Regulatory Constraints on Lending by Foreign Lenders

Foreign lenders may extend loans in Latvia, however, they are required to comply with Latvian laws, including any licensing and representative office requirements set out in the Credit Institution Law. Credit institutions from other European Union member states may offer financial services in Latvia either through the freedom to provide services or by establishing a branch, without the necessity to obtain a separate Latvian licence, provided they meet the conditions specified in Latvian law, namely, the Credit Institution Law. In such cases, the branch remains subject to supervision of its home-state regulator while also complying with the applicable Latvian regulatory requirements.

Where Latvian borrowers independently approach foreign lenders, and those lenders do not engage in promotional activities directed at Latvian consumers, no local licensing requirement applies.

Regulatory Constraints on the Granting of Security to Foreign Lenders

There are no specific legal limitations on foreign lenders receiving security over assets that differ from those imposed on Latvian lenders.

There is no general cap that applies to purely commercial loans between legal persons. However, for corporate lending, i.e., loans to companies, the rate is subject to general civil law principles, such as the principle of good faith. Interest rates that are disproportionate and inconsistent with fair business practices shall be deemed unlawful. The rate is also subject to prohibition of usury (excessively burdensome terms and conditions of a loan) which is prohibited under the Criminal Law.

Latvian law does impose limits on interest rates regarding consumer lending and late payment interest. Specific regulations on consumer lending are laid out in the Consumer Rights Protection Law and the Cabinet of Ministers Regulation No. 691 “Regulations Regarding Consumer Credit” of October 25, 2016. According to the Consumer Rights Protection Law, the total costs of the credit to a consumer (which include all costs, including interest, which must be paid by the consumer in relation to the credit agreement) shall be proportionate and must correspond to a fair transaction practice. Total cost of the credit to a consumer shall be considered as not corresponding to a fair transaction practice if they exceed 0.07 per cent of the credit amount per day. The concept of total cost of the credit to a consumer is closely related to the annual percentage rate of charge which is the total costs of the credit to the consumer, expressed as an annual percentage of the total amount of credit granted to the consumer. The detailed method for calculating the annual percentage rate of charge for consumers which correlates with the total costs of the credit to a consumer and therefore the amount of interest that can be charges by lenders is laid out in Annex 1 of the Cabinet of Ministers Regulation No. 691 “Regulations Regarding Consumer Credit” of October 25, 2016. The conformity with these Regulations is supervised by the Consumer Rights Protection Centre.

Latvia does not impose any specific restrictions on disbursements in foreign currency or on repaying loans, however, these transactions may be subject to Latvian law, for example, the country’s tax rules or consumer credit disclosure rules if the borrower is a consumer.

Real property (land), plant and machinery
Security may be taken over real property (land), as well as plants and machinery; however, the applicable procedures differ depending on the category of asset.

With respect to real property, it should be noted that the creation of a mortgage requires registration in the Land Register. To register a mortgage in the Land Register, specific documentation must be submitted. Such documentation includes, for example, the corroboration request, the pledge agreement, the loan agreement (i.e., documents evidencing the rights to be corroborated), proof of payment of the relevant fees if this information is not already included in the corroboration request and identifying information regarding both the applicant and the immovable property. The obligation to include the loan agreement in the corroboration request does not apply if the pledge agreement underlying the mortgage registration contains essential provisions regarding the obligation secured by the mortgage and its validity.

The timeframe required to prepare the documentation and submit it to the Land Register depends largely on the complexity of the matter. The examination of the corroboration request itself must be completed within ten days; however, in more complex cases, the review period may be extended to one month. The cost of registering a mortgage also varies based on the amount of the loan.

With respect to plants (industrial assets), the ability to take security depends on whether they qualify as components of immovable property or remain separate movable assets. Under the accession principle in property law, items that are permanently attached to land or buildings and form integral components thereof cannot be encumbered separately and follow the legal fate of the immovable property. Accordingly, a mortgage over real property extends to such plant. However, where plant and machinery retain their status as independent movable property (e.g., they are not intended as permanent fixtures or can be removed without substantial damage), security may be taken over them separately, for example, by way of a commercial pledge.

