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.
|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 %)|
|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)|
|Fitch||A+||high credit quality, outlook stable|
|Moody's||A1||upper medium grade, outlook stable|
|Double Taxation Agreements||57 signed agreements|
|Automatic Exchange||starts in September 2017|
|FATCA||IGA in effect since 11 April 2014, Model 1|
|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)|
|Deposit Guarantee Scheme|
|Maximum Protected Amount||100 000 EUR|
|Country Ceiling for Deposits|
|Local Currency (Euro)||Aaa||prime|
|Deposit Rates (Nov 2016, EUR)||0.30 % (Oct 2016: 0.29 %)|
|Banking Sector Structure|
|Number of Banks||39|
|Recent Changes (2016)||new banks: 2, closed banks: 3|
|Consolidated Assets (2015)||23 340.78 mln EUR (+5.64%)|
|AS Swedbank||AS LHV Pank|
|AS SEB Pank||BIGBANK AS|
|Danske Bank A/S Eesti filiaal||Pohjola Bank plc Eesti filiaal|
|Aktsiaselts DNB Pank|
|List of Banks in Estonia|
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.
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.
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.
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):
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):
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.
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.
FATCA and European countries
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).
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'.
|Credit risk in economy||high|
|Government support assessment||supportive|
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 2.
|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 2. Deposit guarantee scheme in Estonia.
Deposit Guarantee Schemes in Europe
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).
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 Banks||2||3||3||2|
|Number of Closed Banks||2||0||1||3|
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.
|Category||Number of Banks|
|Branches of foreign banks||7|
|Savings and loan associations||21|
The list of the most recently opened banks in Estonia is provided in Table 5.
|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 Origin||Number of Branches|