Lars Christensen, you are being laughed at!

During approximately past two years Danske bank, the number one bank in Denmark also active in other markets in Scandinavia has been prophesying financial Doom's Days in the Baltic states. The campaign was lead by its chief analyst Lars Christensen.

Months after months we've been hearing from this Danish bank about how Baltic states' economic growth isn't sustainable, how hard the landing is going to be and how the currencies are going to be devalued.

In Spring of 2007 people in Latvia started to exchange their lats to EUR in the fear of imminent devaluation, which never came.
In November Russian speaking minorities in Estonia lined up to cash machines and in panic emptied currency exchanges from EUR, pounds and even Swiss franks in fear of "imminent" devaluation of kroon, after website of pro-Kremlin group Night Watch spread "reliable information" (lies) of overnight devaluation. This information fell to fertile ground because Danske bank's Lars Christensen has been producing truckloads of PDFs and press headlines about "bubbles", "bursting of market" and so on. Devaluation did not take place as in fact it is all but impossible in Estonia under the system, but it was a good pre-Christmas gift for the currency exchanges. Have a look at Mr Christensen's works in Google.

Russians lining up to withdraw their kroons from a cash machine during devaluation scare in November. Photo by Estonia in World Media.

I just scrolled through one of the fresher pieces by Danske bank, on Moody's credit rating agency downgrading Estonia's credit outlook... to stable, from positive. Immediately after this move by the credit agency Mr Christensen produced his press-release about imminent catastrophe. I could almost hear the sound of shampaign bottles being opened. No wonder the British Economist called Mr Christensen "hawkish analyst".

But in a longer overview in December Mr Christensen overdid himself, claiming Baltic states went "from red to very red". I stopped reading at this point because I am too sensitive a person to face the horrors of his vivid imagination. But judged by the fact how little attention this latest set of predictions received in the press I suspect Mr Christensen works could have just crossed the line between stupid to "very stupid".

Now, two years after the start of the crusade of the Dane vikings to bring the light of solid finance market analysis into the Baltic shores Estonia's GDP expansion rate "hit hard" to about 6 per cent of growth, with EEK, the Estonian currency iron-solid, state budget in bright green and verivorst still served, with hapukapsas as we celebrate New Year. Better than ever.

Toomas Hendrik Ilves appeared at twelve o'clock to congratulate the people and why not ridicule a little Last Days analysts (here see full text):

Free market economy involves development and change. This is why rapid economic growth, characteristic of transition economies, has now stabilized into a steady rise. Let us accept this and keep this in mind.

Yet we must not attach disproportionate or false qualities to our now more measured economic growth. We must not believe those foreboding crisis and crash. They are making an overstatement and a mistake, they mislead and discourage.

They are wrong.

So much for bubble bursts, devaluations and other false prophesies and prophets. Here a coin, catch.

There are two things, which set Danske bank apart from the pack. Firstly, it spells doom, while the rest of the community of financial institution analysts remain much more reserved, to say the least. Danske bank is thus practically the only one of its kind with his catastrophe scenarios, while every other estimation I can think of is about a dozen times less pessimist. There are reasons to be pessimistic this year, given that zillion per cent profits enjoyed by the private sector in the Baltic states now turned into mere insane profits and then there's a problem with high inflation and trade deficit with easy cash like EU structure funds - "free money" - just pouring in, but this is about it.

Secondly, Danske bank is probably the only one of the leading financial institutions of Scandinavia, which doesn't profit (insanely) from the Baltic states financial markets' growth. The bank in question has been too late to move to the Baltic markets, when it was the easiest in the 90s, when the markets emerged and when there was no serious competition. Today the fight is lost, chiefly to the competing banks from Sweden, which are now swelling with the profits from Estonia, Latvia and Lithuania.

Hansabank, Swedbanks' Baltic states daughter alone annually squeezes some €400 million in profits, with Estonia giving about half of this number, other half by the other Baltic states.
In first three quarters of year 2007 Hansabank put into pocket €364 million, earned in the Baltic states, according to his homepage. So by the year's end the sum should be up to €455 million. This is € half billion! Couple of years ago I did some googleing, comparing Baltic states' (7 million inhabitants) Hansabank's profit with cumulative profits of all Ukrainian (46 million inhabitants) commercial banks combined and it turned out about the same figure, in €. This is just enormous amount for such small market as Estonia or even three Baltic shore countries together. Thus instead of saying "lucrative market" perhaps I should be just screaming "crazy money!"

Hansabank's chief competitor SEB's Ühisbank is doing not as spectacularly, but in his modest capacity he too was able to pull some fantastic looking €60 million in profits in 9 months of year 2007, this time the number is from Estonia alone, according to his Estonian page (in English). Here we go again. This isn't all as there are other good looking numbers, but let's just limit this overview to two banks whose services I personally use.

But as Tallinn's fancy places filled with New Year celebrations where did Danske bank managers and share holders mark their hundreds of millions in Baltic profits? Radisson SAS, Swissotel, Meriton Grand Hotel Tallinn, or perhaps even Saku Suurhall?

Unfortunately there was unlikely any reason to celebrate for Danske bank. He only moved to Estonia and the other Baltic states in 2007 by a costly acquisition of Finnish Sampo bank and he's got market shares between 0 and 9 per cent. Both these factors demonstrate how big a loser he so far is in the competition for super profits with his Scandinavian arch rivals (on Danske's pitiful market shares see Wikipedia).

That's why there are voices in Estonia (for example in last Keskpäevatund) finally beginning to doubt in Mr Christensen's ability to impartially assess the situation. Not hard to doubt indeed, given that bursts from his propaganda gun aimed at Baltic states actually wound his salary payer's competitors. For the Danske bank there's no costs, only profits.

Stay tuned as next time I am going to have a look at Russian analysts' opinions - a lot more funnier.