Banking market concentration continues in Lithuania

May 11, 2000

The privately-owned Vilniaus Bankas and the state-run banks Taupomasis and Zemes Ukio, both slated for privatization, held 85.7 percent of the total banking assets, 87.9 percent of all deposits, and 83.8 percent of loans.

Smaller private banks' business prospects remained rather bleak - their share of the market was practically unchanged, with few sources for growth seen amid the uncertainty surrounding the country's economy in general.

Only aggressive newcomers with solid backing from parent banks - Poland's Kredyt Bank S.A., Hansabankas, Germany's Nord/LB, and Finland's Merita Bank Plc. - are able to compete with the leading local banks, to a certain degree.

Vilniaus Bankas has become the undisputed leader of the market after the takeover of Hermis, its key rival, was completed in February.

In the first quarter of this year, Vilniaus Bankas raised its market share to 42.6 percent of assets (from 29.7 percent), 44 percent of loans (from 31.1 percent), and 38.8 percent of deposits (from 26 percent).

Lithuania's largest bank before the Vilniaus/Hermis merger, LTB lagged behind Vilniaus Bankas in all positions in the first quarter of this year.

Over the three-month period, LTB' share of the banking assets increased to 28.6 percent from 28.4 percent, its share of the loan market dropped to 23.3 percent from 23.4 percent, and its share of deposits rose to 37.2 percent from 36.6 percent.

The total assets of nine commercial banks, which publish their data in the central bank's bulletin, shrank by 0.2 percent to 11.14 billion litas ($2.785 billion) over the January-March period, deposits grew by 3.2 percent to 7.1 billion litas, and loans decreased by 4 percent to 5.30 billion litas.

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