The banks met in Sweden's capital on Sept. 11 to discuss their troubled Latvian subsidiaries.

RIGA — Leading Scandinavian banks have pledged to continue support for their Latvian-based branches in a bid to bring some much needed financial stability to the crisis-hit Baltic region.

Banking giants DnB Nord, Nordea, SEB and Swedbank said they were committed to remaining in Latvia and would continue to meet the liquidity needs of branches and subsidiaries, following high-level talks in Stockholm on Sept. 11.

They also agreed to continue close cooperation and regular dialogue with a view to making progress towards more specific bilateral commitments to supervisory authorities.

In a statement released by the International Monetary Fund following the meeting, the banks said it was in their collective interest to: “restate, in a coordinated way, our commitment to maintain our overall exposure to Latvia subject to nominal GDP development and the availability of sound business opportunities.”

It’s hoped the banks’ commitments, along with financial support received from the European Union, the IMF and other donors, will help cushion the effects of the economic downturn and strengthen investor confidence in Latvia.

Foreign-owned banks have previously copped criticism after dramatically scaling back lending in the Baltics.

The banking sector is seen as key to further economic growth in Latvia and both the government and central bank have expressed concerns regarding the lending policies of high profile Nordic banks in the region.

The reticence of many Scandinavian banks comes as they continue to suffer rising loan losses in the face of Latvia’s worsening economic recession and soaring unemployment.

On Monday Swedbank unveiled plans for its €1.47 billion rights issue — the second in less than a year — aimed at bolstering its balance sheet in the face of mounting loan losses in the Baltics.

However, a joint statement prepared by the IMF and the European Commission said continued international financial support would help Latvia’s banking system weather the current crisis and return the economy to robust growth.

“The success of the reform program and medium-term balance of payments sustainability also depends significantly on the continued involvement of all banks operating in or with Latvia, including foreign-owned banks,” the statement said.

As part of an IMF-led €7.5 billion rescue package secured last year Latvia has agreed to undertake tough austerity measures, as well as implement stringent reforms aimed at shoring up its ailing economic fortunes.

The European Bank Coordination Meeting for Latvia was jointly chaired by the EC and IMF.

The World Bank Group, the European Bank for Reconstruction and Development, the European Investment Bank, the International Finance Corporation, the Bank of Latvia, the Financial and Capital Markets Commission of Latvia, the Ministry of Finance of Latvia, home country authorities of Denmark, Finland, Norway and Sweden and the European Central Bank were also in attendance.