Arlauskas fires off warning on banking system

VILNIUS - Danas Arlauskas, director general of the Lithuanian Business Employers’ Confederation, thinks that the Lithuanian banking system is in danger because it is operating in an environment currently marked by stiff competition, capital flight and crisis. According to Arlauskas, competition in the banking system is not de facto, reports ELTA. Over 90 percent of all bank property is governed by the Scandinavian banks, to which Lithuania is not their priority market.
Furthermore, the main share of those 90 percent is controlled by two major banks, which determine all the tendencies in the banking sector, he claims. This leads to low interest rates and deposits.

In addition, the Scandinavian banks restrict granting loans and demand high interest rates, thus taking away an opportunity for the business sector to borrow on rational terms. This is especially important for small-scale and medium-scale companies. Such credit policies prevent business development and economic growth, he asserts.
One more consequence of competition in the finance system is bank service fees, which keep increasing, complains Arlauskas. For instance, fees for international transfers in Lithuania are 8 times higher than in neighboring countries.
Arlauskas recalls that many eurozone member states are suffering from recession. A number of analysts think that Sweden will be another country to face a real estate crisis as well.

If this happens, the Nordic banks would completely concentrate on their “home” markets. The Baltic States are not of primary importance for the Scandinavian banks, and the most likely scenario is that in such a case, the Baltic subdivisions would be sold and the only real buyers are then Russian capital, warns the director general.
Therefore, according to Arlauskas, the government should firstly evaluate the risk and pay more attention to the Lithuanian financial sector, which is equally important to the energy sector.