STOCKHOLM May 23 (Reuters) - Currency devaluation in the Baltics would not lead to bigger loan losses for Swedish banks, but the losses would come more quickly and be harder to deal with, the head of SEB (SEBa.ST) said in a radio interview on Saturday.
"In total we would have the same size of credit losses, but (if there is no devaluation) they would be a little more regular and over a longer time frame," SEB Chief Executive Annika Falkengren told Swedish radio.
"In the case of a devaluation they would be pretty much instantaneous."
Falkengren said a decision over devaluation was up to the Baltic states, but that it would obviously be easier for her bank, one of the top players in the region along with Swedish rival Swedbank (SWEDa.ST), to spread credit losses over a longer period.
Last month, SEB reported a 25 percent drop in first-quarter operating profit, mainly due to provisions for possible loan losses which it may incur in the Baltics, where economies are expected to shrink more than 10 percent this year.
Swedbank slipped to a 3.4 billion Swedish crown ($448 million) operating loss.
Latvia's gross domestic product fell 18 percent in the first quarter compared with the same period in 2008, Estonia's economy shrank 15.6 percent and Lithuania's 12.6 percent.
Some analysts believe the three Baltic states will be forced to devalue their currencies to limit the severity of economic contraction and to avoid radical budget cuts.
However, Falkengren said that devaluation without long term policies to get economies back on track was not a good option.
"It's like peeing in your pants. It feels good, but only for a very short time," she said.