Lithuania to merge state company, development bank to attract EUR 1 b for defense

VILNIUS - Lithuania will merge its national development bank ILTE and Valstybes Investicinis Kapitalas (State Investment Capital, VIK), a state company, to attract an additional 1 billion euros for defense over the next couple of years.

The merger will increase ILTE's authorized capital, which will help the national development bank attract more funding for security projects, Finance Minister Kristupas Vaitiekunas says.

"It has been decided that VIK will be merged with ILTE. The process should take up to six months, possibly less. This will create a 'one-stop shop' for financing the defense industry," Vaitiekunas told reporters on Wednesday, adding that the merger with VIK will strengthen ILTE and allow it to borrow on more favorable terms for defense projects.

"It will also allow us to finance larger, more important defense projects, borrow on the market on better terms, and take advantage of the international experience accumulated by our development bank," the finance minister pointed out.

"The merger will create a capacity of around 1 billion euros, which could be injected into defense industry projects. Not in a single year, but over a period of time. In three to five years, it would be possible to inject that money into the market," the minister said.

In his words, the merger with VIK will strengthen ILTE and allow it to borrow on more favorable terms for defense projects. ILTE will provide the attracted funds to defense industry companies as loans, but the bank will have more financial opportunities to attract funds.

The ministry believes that after the merger, ILTE will be able to finance defense businesses of various sizes and maturity. Among other things, ILTE would contribute its own funds to large investments by foreign military manufacturers in Lithuania.

After the merger, the development bank's authorized capital would increase by approximately 101 million euros. ILTE's capital currently stands at 253 million euros, with plans to increase it by another 262 million euros this year so that it would reach 615 million euros by the end of 2026, including VIK's capital funds.

The ministry hopes that as ILTE's financial capacity grows, the bank will be able to borrow more and more on the market and gain access to large investors, for whom individual projects on the Lithuanian market are usually too small.