laenuühistu (new)||August 2013|
Table 3. The most recently opened banks in Estonia.
All the credit institutions operating in Estonia can be classified into several categories. Table 4 summarises the number of banks in each category.
|Category||Number of Banks|
|Branches of foreign banks||7|
|Savings and loan associations||20|
There are 7 branches of foreign banks from 5 different countries in Estonia. Table 5 shows the number of branches grouped by the country of origin.
|Country of Origin||Number of Branches|
|Rank||Name||Total Assets||Market Share|
|1||Swedbank AS||9716.30 mln EUR||40.54 %|
|2||AS SEB Pank||5581.66 mln EUR||23.29 %|
|3||Nordea Bank AB Eesti filiaal (closed)||3627.55 mln EUR||15.14 %|
|4||Danske Bank A/S Eesti filiaal||1698.70 mln EUR||7.09 %|
|5||AS LHV Pank||895.22 mln EUR||3.74 %|
Swedbank AS is a universal bank offering retail and corporate banking products and services to private individuals and companies.
Swedbank AS is the 1st largest bank in Estonia in terms of total assets. In 2016 its total assets were 9 716,30 mln EUR, providing the bank with the market share of 40.54%. In 2016 the bank's net income was 212,23 mln EUR.
Swedbank AS participates in deposit guarantee scheme of Estonia. This scheme covers accounts up to 100 000 EUR per bank per depositor.
AS SEB Pank is a universal bank, offering retail, private and corporate banking products and services to individuals and companies. AS SEB Pank also offers pension plans and insurance.
AS SEB Pank is the 2nd largest bank in Estonia in terms of total assets. In 2016 its total assets were 5 581,66 mln EUR, providing the bank with the market share of 23.29%. In 2016 the bank's net income was 70,83 mln EUR.
AS SEB Pank participates in deposit guarantee scheme of Estonia. This scheme covers accounts up to 100 000 EUR per bank per depositor.
Nordea Bank AB Eesti filiaal provided retail, private and corporate banking products and services to private individuals and companies. In 2017 Nordea Bank AB Eesti filiaal was superseded by Luminor Bank AS, a joint venture of Nordea and DNB.
Nordea Bank AB Eesti filiaal was the 3rd largest bank in Estonia in terms of total assets. In 2016 its total assets were 3 627,55 mln EUR, providing the bank with the market share of 15.14%. In 2016 the bank's net income was 24,41 mln EUR.
Nordea Bank AB Eesti filiaal participates in deposit guarantee scheme of Sweden. This scheme covers accounts up to 100 000 EUR per bank per depositor.
Danske Bank A/S, branch in Estonia offers a broad range of banking products to business customers and individuals non-residents of Estonia.
Danske Bank A/S Eesti filiaal is the 4th largest bank in Estonia in terms of total assets. In 2016 its total assets were 1 698,70 mln EUR, providing the bank with the market share of 7.09%. In 2016 the bank's net income was 16,21 mln EUR.
Danske Bank A/S Eesti filiaal participates in deposit guarantee scheme of Denmark. This scheme covers accounts up to 100 000 EUR per bank per depositor.
LHV Group is an Estonian financial company founded in 1999 as an investment firm offering brokerage servcies and portfolio management services. In 2009 the group established LHV Pank. LHV Pank provides retail and corporate banking products and services to private individuals and companies. LHV Pank also offers pension funds and online brokerage services.
AS LHV Pank is the 5th largest bank in Estonia in terms of total assets. In 2016 its total assets were 895,22 mln EUR, providing the bank with the market share of 3.74%. In 2016 the bank's net income was 9,96 mln EUR.
AS LHV Pank participates in deposit guarantee scheme of Estonia. This scheme covers accounts up to 100 000 EUR per bank per depositor.
27 time deposit accounts offers from 3 banks operating in Estonia are currently available. The time deposit accounts terms vary from 6 month to 5 years (60 months).The interest rates are within the range 0.50 - 1.80 %.
AS Versobank was founded in October 1999. Versobank offers retail banking products and services to natural persons and legal entities residents of Estonia. Debit and credit cards are also offered to non-residents.