VILNIUS - Ukio Bankas, Lithuania's fifth-biggest commercial bank by assets, announced on March 9 that it was switching to another international rating agency after Fitch downgraded the bank's long-term B+ rating to a B- with a stable outlook.
The agency said that it had withdrawn the ratings and would no longer provide analytical coverage of the bank.
"The downgrade reflects Fitch's ongoing concern over the lack of progress in dealing with the bank's weak corporate governance and transparency," the agency said.
Edita Karpaviciene, chairwoman of Ukio Bankas' management board, said they disagreed with the agency's position.
"Therefore, the bank's rating-assignment process has been started by another international agency," she said. "Unfortunately, the agency's recent reports are not free from the influence of certain pre-formed opinions, which has hindered an objective evaluation."
Fitch confirmed Ukio Bankas' other ratings at short-term B, individual D/E and support 5.
Vladimir Romanov, a local businessman, directly owns 19.99 percent of the bank and has obtained permission to increase his stake to 33 percent.
"It is Fitch's belief that Romanov's influence is greater than his shareholding suggests and that the continuing activity between the bank and this shareholder's other business interests is an ongoing cause for concern," Fitch said.
According to the report, these concerns outweigh positive developments on the potential sale of the bank's Moscow property development. Fitch has been informed that the sale will be closed by May.
Ukio Bankas, which is based in Kaunas, posted a net profit of 5.7 million litas (1.7 million euros) for 2004, a rise of 16.5 percent from 2003. Its assets soared by 58 percent to 1.5 billion litas, and deposits and letters of credit by 63 percent to 853 million litas.
