OREANDA-NEWS. November 11, 2014. The impact of the Ukraine conflict and the Russian sanctions on Estonian banks are relatively modest and the businesses, households and banks are better prepared than before, says the Central Bank.

The influence of Russian sanctions on Estonian economy are in the region of 0.3 percentage points of the national GDP, reported ERR radio news.

Mari Tamm, specialist at the Bank of Estonia's Financial Stability Department, said that the main sectors that have suffered as a result of the sanctions are food production, agriculture, transport and wholesale goods.

She added the influences are not yet visible in the banks' return.

"It's early days still. One could say that the proportion of these sectors in the banks' loan portfolios are relatively small, and the quality of these loans is also a bit smaller than the average," she said.

The proportion of outstanding debit held by Russian citizens is similarly small.

"We, therefore, estimate the effect of Russian sanctions on our local banks to be rather modest. The banks as well have found it to be so. The potential credit loss resulting from the sanctions set by the Russian government should not exceed 1 percent of the total loan portfolio," she said.

The full impact of the sanctions on the Estonian banking sector is difficult to assess. If the direct impact is felt through sanctioned sectors of the industry, the indirect impact is evident in the increase of financial and more general insecurity they cause.

Tamm pointed out that Estonian businesses, households and banks were much better prepared for the crises than before.

"Debt levels are lower; businesses, households and banks have less liquid assets than they did during the previous crises. In that sense, our readiness has definitely improved," she said.