Number of bankruptcies up by 26% in Estonia
Creditinfo’s bankruptcy survey revealed that the amount of bankruptcies grew last year for the first time in ten years and increased 26% compared to 2019 in Estonia.
Last time the number of bankruptcies grew significantly was due to the global economic crisis in 2008 and 2009 when the growth measured up to 150% in annual comparison. There was marginal growth (+2.4%) in 2017, but this was a shift by eight companies. In 2020, the number of bankrupt companies increased from previous year’s 271 to 341 ( 26%). The share of companies that have gone bankrupt is at 0.15% of all registered companies.
“The amount of bankruptcies remained at a low level in 2020, but there was still a trend of significant growth in the number of bankruptcies that we have not seen since the beginning of the previous great economic crisis. It may be assumed that this was partly due to the effects of the corona crisis, but since the bankruptcy process is long-term, we will probably see the greater effect here next year,“ explained Creditinfo Estonia’s analyst Helen Tinkus.
There was also growth in the last decade’s continuous downtrend of the number of asset-less companies, where bankruptcy rates dropped due to the absence of assets. During 2010-2019 the number of dropped bankruptcies decreased on average by 14% yearly. In 2020, the number of asset-less companies increased by 49%.
“This might have been caused by the fact that the economic environment had become insecure because of the corona crisis. More business plans failed completely and the companies were unable to gather any assets at all before the insolvency situation developed. At the same time, there were also some asset-less companies that showed substantial turnover numbers in the years prior to the bankruptcy,“ Tinkus added.
The areas with the highest rate of bankruptcy are still hospitality and catering, manufacturing industry and construction. The rate of bankruptcy was above the average in wholesale and retail as well.
“There have been no changes in the fields of activity with the highest bankruptcy rate in the recent years. But the share of bankrupt companies in the hospitality and catering sector grew faster than in others, both compared to other fields of activity and to previous periods. These are the fields that was influenced the most by the corona crisis and the restrictions. Based on the payment defaults and wage compensations statistics, we can predict a greater effect of the crisis on the companies operating in the field also in the coming years,“ Tinkus stated.
Creditinfo Estonia Ltd has conducted bankruptcy surveys about Estonian companies since 2000. During the 20 years the number of bankruptcies has both increased and decreased in waves, reaching the peak level in 2009 as a result of the global economic crisis. In 2011 the number of bankruptcies fell by a remarkable 40%, in 2012 by 20%. Bankruptcies have decreased steadily also in the following years, reaching the pre-crisis low level in 2015.
Ends.
Media Contacts:
Rain Resmeldt Uusen, Head of Marketing – Creditinfo Estonia
Email: turundus@creditinfo.ee
Tel: +3725018998
Creditinfo’s new KYC tool allows affordable background checks of international business partners
Creditinfo is the first company in Estonia to bring the shared KYC utility “Know Your Client” to the market. The tool gathers the data an entrepreneur needs to know about clients and business partners from both Estonia and international reliable databases covering the whole world.
According to the rules of the fight against money-laundering and financing of terrorism, each company is responsible for ensuring that every business transaction and cooperation agreement complies with the terms stated in the anti-money laundering law (the Anti-Money Laundering and Countering the Financing of Terrorism Act). In essence, it is the duty of a company to know their clients and business partners in case of both single transactions and longer business relationships.
“Every entrepreneur needs to check the background of the business partner because when the transaction reaches the bank, it may already be too late. The accounts may be frozen and you could end up losing the money,“ Jaanus Leemets, head of Creditinfo’s product development unit explained. “One questionable transaction, no matter how great or small sums are involved, may significantly increase the overall risk rating of the entrepreneur.”
The background checks of companies and individuals operating in Estonia has been a widely available service for years, but checking the background of international partners has been a great challenge for small and medium-sized companies. Access to reliable international databases is very expensive, and the offered solutions are often not suitable for checking single transactions or compiling detailed reports of the parties involved.
“Banks spend millions of euros a year on anti-money laundering background checks, leaving entrepreneurs stranded since they have no resources to afford these services. The results of public search portals are also often not reliable, extensive nor up-to-date enough in their content, especially with international companies, as well as also domestic inquiries. We therefore created a tool that makes inquiries from dozens of different reliable, international databases. The new tool is affordable to small businesses as well and it is also simple to use for single inquiries.“ Leemets added.
To get the entrepreneurs started, Creditinfo offers consultations on the correct implementation of the background check and its proficiency. There is also the option of joining the KYC business school in order to understand the essence of KYC regulations, the precise duties, everyday needs of their companies, and all available options to regularly check the background of clients and business partners without spending too much time.
Media contact:
Rain Resmeldt Uusen
Marketing Manager, Creditinfo Estonia
Email: rain@creditinfo.ee
Thanks to Creditinfo, Estonia becomes the competence center of open banking
The Head of the company says a positive credit register is needed for boosting the Estonian credit market. Stefano Stoppani, Dubai-based Chairman of the Board of Creditinfo providing business information, solvency assessment and market analysis, intended to visit its offices in Estonia and the other Baltic countries in the beginning of March, but COVID-19 hampered with these plans. Europe is cautious in regulating both data protection and open banking. The aim of the PSD2 directive is to give third parties – licensed companies – access to a person’s bank account information. This is not done just because, but for providing better service, and obviously the account holder must authorize this. The third-party, for example, the creditor, can then see the income of the person and what the money is spent on. Information is needed to determine if the person is able to pay back the loan (s)he wants.
Creditinfo Estonia celebrates the 25th anniversary
Creditinfo Estonia – the oldest company in the Creditinfo Group – celebrates the 25th anniversary this year. Creditinfo Eesti AS was established in 1993 (operated under the name Krediidiinfo AS until December 2016). Many years’ experience has helped the company to become the largest and most professional Estonian supplier of credit information.
Creditinfo Estonia has been a loyal long-term partner to Estonian companies helping them to make smart and intelligent business decisions. Creditinfo Eesti AS is the Estonian market leader in the sector of information collection, processing and intermediation.
On 17th of October, Creditinfo Estonia celebrated its 25th anniversary with the clients in a client-conference: Creditinfo 2.0.43. Our goal was to look back to the eventful history, and to begin with the creation of a new version of Creditinfo Estonia for the next 25 years – Creditinfo, version 2.0.43!
The main topics of the conference covered the preview into the next years – possibilities of using alternative data solutions in credit ratings and cross-border data exchange, we talked about innovations and advances in data ecosystems and analytics. Additionally, we took a closer look into what is happening in the credit-industry in the world.
The conference was a perfect thank you gesture for all the clients, who are the roots of our success. Trust and loyalty from the clients give us the inspiration and courage to create innovative solutions impacting the business and social environment around us.
Creditinfo acquire Credit Bureau in Estonia from Experian
Creditinfo are pleased to announce that they have entered into a definitive agreement to acquire a credit bureau operation in Estonia from Experian, Krediidiinfo. Krediidiinfo has been operating since 1993 and is engaged in corporate economic and financial data collection, processing and analysis. Hosting Estonia’s largest corporate and private database, Krediidiinfo currently has more than 16,000 companies, both domestically and abroad, utilising their credit reporting services.
