(eca008): Latvian bank woos Russians using EU residence permit (News Feature)

By Mike Collier Jul 30, 2010, 4:23 GMT

Riga - 'Welcome to EU!' says the matronly woman in a blue dress and Baltic amber necklace. In her hands is a tray of bread and salt - a traditional Russian greeting for guests.

She is the face of a new advertising campaign by Latvia's Rietumu Banka (Western Bank) and is visible on billboards across the Latvian capital, Riga.

But if her bread, salt and smile aren't enough to make you open a deposit account, she has one other thing to offer on her poster in Latvian, English and Russian: the chance to get hold of an EU residence permit.

The campaign revives fears that legislation recently adopted by the Latvian parliament could turn the country into a 'back door' into the European Union, particularly for Russians.

From July 1, five-year residence permits are being made available to non-EU citizens able to meet certain financial criteria.

They include paying 20,000 lats (37,000 dollars) in taxes per year, buying real estate worth 50,000 lats or depositing 300,000 euros in a savings account, which Rietumu's website assures is the 'fastest and easiest way to the residence permit.'

'The residence permit of the Republic of Latvia automatically guarantees free movement of persons within the Schengen area, currently consisting of 25 European countries,' the website stresses.

Rietumu denies that its campaign could give the impression it is selling EU residency to rich Russians.

'We are not afraid of any incorrect interpretations of our campaign,' spokesman Vadim Alekseyev told the German Press Agency dpa. 'We started to support amendments to the law on immigration at the very beginning. Its potential contribution to our country in the form of foreign investments ... is absolutely clear to us.'

Latvia has a knack for attracting rich Russians - perhaps not surprising when around one third of the population has Russian as its mother tongue. Every summer the Baltic state, which joined the EU in 2004 after half a century of Soviet occupation, plays host to the New Wave song contest, a Russophone pop extravaganza.

At the coastal resort of Jurmala, 20 kilometres from Riga, dozens of established and aspiring Russian pop stars are watched by hundreds of well-heeled audience members on holiday from Moscow and St Petersburg.

This year's New Wave event started on July 27 and even attracted the attention of Russian billionaire Roman Abramovich, whose 115- metre luxury yacht, the Pelorus, is currently moored on the River Daugava in central Riga.

The timing of the Rietumu campaign is no coincidence, and the bank freely admits that it is targeting New Wave attendees. 'It would be completely unprofessional to lose such an excellent opportunity to communicate our message to them,' Alekseyev told dpa.

Originally the intention was to use Russian only on the posters, but this proved impossible under Latvia's strict language laws, resulting in a situation in which they say 'Welcome to the EU' in Latvian to Latvians who are already in the EU.

Rietumu is not the first Latvian bank to target Russian clients. Parex banka rose to prominence during the 1990s largely as a result of its ability to attract deposits from rich Russians. Then in 2008 it went spectacularly bust and had to be bailed out by the government, dragging the whole state to the verge of bankruptcy.

Latvia was forced to turn to the International Monetary Fund and EU for a 7.5-billion-euro bailout loan and saw its economy contract by 18 per cent in 2009.

Now rebranded as 'Citadele,' former Parex is seeking potential buyers. It is probably a coincidence that Citadele's headquarters are located literally a stone's throw from where Roman Abramovich's vast luxury yacht is moored.