Machinery may likewise serve as collateral, most commonly through a commercial pledge. Although the creation of a commercial pledge does not itself require registration in the Commercial Pledge Register (maintained by the Enterprise Register), registration is necessary for the pledge to be effective against third parties and for the pledgee to exercise its rights. A commercial pledge may be registered if it has been established on the basis of an agreement or a court ruling. All relevant documents – such as the application, the commercial pledge agreement, and the document establishing the secured claim – must be submitted to the Enterprise Register. The obligation to include the document establishing the secured claim does not apply if the pledge agreement contains essential provisions regarding the obligation secured by the commercial pledge and its validity. The Enterprise Register generally reviews submissions within five working days.

It should be noted, however, that certain types of assets (e.g. vehicles) may require additional registration in specific public registers. Consequently, both the registration timeframe and the associated costs may vary.

Equipment
Because the term “equipment” generally refers to movable tangible objects, such as tools or other physical resources, such assets may qualify as the subject of a commercial pledge. Accordingly, the provisions of the Commercial Pledge Law apply to equipment of this nature.

If, however, the equipment is classified as intangible – for example, where it consists of financial instruments – a financial collateral arrangement may be established instead. Unlike commercial pledges or mortgages, where registration in a public register is necessary for the pledge to be effective against third parties, financial pledges may be created solely on the basis of an agreement. In most cases, the establishment of a financial pledge requires only demonstrable evidence that the collateral has been transferred or otherwise made available to the pledgee. As a result, the time and costs associated with creating such a pledge depend largely on the specific arrangements set out in the agreement.

Inventory
Comparable to the considerations outlined in the previous section, the term “inventory” most commonly refers to movable tangible assets. Consequently, commercial pledges may be established over such items in accordance with the Commercial Pledge Law. The same procedural framework described earlier with respect to the creation of commercial pledges therefore applies.

It should also be noted that an undertaking is regarded as an aggregation of assets, which allows for a single commercial pledge to be established over all assets forming that undertaking. However, it is essential to recognize that certain categories of assets within an undertaking – such as credit claims and financial instruments – fall under the scope of the Financial Collateral Law rather than the Commercial Pledge Law. As a result, a commercial pledge cannot be created over these asset types. Accordingly, when seeking to take security over an undertaking, it is necessary to assess the composition of the undertaking’s assets to determine which forms of security are legally permissible.

Receivables
The term “receivables” generally refers to credit claims that may be provided as financial collateral under a financial collateral arrangement. Pursuant to the Financial Collateral Law, the creation of a financial pledge requires the conclusion of a financial collateral agreement, and the delivery to the collateral taker (or an authorised person) of the documents evidencing the credit claims, including any documents pertaining to the underlying credit collateral. At the same time, the collateral provider may not be deprived of the right to substitute the initially provided financial collateral with equivalent financial collateral, nor of the right to receive any surplus financial collateral that exceeds the secured obligations.

Shares in companies incorporated in Latvia’s jurisdiction
A commercial pledge usually may be established over shares in companies incorporated in Latvia. Accordingly, the creation of such a pledge must follow the procedure prescribed in the relevant provisions of the Commercial Pledge Law.

The previously mentioned security may be documented in a foreign law governed agreement, provided that the mandatory requirements of Latvian law governing its creation and proprietary effects are complied with.

Yes, generally a company in Latvia may grant security over both future assets and future obligations – such statement is compatible with the principle of contractual freedom present in Latvian civil law, as well as the rules listed in the Civil Law and the Commercial Pledge Law. It must, however, be noted that certain requirements must be met to grant such security.

Firstly, as a general rule a pledge cannot cover future assets that are legally non-transferable. This may include certain permits and licenses which have been given out to a certain legal or natural person. Secondly, the future obligation must be sufficiently defined and specified – a hypothetical obligation cannot be secured.

Generally, yes, one security agreement can be used to take security over all of a company’s assets in Latvia, however, only to take security over all movable and intangible assets of a company. This type of solution is allowed by the Commercial Pledge Law which allows to qualify the entire assets of another legal person or merchant as assets that may qualify as the subject of a commercial pledge. It should also be noted that the Commercial Pledge Law overall allows many types of assets to be subject to commercial pledges, for example, any movable tangible (including equipment, inventory, vehicles etc.) or intangible property (including the right to claim etc.) which belongs to a merchant or another legal person can be the subject of a commercial pledge. Moreover, a commercial pledge can be granted of all future movable property and rights as well, therefore allowing an even broader range of assets to be the subject of it. Therefore, since there is no rule that restricts a person to grant a commercial pledge on all their movable and intangible assets, it can be concluded that usually no separate agreement is necessary to register a commercial pledge in the Commercial Pledge Register for these types of assets.

