While the central bank continues to examine Litimpeks' past activity, banking analysts are expressing their own views about what should be done with the bank, which had operations temporarily suspended by the central bank Aug. 13 when it proved unable to resolve its liquidity problems. After the decision, Litimpeks' only remaining task was to woo investors who would be willing to pull it out of a hole.
But anlaysts are convinced the search for investors will only lead to a dead end. Most say only alternative options will lead to the bank's survival.
"There seems to be only two clear options at this point: bankruptcy or joining the savings bank [Lietuvos Taupomasis]," said Eugenija Martinaityte, director of the Lithuanian Banking, Insurance and Finance Institute. "At the last moment, perhaps God will send in a strong investor. But there doesn't seem to be much of a chance that a good investor will come in and save Litimpeks."
Eduardas Vilkelis, chief of Lithuania's Commercial Bankers Association, echoed Martinaityte's sentiments.
The idea of bailing out Litimpeks by hooking it up to Lietuvos Taupomasis Bankas, the country's largest savings bank, was suggested by Litimpeks' executive board nearly a month ago. According to the scenario, the largest shareholders would sell a two-thirds stake to Taupomasis, which would then put aside funds to maintain Litimpeks' liquidity. Liquidity would be guaranteed by Litimpeks' "profit-making activities and other assets."
Vilkelis said the analysis work being done by the central bank will eventually show whether it is worth connecting Litimpeks to Taupomasis.
"If it's cheaper to declare Litimpeks as bankrupt, the central bank should do that. If it's cheaper to connect it to Taupomasis, they should do that. The government and central bank should look to the option which offers the best economic result," said Vilkelis.
Martinaityte seemed to feel the connection idea would probably be the least costly option in terms of both time and money.
"In the short run, the idea is not so bad," said Marti-naityte. "Bankruptcy is a complex procedure and takes a long time and money. The central bank has to appoint an administrator and so on. The process could take years."
But the option of hooking Litimpeks up to Lietuvos Taupomasis Bankas is apparently not ideal either. Marti-naityte seemed to feel that Taupomasis' own situation is also painted with a tinge of haze. She claimed Taupomasis tends to lack a "clear strategy" and that its business is "not so effective." Plus, the plans to get Taupomasis onto the privatization block in the future does little to put the bank's situation in focus.
"The situation of Lietuvos Taupomasis Bankas is very complicated and far from clear," Martinaityte said.
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