Financial Environment


The central institution of Latvia’s financial environment is the Bank of Latvia – Latvia’s central bank. According to the Law on the Bank of Latvia, the bank’s main goal is to execute Latvia’s monetary policy and to maintain price stability nationally. The Bank of Latvia also ensures the operation of the Credit Register. The bank grants legal persons registered in the Enterprise Register (except credit institutions) licenses for the purchasing and selling of foreign currency in the form of business activities, and controls compliance with its established procedures for purchasing and selling foreign currency.

With the intention of becoming a fully-fledged member of the Economic and Monetary Union and to introduce the euro as the national currency, Latvia has pegged its national currency – the Latvian lats (LVL) – to the euro (rate - EUR 1 = LVL 0.702804).

Financial and capital markets are regulated by the Financial and Capital Market Commission (FCMC), established in 2000 to sustain stability and development and to promote free competition within financial markets. The FCMC has the authority to monitor and regulate all participants in financial and capital markets (investors, credit institutions, insurers, stock exchanges, depositories, brokers, etc.). The banking system comprises several types of credit institutions:

  • Commercial banks.
  • Credit institutions.
  • Mortgage banks.
  • Subsidiaries, branches, and agencies of foreign banks.

20 commercial bank and 10 branches of foreign banks operate in Latvia with total assets of approximately EUR 30 billion (2011). Latvia’s largest banks represent foreign investors from Sweden (Swedbank, SEB) and Finland (Nordea Bank), which make up approximately 41 % of market share in total assets and account for more than 50 % of issued loans (2011). Only a few of the largest Latvian banks operate as universal credit institutions providing the full range of banking services to private individuals and corporate entities, with and extensive networks of local branches and ATM terminals. Most banks provide a limited range of services to specific customer groups.


At the end of 2011, 11 insurance companies were operating in Latvia – three life insurance companies and eight non-life insurance companies, as well as ten branches of foreign insurance companies. The provision of insurance services and insurance company operations are regulated by the Law on Insurance Companies and the Supervision thereof.


The leading institutions operating in the securities market in Latvia are NASDAQ OMX Riga and the Latvian Central Depository. Through these two enterprises, market participants are provided with an environment for carrying out transactions with securities, the clearing and settlement of securities’ transactions, the listing of securities, and the operating of a central public securities register and a funded pension-fund register. NASDAQ OMX Riga is a part of the NASDAQ OMX Group, Inc., which is the world’s largest exchange company. At the end of 2011, NASDAQ OMX Riga listed 32 companies with total market capitalization of EUR 884.41 million. According to the provisions stipulated by the Financial Instrument Market Law and the rules of NASDAQ OMX Riga, companies that are interested in listing their shares on the main list of NASDAQ OMX Latvian market must meet certain requirements:

  • Prospectus approved by the Latvian supervisory authority.
  • At least EUR 4 million market capitalization.
  • At least 3 years of operation.
  • Must list at least 25 % of total number of shares, or, if less than 25 % of total shares are listed, total capitalization of the listed shares shall not be less than EUR 10 million.
  • Financial statements prepared according to IFRS or GAAP standards.

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