It must, however, be noted that a separate mortgage agreement is necessary when registering a mortgage in the Land Register, as well as for the registration of a ship or aircraft mortgage. A separate agreement must be concluded whenever there is an intention to register a pledge in any public register other than the Commercial Pledge Register, and a separate agreement may also be required in relation to financial instruments falling within the scope of the Financial Collateral Law.

Yes, there are certain notarization and legalization requirements in Latvia’s jurisdiction regards to obtaining security, however, they only apply in specific cases.

For a mortgage to be effective against third parties and to grant the lender priority over other creditors, it must be registered in the public immovable property register (the Land Register). To register a mortgage in the Land Register, several documents must be submitted, including a corroboration request.

As a general rule, the signatures on a corroboration request must be certified by a sworn notary. The situations in which certification is not required are only a few exceptions and apply only if all specific legal conditions are met.

In particular, certification may be waived only where the owners of the immovable property – or the persons in whose favour or against whom the corroboration is sought – submit the request to the court in person and the request is based on certain strictly defined documents. These include, for example, a court judgment, a notarial deed drawn up before 30 April 2015, and a small number of other documents expressly listed in the law.

If these defined exceptions under Article 60 of the Land Register Law do not apply, the signatures on the corroboration request must be certified by a sworn notary.

It should also be noted that Latvian law does not require the mortgage agreement itself to be notarised. Nevertheless, the Civil Law requires the agreement to be concluded in written form for it to be eligible for registration in the Land Register.

Legalisation requirements are set out in the Document Legalisation Law. Under Article 1 of this Law, the legalisation procedure applies exclusively to public documents, meaning those that fall within the definition used in the Hague Convention of 5 October 1961 Abolishing the Requirement of Legalisation for Foreign Public Documents (the Apostille Convention).

According to Article 1 of the Apostille Convention, the term “public documents” includes, inter alia, notarial acts and administrative documents. Therefore, if an agreement is formalised in a notarial act, it qualifies as a public document and must be legalised in accordance with the procedure prescribed by the Document Legalisation Law.

Yes, there are specific security registration requirements for the establishment of commercial pledges, as well as mortgages (see the answer to question No. 4).

Yes, there are several fees that lenders should consider both at the outset of a transaction and during potential enforcement. These costs may vary depending on the complexity of the transaction and other relevant factors.

With respect to pledge registration, a state fee must be paid for registering a commercial pledge with the Commercial Pledge Register and for registering a mortgage with the Land Register. While the fee for registering a mortgage depends on the amount secured under the pledge agreement (currently 0.1% of the loan amount), the basic fee for registering a commercial pledge is currently 42.68 EUR (which may differ based on the objects that are pledged) and for enforcing a commercial pledge is currently EUR 7.11 per commercial pledge right. In addition, small administrative fees, e.g. chancellery fee, may be incurred in connection with the mortgage registration in the Land Register. Payment of the applicable state fee – both for commercial pledges and mortgages – is a prerequisite for registration. In practice, it is typically the borrower who bears these costs, subject to the parties’ agreement.

Notarial fees may also arise, especially in cases when registering a mortgage, because it requires for the preparation of the corroboration request. However, Latvian law does not generally require agreements to be executed as notarial deeds or certified by a sworn notary, and therefore notarial fees are not commonly incurred when structuring loan and security documentation.

Following registration, additional costs may be incurred if enforcement is carried out through a bailiff or court. In such cases, the relevant bailiff or court fees must be paid as part of the enforcement process. As a matter of standard market practice, these enforcement-related costs are borne by the borrower rather than the lender.

Yes, it is generally permitted to guarantee or secure the obligations of another group company; however, certain limitations apply. Such guarantees or security must serve the company’s interests. If the agreement is concluded between related or associated persons, the provisions regulating transactions between related parties under the Commercial Law must be observed. The limitations depend largely on whether the guarantee is upstream, downstream, or cross-stream.

Downstream Guarantees
Latvian law imposes relatively few restrictions on situations in which a parent company guarantees the obligations of its subsidiary. Such arrangements are generally permissible and are commonly used in financing structures.

Upstream Guarantees
Upstream guarantees involve greater legal risk and are subject to more stringent scrutiny. Under the Commercial Law, a subsidiary may make transfers to its shareholder only in the form of dividends, through a reduction of share capital, or upon liquidation as part of the distribution of residual assets. Any other type of value transfer may be regarded as an unlawful distribution. Consequently, an upstream guarantee must be carefully assessed and supported with evidence demonstrating that it does not constitute an impermissible distribution and does not diminish the subsidiary’s asset value. Although upstream guarantees are feasible, they require thorough justification and documentation.

