TALLINN, July 3 (Reuters) - Nordic banking group Nordea is to establish companies in Estonia and Lithuania to handle real estate on its books from problem loans in the region, adding to one in Latvia, the bank said on Friday.

Other banks such as Swedbank and SEB have also set up property management firms, in a similar mechanism to that used after Sweden's crisis in the early 1990s.

Nordea is the least exposed to the region of the three in terms of loans outstanding to Baltic borrowers.

'Yes, Nordea is setting up a separate property management company in Estonia as well as in the other Baltic countries,' said Gaili Eding, spokesperson for Nordea Bank Estonia.

She added that Nordea is at present in the process of registering its new company in Estonia. Latvia's Nordea office has already registered such a company.

'Nordea Bank Lietuva has currently not established a real estate management company, though we have it in our plans,' said Nordea Lithuania spokesman Vaidotas Cucenas.

He said Nordea's portfolio quality remained good and that forming a property management company was an additional tool to provide flexibility in dealing with problem mortgage loans.

Such a company would take over residential real estate property used as a collateral in non-performing mortgage loans of private individuals.

'A similar set-up was tested in the Nordic countries during an earlier banking crisis and we think that this model should work out in our country,' he said, adding that if such a company were established it would operate for about 3 to 5 years.

Nordea and other Nordic banks are facing rising Baltic loan losses due to a recession and rising unemployment. They have also reduced their lending, contributing to the downturn after the boom, which was largely fuelled by cheap credit.

Swedbank is the biggest lender in the Baltic, with 207 billion crowns ($26.60 billion) of loans at end-March.

SEB was second on 166 billion Swedish crowns ($21.33 billion) at end-March and total credit exposure was 194 billion.

Nordea had 7.5 billion euros ($10.51 billion) of loans to the region at end-March.

($1=7.781 Swedish Crown)

($1=.7133 Euro)

(Reporting by David Mardiste and Patrick Lannin; Editing by Hans Peters) Keywords: NORDEA BALTIC/

(Riga newsroom, patrick.lannin@reuters.com, patrick.lannin.reuters.com@reuters.net, +371 29 269 191)

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