But now, the government is planning to swap at least part of its stake. If all goes well, some state-owned shares will be exchanged for the European Bank For Reconstruction and Development's stake in Vystymo Bankas.
After all is said and done, the government still expects to hold onto 50 percent of Zemes Ukio Bankas.
Zemes Ukio Bankas currently has a share capital of $25.7 million, of which the state owns 87.4 percent.
The potential trade could end up giving the EBRD about a 30-percent stake in Zemes Ukio Bankas while the state's 29.63-percent stake in Vystymo Bankas is expected to double. A special commission comprising members from the country's Finance Ministry, central bank, State Assets Fund, and parliamentary committees has been formed to haggle with the EBRD over the details.
Local press reports say the Lithuanian State Assets Fund is expected to try to peddle the rest of their shares in Zemes Ukio Bankas later. Jonas Lionginas, who was head of Zemes Ukio Bankas before becoming the country's finance minister last month, took the EBRD's interest in the deal as a good sign.
"The very fact that the EBRD trusts the bank and will participate in its share capital, makes our work much easier. There is considerable interest in the bank already," Lionginas said. "If we succeed in privatizing the bank in the fourth quarter of this year, it would be a very big step forward."
The government's first attempt at privatizing the bank flopped last fall. Latvia's Parex bank was the only participant to bid in the second round, offering $500,000 plus tens of thousands of dollars in future investments. Unsatisfied with the offer, Lithuanian government officials declared the tender void.
Despite the poor response to the tender, Zemes Ukio Bankas is hardly a slouch in Lithuania's banking sector. Last year, the bank's profits amounted to 13.24 million litas ($3.31 million), the second highest result in Lithuania. Over the first five months of 1999, it has raked in another 6.3 million litas of profit.