Cross-stream Guarantees
Cross-stream guarantees similarly carry a risk that the arrangement may be characterised as an improper transfer of value between related companies. Accordingly, the same corporate benefit and distribution principles must be considered.

Latvian Commercial Law prohibits financing the acquisition of the company’s own shares. This prohibition may include, as examples, loans, guarantees, pledges, asset sales at reduced prices, or any transaction that diminishes assets or increases liabilities to facilitate the purchase. While the rule formally applies to joint-stock companies (akciju sabiedrība), some court decisions have extended it to limited liability companies (sabiedrība ar ierobežotu atbildību). Guarantees or security supporting the acquisition of shares in parent or related companies are generally allowed, provided the transaction serves the company’s corporate interests, maintains solvency, complies with related-party provisions, and is properly approved and documented.

Yes. Under the Civil Law and the Commercial Law, the concepts of trustees and agents are recognised in Latvian law. Latvian legislation permits a broad range of rights and authorities to be delegated to a trustee or agent, and the actions described in points (i) – (iii) are not identified as matters that must be exercised exclusively by the lenders themselves. Accordingly, lenders in a syndicate may appoint a trustee or agent to (i) hold security on their behalf, (ii) enforce their rights under the loan documentation, and (iii) apply enforcement proceeds toward the claims of all lenders in the syndicate.

As noted above (see answer to question No. 12), Latvian Civil Law and Commercial Law recognise the roles of agents and trustees. Accordingly, this question is not applicable.

Generally, yes. Foreign law (including English law) may govern a contract under Latvian law, as Latvia is a member of the European Union and is therefore bound by the Rome I Regulation.

It should be noted, however, that in each case the parties must have validly selected the applicable law in accordance with the procedures set out in the Rome I Regulation. Where such a choice has been made properly, Latvian courts will apply the chosen law. Certain limitations apply in the context of specific types of contracts, including contracts of carriage, consumer contracts, insurance contracts and individual employment contracts, where the Regulation imposes additional protective rules.

Furthermore, a choice of foreign law cannot override mandatory provisions of Latvian law, including rules safeguarding the country’s public interests, such as its political, social or economic organisation.

Since Latvia is a member of the European Union, it is bound by the rules set out in the Brussels I bis Regulation, including its principle of the “free movement of judgments” in civil and commercial matters. As a result, a judgment issued by a court of an EU Member State may be enforced in Latvia without the need for a prior recognition procedure. It should be noted, however, that where legal proceedings were initiated before 10 January 2015, the earlier Brussels I Regulation applies.

For judgments issued by courts of non-EU countries, the applicable regime depends on whether a bilateral or multilateral treaty exists between Latvia and the state in question. Relevant instruments include, for example, the Lugano Convention and the Hague Convention on Choice of Court Agreements, both of which cover cooperation with various non-EU jurisdictions. If no such treaty is in force, recognition and enforcement are governed by the provisions of Chapter 77 of the Latvian Civil Procedure Law.

English court judgments
Following an initial period of uncertainty regarding the recognition and enforcement of judgments issued by United Kingdom courts after Brexit, this issue has largely been resolved by the ratification of the Hague Convention of 2 July 2019 on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters (the Hague Judgments Convention), which entered into force on 1 July 2025. Latvia is also a contracting state to the Hague Judgments Convention. Accordingly, where a UK judgment concerns civil or commercial matters and does not fall within one of the Convention’s exclusions, it is eligible for recognition and enforcement in Latvia.

It should also be noted that both the United Kingdom and Latvia are parties to the Hague Convention of 30 June 2005 on Choice of Court Agreements. Therefore, where the parties have concluded an exclusive choice of court agreement in an international civil or commercial matter (and the matter does not fall within the Convention’s exclusions), and the designated court is an English court that has issued the judgment, Latvia is obliged to recognise and enforce the judgment unless a ground for refusal applies.

In all remaining cases – where neither of the above Conventions governs the matter – recognition and enforcement of UK judgments are carried out pursuant to the relevant provisions of the Latvian Civil Procedure Law.

United States court judgments
Since neither the Hague Judgments Convention nor the Hague Convention on Choice of Court Agreements is in force in the United States, the recognition and enforcement of U.S. court judgments in Latvia are governed by the provisions of Chapter 77 of the Latvian Civil Procedure Law.

