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Economy and Banking Sector of Latvia

Northern Europe
Population  (2017)
1 950 116  (-0.01%)
EU Status
member since 2004
EUR (Euro)
Nominal GDP (2016)
25.0 bln EUR  (+0.02%)
Credit Ratings (as of Sep 2016)
Consolidated Banking Assets (2016)
29 675.76 mln EUR  (-7.89%)
Deposit Guarantee
100 000 EUR
Number of Banks

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

Latvia is a developed country with high-income economy.Main industries of Latvian economy are processed foods and wood products, textiles, processed metals, pharmaceuticals, railroad cars, and synthetic fibers.

Latvia banking and financial system has been developing rapidly since 1991when Latvia declared its independence from the Soviet Union.Latvian banking sector is relatively small, highly concentrated,with high share of foreign capital. Most of the foreign-controlled banks are originated from Scandinavian countries (Denmark, Finland, Norway and Sweden); most of the domestic banks are privately owned. The majority of Latvian banks operate as universal banks, however there are also specialized banks, focused solely on wealth management or corporate banking. More than a half banks in Latvia provide their products and services to non-residents (offshore banking).

List of Banks in Latvia
Offshore Banking in Latvia

National Currency

Euro (EUR)

Latvia joined the Euro Area on 1 January 2014. The preceding national currency, Latvian lat (LVL), was replaced by Euro.


Nominal GDP (2016)Nominal GDP per Capita (2016)Real GDP Growth (2016)
25.0 bln EUR  (+0.02%)12 800 EUR  (+0.04%)2.0 %  (2015: 2.7 %)

According to Eurostat, nominal GDP of Latvia in 2016 was 25.0 bln EUR.

Latvia outperforms the European Union in terms of real GDP growth with the average annual differential coming to 1.4% over the past 10 years (2006 - 2016). In 2016 real GDP growth was 2.0% which was above the Euro Area average (1.8%) and above the European Union average (1.9%). Real GDP growth in 2017 - 2022 are IMF's estimates.

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

In 2016, nominal GDP per capita in Latvia was 12 800 EUR.

Latvia 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 -29.0% over the past 10 years (2006 - 2016). GDP per capita at PPP in 2017 - 2022 are IMF's estimates.

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

Inflation Rate

CPI, MoM (Sep 2017)CPI, YoY (Sep 2017)CPI, Year Average (2016)
0.2 %  (Aug 2017: -0.1 %)3.0 %  (Aug 2017: 3.2 %)0.1 %  (2015: 0.2 %)

According to Eurostat, inflation rate in Latvia in 2016 expressed as annual percentages of average consumer prices was 0.1% which was below the Euro Area average (0.2%) and below the European Union average (0.3%). Inflation rates in 2017 - 2022 are IMF's estimates.

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

Unemployment Rate

Unemployment Rate (2016)
9.6 %  (2015: 9.9 %)

Government Bond Yield

Government Bond Yield (Sep 2017)
0.72 %  (Aug 2017: 0.85 %)
According to Eurostat, government bond yield in Latvia in Sep 2017 was 0.72%, compared to 0.85% in Aug 2017.
Government bond yield of Latvia. Chart 4. Government bond yield of Latvia. Source: Eurostat.

Credit Ratings (as of Sep 2016)

Fitch Moody's
A- (high credit quality), outlook stable A3 (upper medium grade), outlook stable

Withholding Tax

Withholding taxes are imposed at source of income and are often applied to dividends, interest, royalties, rent and similar payments. The rates of withholding tax are often reduced by double taxation agreements.

Withholding Tax Rates in Latvia: 0.0 - 10.0%

Withholding tax rates applied on payments of interest and dividends in Latvia are shown in Table 1.

Dividends Interest
Natural person, resident 10.0 %10.0 %
Natural person, non-resident 10.0 %10.0 %
Table 1. Withholding tax rates in Latvia.

