It is easy to say, "What could they have done?" I suspect that the Central
Bank and the other banks could have done something other than shut down the
phone lines, the fax lines, the internet connections, the debit cards, etc.
with no explanation other than we're done.
In a situation like that the Central Bank probably should have come in and
taken over the bank, and/or worked with others to try to save the bank, if
for no other reason that saving the reputations of the OTHER banks. The
Central Bank's job is not to protect Paritate, nor even to protect the
client's of any one bank, but is to protect the banking system. In such a
small country, a failure such as Paritate will darken the entire Baltic
Banking System. I for one will not be placing my money there, regardless of
what anyone tells me of the quality of the bank.
Everyone knows that Paritate had terrible customer service. But this was
not a customer service problem. (I doubt any of the other institutions in
the former Soviet block are any more customer friendly.) This was a lack of
capitalization. That is a problem that clever bankers who have a little
long range vision could have solved. I doubt you would have found them in
Paritate. But obviously you won't find them in the Central Bank or the
other banks either.
Take and good luck in the North.
On Thu, 28 Jun 2001 13:19:10 +0200, [EMAIL PROTECTED] wrote:
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> Glencannon Group Ltd. wrote:
>
> > It really quite odd that the other banks
> > in Latvia allowed this to happen? Don't they understand that
> > the fall of
> > Paritate, in such crude and unsophisticated manner, will only
> > reflect ill on
> > those more functional banks? I think everyone in that area
> > needs to learn a
> > few things about managing marketing issues and particularly crisis
> > situations.
>
> Although I'm from Estonia (northern neighbor of Latvia), I can't see
> what other banks should have done. Should the tellers of Parex and
> Saules banks have stormed the Paritate with automatic rifles and take
> control before the "crisis situation"? The fact is that there isn't
> much you can do except giving your best servicing your customers when
> you see your competitor going belly up. But I'm still eager to listen
> to your suggestions, what the other banks should have done.
>
> The state has gave some thought of these kind of situations and their
> response has been the institution of Central Bank. CB's duty is to
> monitor the private bank and revoke their license when they see that
> bank is becoming insolvent. This seems to pretty efficient, although
> I personally think that the free market system is even more
> efficient. When Soviet occupation ended in Estonia we had 0 banks.
> Some 9 years ago we had near 40 banks (in a country with population
> of 1.5 million people!). Today we have only 7 or 8 banks, out of
> which 5 are really small ones or branches of foreign banks.
>
> It is natural process, please bear in mind that countries in Baltic
> region has been building capitalism only for 10 years, while Western
> countries have done it fro 200 years. I hope this gives you some
> perspective.
>
> For the record: I'm not customer of any Latvian banks and I'm don't
> know details of that particular incident. I'm just living in the
> region :-)
>
>
> Regards,
>
> Paul Vahur
> IceGold
>
> P.S. It actually reminds me a good anecdote (a true story): When one
> old lady from some Western country was told how after the WWII NKVD
> (the old name for KGB) deported overnight some few hundred thousand
> peoples from Baltic states to Siberia, she asked: "But why didn't you
> called the police?!?".
>
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