The New York Arbitration Convention
Latvia is also a contracting state to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Accordingly, Latvian courts will recognise and enforce arbitral awards issued in other Convention member states, subject only to the limited grounds for refusal set out in the Convention.

The course of the insolvency process is mostly regulated by the Insolvency Law; however, certain procedural aspects of the proceedings are additionally set out in the Civil Procedure Law as well.

The opening of insolvency proceedings for a legal person may generally be requested either by the debtor itself or by its creditors. However, in certain circumstances the debtor is legally obliged to file an application for insolvency proceedings. Pursuant to the Insolvency Law and the Civil Procedure Law, the application must be submitted to the court corresponding to the debtor’s registered legal address, provided that such address has been registered for at least three months prior to the filing. A state fee of EUR 80 must be paid upon submission of the application if it is submitted by the debtor, however a state fee of EUR 300 applies if it is submitted by a creditor. In addition, the applicant must pay a deposit equal to two minimum monthly wages into a dedicated account administered by the Insolvency Control Service. The court will declare insolvency proceedings if, at the time of examining the application, it determines that the statutory indicators of insolvency are present.

Once insolvency proceedings are declared, the insolvency administrator assumes all rights, duties and responsibilities of the debtor’s administrative bodies as provided by law, the debtor’s articles of association and applicable contracts. The administrator is responsible for collecting and assessing creditors’ claims, deciding on their recognition, determining the debtor’s financial position, realising the debtor’s assets, recovering receivables and carrying out other actions necessary for the administration of the estate.

Insolvency proceedings are terminated by a court decision in the following cases: the debtor has satisfied all of its obligations; the proceedings are converted into legal protection proceedings (a restructuring procedure under the Insolvency Law); the administrator reports that the debtor has no assets and no agreement is reached on financing the continuation of the proceedings; or the creditors’ claims satisfaction plan has been fully implemented.

In the event of a legal person’s insolvency, secured creditors enjoy priority of claim satisfaction over unsecured creditors. This priority, however, is subject to compliance with the specific requirements and limitations laid down in the Insolvency Law. As from the declaration of insolvency, the accrual of interest on loans or credits, statutory interest, contractual penalties (including penalties calculated as a percentage), as well as late payment penalties, is suspended, with the exception of tax claims. Furthermore, a secured creditor is restricted from initiating the sale of the debtor’s pledged assets for a period of two months following the declaration of insolvency. Pursuant to the Insolvency Law, a pledge agreement is regarded as legally ineffective where the pledge right is established after the insolvency register has been entered with information concerning the declaration of the debtor’s insolvency proceedings.

Under the applicable legal framework, the debtor’s property subject to a pledge is realised through an auction conducted in accordance with the procedure set out in the Civil Procedure Law, unless the secured creditor and the insolvency administrator have agreed on the sale of the property outside the auction process. In such cases, the functions attributed to the bailiff under the Civil Procedure Law in connection with the auction of the debtor’s assets are exercised by the insolvency administrator. Where the sale of the pledged property is agreed without an auction, the administrator is required to ensure that the property is disposed of at the highest attainable price, having due regard to the interests of unsecured creditors.

As a general rule, the administrator of a legal entity is obliged to review the debtor’s transactions and, where appropriate, initiate court proceedings seeking recognition of the relevant transaction as invalid. Secured creditors may also bring a claim before the court to have a transaction concluded by the administrator declared invalid where the transaction concerns pledged property and adversely affects their legal interests.

The insolvency administrator may file claims seeking the avoidance of transactions in several circumstances. For example, the administrator is required to assess the debtor’s gifts and donations and, in certain cases, to bring a corresponding claim before the court. In other situations, the administrator may initiate proceedings where a transaction has cumulatively caused harm to a group of creditors and where additional statutory grounds for invalidity are also present.

According to the Insolvency Law, the administrator has a duty to evaluate all debtor transactions and bring an action for recognition of a transaction as invalid regardless of its type, in particular if the transaction was concluded:

1. After the day of proclamation of insolvency proceedings or within four months prior to the commencement of insolvency proceedings, and thereby caused losses to the debtor, regardless of whether the other party knew or did not know of the losses; or
2. Within three years prior to the commencement of insolvency proceedings, and thereby caused losses to the debtor, where the other party knew or should have known that such losses would result.

There are also instances in which the administrator is obliged to bring such a claim. This applies in particular to pledge agreements, which must be declared invalid where pledge rights were established after the entry concerning the commencement of the debtor’s insolvency proceedings was recorded in the Insolvency Register.

