Estonia: Bad neighbors feed woes for baltic bank ruing Deutsche loss

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August 11, 2016

Just like in real estate, banking can be all about location.  Take AS LHV Pank. Despite being the biggest locally owned lender in its home market of Estonia, it’s struggling to regain access to dollar clearing after Deutsche Bank AG stopped providing the service last month, citing a wider review of its clients.

LHV’s difficulties are largely the result of geography: With a population of just 1.3 million people, it’s hard for the smallest of the three Baltic nations to justify its value in a world of global risk-reduction by banks. Compounding matters, proximity to Latvia — a hub for cash from the ex-Soviet region that’s battling a reputation for money laundering — and Russia — under U.S. and European sanctions over Ukraine — can scare off potential partners.