BANKS

Latvia has a two-tiered banking system. The Bank of Latvia, established in 1990, is an independent State institution responsible for monetary policy, bank regulations and supervision.

As a result of the bank crisis in 1994 and 1995, and due to stronger supervision, the number of banks has decreased. In 1992, there were 67 commercial banks in Latvia, while by the end of 1997 there were only 32, and in 2000 only 24 banks.

All largest Latvian commercial banks - Parex Bank, Latvijas Unibanka, Hansabanka, Latvijas Krajbanka and Rietumu Banka - have their headquarters in Riga.

Russian financial crisis in 1998 negatively affected by the banking system of Latvia, however, in 1999 the banking system overcame the consequences of the negative impact of Russian financial crisis successfully and that is proved by both positive changes in the main financial indicators and the fact that 19 out of 24 banks ended the year with profit, the level of which is growing again (see Figure 60 ).