Double Taxation Agreements

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

DTAs of Latvia: 57 Signed Agreements

Latvia 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):

 Czech Republic
 India (Dec 2013)
 Korea, Republic of
 Kuwait (Apr 2013)
 Mexico (Mar 2013)
 Moldova, Republic of
 Russian Federation
 United Arab Emirates (Jun 2013)
 United Kingdom
 United States

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.

Exchange on Request: 2 Signed Agreements

Latvia signed TIEAs 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):

 Guernsey (Oct 2013)
 Jersey (Dec 2013)

Automatic Exchange: Starts in September 2017

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

Further 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 Latvia
IGA in effect since 27 June 2014, Model 1

Latvia has FATCA agreement with the U.S. in effect since 27 June 2014 (Intergovernmental Agreement Model 1). Financial institutions operating in Latvia 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: Latvian financial accounts hold in U.S. financial institutions will be reported to Latvian authorities.

Further Information

Financial Market Development

Financial Market Development
4.1 (max 7.0), 64th out of 138 countries
Banks' Soundness
4.7 (max 7.0), 73rd out of 138 countries

According to World Economic Forum's Global Competitiveness Report 2017-2018, financial market development in Latvia is scored 4.1 out of maximum 7.0 and ranked 64th out of 138 analysed economies. Soundness of banks is scored 4.7 bringing Latvia into the 73rd place, trustworthiness and confidence of financial market is scored 4.7 (43rd place).

Financial Market Development in Latvia. Chart 5. Financial Market Development in Latvia. Source: WEF.

Deposit Guarantee Scheme

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:

  • 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 Latvia are summarised in Table 2.

Scheme Participantsall credit institutions operating in Latvia, branches of non-EU banks, branches of Latvian banks abroad
Scheme Exemptionsbranches of EU-banks (covered by their home countries)
Eligible Depositorsnatural persons, legal entities
Covered Accountsdeposits, current account balance, salary accounts, savings accounts etc.
Maximum Protected Amount100 000 EUR
Paid In CurrencyEUR

Table 2. Deposit guarantee scheme in Latvia.

Further Information

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) Foreign Currency
Aaa (prime) Aaa (prime)

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

Deposit Rates

Average Deposit Rate (Aug 2017, EUR)
0.53 %  (Jul 2017: 0.43 %)
In Aug 2017, 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 0.53% which was above the Euro Area average (0.36%).
Deposit Rates in Latvia. Chart 6. Deposit Rates in Latvia. Source: ECB.

Further Information

Banking Sector Structure

Number of Banks
Consolidated Assets (2016)
29 675.76 mln EUR  (-7.89%)
Recent Changes (2016)
new banks: 0, closed banks: 4

Currently there are 56 credit institutions operating in Latvia.

In 2016 consolidated banking assets in Latvia were 29 675.76 mln EUR. The consolidated banking assets' evolution is shown at Chart 7 below.

Consolidated banking assets in Latvia. Chart 7. Consolidated banking assets in Latvia.

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

Number of Opened Banks0130
Number of Closed Banks1514

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

The list of the most recently opened banks in Latvia is provided in Table 4.

NameStart Date
Rīgas kooperatīvā krājaizdevu sabiedrība (new)October 2015
Kooperatīvā krājaizdevu sabiedrība "Latvijas lauksaimnieku krājaizdevu sabiedrība" (new)July 2015
 AS LHV Pank Latvijas filiāle (closed)February 2015
 Nordea Bank AB Latvijas filiāle (new)February 2014

Table 4. The most recently opened banks in Latvia.

All the credit institutions operating in Latvia can be classified into several categories. Table 5 summarises the number of banks in each category.

CategoryNumber of Banks
Branches of foreign banks6
Central banks1
Credit unions33

Table 5. Number of banks by category in Latvia.

There are 6 branches of foreign banks from 4 different countries in Latvia. 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 Latvia grouped by country of origin.

Time Deposit Accounts

Minimal Interest Rate
0.20 %
Maximum Interest Rate
1.60 %
17 offers from 3 banks