Estonian businessman Adik Levin applied for a four-month grace period for principal loan repayments to Swedbank. In exchange Swedbank wanted to increase the interest margin by 50%. As a result, Levin’s company would have had to pay the Swedish Bank an additional 1.7 million Estonian kroon.
“I call it legalized public robbery of borrowers. We don’t need such assistance from the bank.”
the Estonian paper Äripäev writes.
As a result, Role would have had to pay Swedbank an additional 1.7 million kroon. “Naturally, we refused since it was nonsense. I call it legalized public robbery of borrowers. We don’t need such assistance from the bank,” Levin says.
Tauno Vanaselja, head of the corporate financing division of Swedbank, said that the bank’s practice is not to comment the activities of the bank’s customers in public.
Vanaselja explained that companies that ask for a grace period become more riskier for the bank that needs to make additional loan provisions and is therefore forced to increase the interest rate to offset possible losses. “Often, since the time when the original loan was taken, market conditions have changed and the price of borrowed capital that banks use to finance themselves.”
Levin who is one of Estonia‘s best-known medical doctors said that he applied for a grace period to ease the pressure on the company during the economic crisis. Levin says that such pressure from banks makes the situation in companies more tense and could drive enterprises bankrupt.
Levin says that when he asked the bank whether Levin should give the clinic to the bank, a bank representative said that if the company defaults on its bank loan, this is what needs to be done. “Our office is in a very prestigious area and we have repaid the loan for several years already, so it is natural that it would be beneficial for the bank,” said Levin who is urging the public to discuss such behaviour of banks.
Role borrowed about 10 million kroons in euros with floating interest rate about five years ago for acquisition and refurbishment of an office in central Tallinn.
Source: Baltic Business News.
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