Lithuania's mulls buying bank while establishing state bank – minister

  • 2020-08-05
  • BNS/TBT Staff

VILNIUS – The acquisition of an existing bank is one of the options the Lithuanian government is considering as part of its plans to establish a national development bank, the country's Economy and Innovation Minister Rimantas Sinkevicius says.

"The commission (the inter-institutional panel set up under the minister's order – BNS) has to continue its work and consider all options, including the acquisition of an existing bank. We are speaking here about banks within our state," Sinkevicius told reporters following his meeting with President Gitanas Nauseda on Wednesday.

The minister also said one of the options under consideration is to merge the country's national development agency Investment and Business Guarantees (INVEGA), the National Promotional Institution and the Agricultural Credit Guarantee Fund.

President Gitanas Nauseda says a state development bank should not provide retail services. He once again reiterated that the future bank should incorporate the state's existing financial development institutions.

"The consolidation of the state's existing financial development institutions should be the first step towards establishing a state development bank," the president said in a statement.

In June, the Seimas of Lithuania ordered the government to launch procedures for the establishment of a state bank, and Lithuania is set to start consultations with the European Commission on technical assistance by September.

"The EC needs to look into whether that proposed scheme does not violate competition and whether the state is not providing too much assistance to one type of business. We need to get the EC's approval for such an action," Sinkevicius said.

The establishment of a state bank has been recognized as an economic project important for the state.

The Lithuanian presidential office hosted a discussion in early July on the creation of such a bank and it was reported later that government institutions were moving towards a compromise on establishing a state development bank that would incorporate several existing institutions but would not provide retail banking services.

Kristalina Georgieva, managing director of the International Monetary Fund, said then that a very solid governance model was necessary when establishing a state bank that would be independent from political influence.

The European Commission says Lithuania's banking sector is one of the most concentrated in the EU, raising systemic risk. Three biggest banks in Lithuania – Swedbank, SEB and Luminor – account for around 80 percent of the market.