The administrator is also obliged to bring claims seeking the avoidance or cancellation of transactions against the heirs of the contracting parties and, in specific cases, against other legal successors as well.

Latvian law permits mutual set-off between a debtor and a creditor, subject to statutory limitations. In insolvency proceedings of a legal person, set-off is allowed only where the reciprocal claims of the debtor and creditor arose at least six months prior to the declaration of insolvency. This temporal requirement is intended to prevent the use of set-off for strategic or opportunistic purposes, rather than as a consequence of ordinary commercial dealings.

Furthermore, the general principles governing set-off continue to apply. Set-off is permissible only where the claims are genuinely reciprocal and constitute counterclaims, and these conditions must exist at the moment the intention to set off is asserted. A valid set-off therefore requires an unequivocal declaration by the debtor specifying the counterclaim with which the debt is to be extinguished; in other words, the initiative must originate from the debtor. Finally, the insolvency set-off rules apply solely to private-law claims and do not extend to obligations relating to taxes or other public-law payments.

According to the Insolvency Law, in the event of a company’s insolvency when the pledged asset is sold, the proceeds must first be applied to satisfy the claims of secured creditors, who rank ahead of all other creditor categories. The residual amount is then distributed pursuant to the statutory priority regime, under which payments are made in the following order: the expenses of the insolvency proceedings; claims of the debtor’s employees; tax claims submitted within the legally prescribed time limit; and all other unsecured claims, including the unsecured remainder of previously secured claims.

At present there are no specific reforms aimed at restricting foreign lenders as such. However, Latvia, like all EU states, must implement the EU “banking package” (CRRIII and CRD VI), which will tighten capital, risk-management and third-country branch requirements from 2025-2026 and may make direct EU-operating models more compliance-intensive for non-EU lenders and branches.

Recent Anti-Money Laundering/Counter-Terrorist Financing (AML/CTF) reforms in Latvia are likely to make lending more compliance-intensive for foreign lenders, even though no direct market-access restrictions are planned. In 2024-2025 Latvia approved an enhanced national strategy for combating financial crime, strengthening supervisory expectations for due-diligence, monitoring, and internal controls across all obliged entities, including banks and non-bank lenders. In parallel, Latvia expanded beneficial-ownership transparency rules, including a requirement that foreign legal entities cannot acquire real estate or register title without compliant ultimate beneficial owners disclosure, aligning AML and sanctions controls with land-register procedures. These developments increase documentary, verification and monitoring burdens for cross-border credit transactions, meaning that while Latvia remains open to foreign lenders, operating in the market now requires a significantly more robust AML/CTF compliance infrastructure.

Survey data published by the Bank of Latvia in 2025 indicate that companies continue to rely predominantly on traditional bank lending and internal financial reserves as their primary sources of external financing. Although banks continue to serve as the primary source of corporate financing, recent developments show that the non-banking sector is gaining a steadily increasing role. Lending by non-bank lenders has expanded in both the household and non-financial corporate segments, and the continued demand for these comparatively more expensive instruments – despite the improving financial health of Latvian companies – may point to an underlying insufficiency in the availability or accessibility of bank credit.
Consequently, a growing share of companies are turning to alternative credit providers, particularly when rapid access to liquidity or short-term financing is required. These lenders are valued for their accelerated decision-making processes and more flexible repayment structures, allowing them to function both as a supplement to and, in certain cases, a substitute for traditional bank loans. By contrast, capital-market activity in Latvia remains notably subdued, and its contribution to corporate financing continues to be limited, indicating that meaningful shifts toward market-based funding have yet to materialize.

In Latvia, macro-prudential regulation imposed by the Bank of Latvia has been a key external factor influencing secured-lending documentation. Borrower-based constraints, loan maturities and capital buffers have been reaffirmed and periodically adjusted under the macro-prudential framework.

Meanwhile, political and consumer-protection measures have promoted competition and refinancing flexibility in the mortgage market. In 2024 amendments facilitating easier refinancing were adopted: removal of lender-consent requirements, abolition of refinancing fees, and simplification of collateral transfer procedures when a borrower switches lenders.

Lastly, reforms related to insolvency regulation and security-agent frameworks have shaped how security packages and intercreditor relationships are documented. In 2024, changes clarified the legal status and functions of collateral agents under Latvian law, reducing previous legal uncertainty for bond issuers and secured lenders.