On 3 April the Central
Bank of the Republic of Lithuania Sweden 10
March 2010 .
Sources:
Lietuvos
banko Priežiūros tarnybos sprendimai (2013-04-03)
Several days
earlier, on 29 March, SEB bankas held an annual general meeting of
shareholders. One of the matters decided
at the meeting was that the leasing subsidiary of the bank, AB “SEB lizingas”,
would be merged into the bank. Up to the
present the leasing subsidiary has been a 100% subsidiary of the bank, with its
results being consolidated into the financial statements of the bank itself.
The performance of
the leasing subsidiary has been rather consistently disappointing, so that as
of 31 December 2012 the bank had net outstanding loans to AB “SEB lizingas” of
LTL 731.0 mln (€ 211.7). As of the same
date the total cost of the bank’s investment in AB “SEB lizingas” (before
impairment) stood at LTL 708.6 mln, and total impairment was LTL 435.6 mln,
leaving a total cost of investment (grynoji investicijos vertė) of LTL
273.0 mln (€ 79.1 mln). As of 22 February 2013 the bank itself had 1,766
employees, while AB “SEB lizingas” had 42 employees.
Sources:
Central bank announcement: 2013 m.
pranešimai apie esminius įvykius
SEB Bankas audited, consolidated financial statements
for 2012: AB
SEB bankas 2012 metų nepriklausomo auditoriaus išvada, metinis pranešimas ir
finansinės ataskaitos (2013-03-13)
In earlier news, on
28 March the International Monetary Fund published a country report on Lithuania
RECENT DEVELOPMENTS
[...]
B. The Banking System
9. The largely foreign-owned banking system is, overall, well
capitalized and liquid. Banks’ capital was further
strengthened in 2012 as dividends were not paid out: regulatory capital to risk-weighted
assets improved from 13.9 percent at end-2011 to 14.2 percent at end-2012. The banking
sector’s liquidity ratio stood at 40.4 percent, well above the regulatory
minimum (30 percent). Preliminary calculations by the Bank of Lithuania (BoL)
indicate that banks are compliant with future Basel III requirements, with the
Tier 1 capital ratio at 11.5 percent, leverage ratio at 8.6 percent, liquidity
coverage ratio at 192 percent, and net stable funding ratio at 161 percent.
NPLs fell to 13.9 percent at end-2012, down from 16.3 percent a year before. At
the same time, bank profitability declined amid excess liquidity, slow credit
growth, and low net interest margins. Return on equity fell from 15.2 percent
at end-2011 to 6.6 percent at end-2012.
10. But four credit institutions were intervened since the last
Article IV Consultation amid rising loan losses. Snoras bank—at the time the largest domestically-owned bank,
third largest bank by deposits, and fifth largest by assets (10 percent of
system assets)—was liquidated in late 2011, as the bank became insolvent due to
alleged fraud and misappropriation of assets (Annex I). The government financed
the payout of insured deposits through a loan to the deposit insurance agency,
but is expected to be largely reimbursed by Snoras’ bankruptcy estate. In late
2012/early 2013, two small credit unions were closed as rapid lending growth
and some related-party lending had given rise to large loan losses and
insolvency. On February 12, 2013, another domesticallyowned bank (the largest
after the liquidation of Snoras, with about 5 percent of system assets) was intervened
and subsequently declared insolvent, after it was unable to raise sufficient
capital to absorb losses and address problems of related-party lending. After
an initial report by the temporary administrator, a domestically-owned
bank with significant EBRD participation signed an agreement to take over a
portion of the intervened bank’s assets (the “good” assets) and liabilities (insured
deposits) and to resume banking services by March 5, 2013. The value of the
assets that were taken over was based on an external auditor’s initial report.
A more comprehensive asset valuation exercise will be undertaken, with results
expected in three months. The government is expected to provide a loan to the
deposit insurance agency to cover the shortfall between good assets and insured
deposits, which could amount to ¾ percent of GDP. In all cases, confidence in the
banking system was maintained, largely as a consequence of the authorities’
clear and careful communication to the public and swift action to provide
depositors with access to their funds.
11. Credit continued to stagnate in 2012. The
economic recovery has continued despite nearly four years of negative private
sector credit growth. Uncertainty about growth prospects both in Lithuania and
abroad have no doubt hampered the demand for credit. At the same time, lending
standards have been tight, caused by banks’ continued risk aversion, which
seems to partly reflect lingering NPLs. Outflows to parent banks, which were especially
sizeable in the first half of 2012, were largely matched by deposit growth. As
a result of these developments, banks’ liquid assets increased to 25 percent of
total assets.
The report also
contains a lengthy but highly readable account of the bankruptcy and resolution
of Snoras Bank (AB bankas SNORAS), which collapsed in November 2011: “Appendix:
The Rise and Fall of Snoras Bank”. The
account, authored by Greetje Everaert, an economist at the IMF’s European
Department, provides considerable detail on the demise of the bank and a
precise chronology of events. But in the
wake of the much-discussed Cyprus
In fact the best
estimates are that the recovered assets of Snoras Bank will not cover all of the
bank’s liabilities. As a result, whether
holders of uninsured Snoras deposits will receive anything at all through the
bankruptcy process will depend in part on the outcome of a case currently
pending before Lithuania's constitutional court, a case which considers whether
Lithuania’s deposit insurance fund (Valstybės įmonė “Indėlių ir investicijų
draudimas”) should be considered an ordinary creditor or should have
precedence over other creditors, with holders of uninsured deposits holding
fourth place among creditors in order of precedence.
Sources:
Bank
of Lithuania head Vitas Vasiliauskas on Snoras collapse: If it happened again,
we would act the same (2012-11-21 08:31 )
Constitutional Court’s decision regarding
admissibility of case: LIETUVOS
RESPUBLIKOS KONSTITUCINIS TEISMAS: SPRENDIMAS DĖL PAREIŠKĖJO
- VILNIAUS APYGARDOS TEISMO PRAŠYMO IŠTIRTI, AR
LIETUVOS RESPUBLIKOS BANKŲ
ĮSTATYMO 87 STRAIPSNIO 2, 3, 4 DALYS, LIETUVOS RESPUBLIKOS ĮMONIŲ BANKROTO ĮSTATYMO 35 STRAIPSNIO 3
DALIS NEPRIEŠTARAUJA LIETUVOS
RESPUBLIKOS KONSTITUCIJAI (2012-09-13)
Mark Pleas
[contact]
