NEW YORK, October 25, 2021 – Following a recent re-certification review of Baltic International Bank SE’s inherent risk environment and control effectiveness around internal compliance, governance and financial crime policies, Sigma has reaffirmed Baltic International Bank SE (BIB) “BBB+’’ rating, with the institution performing at a high-level when benchmarked against international best practices. The outlook for BIB is neutral, primarily due to its geographic exposure and increasing geopolitical tensions in the Baltic region.
Baltic International Bank SE’s Rating Affirmed at ‘BBB+’ with Neutral Outlook for its Financial Crime Compliance
The BIB rating reflects our view that, despite increasing geopolitical tensions and challenges of geography, the institution has improved its control framework since its last review in 2019. Specifically, a number of the areas identified by Sigma as part of the initial rating were addressed by BIB’s management and compliance team, including further de-risking of its customer base and an increased focus on financial crime compliance from an audit and risk assessment perspective.
Against the backdrop of significant changes in Latvia, including more pronounced regulator action, as well as notable work by the nation to avoid graylisting by the Financial Action Task Force (FATF), BIB continues to navigate a challenging environment. The bank is equipped to pivot to lower risk markets and has in place a robust compliance team that can both maintain current business, as well as onboard new clients in Latvia and the broader EU as its strategy shifts to make it more dependent on client acquisition in lower risk markets as identified by Sigma’s proprietary country-risk model..
While BIB’s de-risking improves its residual risk score, pressure to onboard and grow the bank’s book will add pressure and the potential for new, previously unforeseen compliance gaps may emerge. This would likely be exacerbated if the institution were to move into new, materially different product offerings or other non- EU client opportunities. While we judge the risk of a more European-focus to be low overall, it is not without risk, particularly as these markets are historically less familiar from a growth perspective for the institution.
About Baltic International Bank SE:
Baltic International Bank SE (BIB), a privately-owned bank founded in 1993, provides wealth management, private and investment banking products and services. BIB offers its clients financial management, banking, fiduciary, custody, and securities trading services
About Sigma Ratings:
Sigma Ratings ("Sigma") is the world's first AI-enabled non-credit rating agency, with a focus on evaluating governance and financial crime controls of financial institutions and corporates globally. Based in New York, Sigma has delivered certified ratings across more than a dozen countries and provides cloud-based risk intelligence and data services to a growing number of financial institutions and fintechs. For more information about Sigma, its methodology or services please visit www.sigmaratings.com.
Rating Process:
Sigma’s ratings consider public and private aspects of an entity’s operations, business strategies and controls, as well as its culture and business decision making process. The process results in a “rating” from AAA-C, with AAA representing the highest rating possible and the lowest risk to governance and financial crime compliance ("FCC") vulnerability. The Outlook represents the general direction of the company regarding its governance and FCC posture. Sigma’s leadership team includes professionals with more than 100 years of combined experience, including deep domain expertise on counter illicit finance-related matters as former senior government, legal and development finance experts.
