Swedish bank plans Baltic strategy

  • 1999-02-25
  • Paul Beckman
VILNIUS - Sweden's Scandinaviska Enskilda Banken set itself up as the biggest foreign player in the Baltic banking market last December when it nabbed about a one-third stake in each of three major Baltic banks. But when SEB increased its holding in one of the banks, Latvia's Unibanka, to 44.3 percent earlier this month, speculation was that the action could be a preview for similar increases in the other two banks as well.

SEB announced in mid-February that it increased its holding in Unibanka to 44.3 percent of the share capital by buying up shares at the auction and acquiring the stake held by the European Bank of Reconstruction and Development. According to the Baltic News Service reports, SEB has apparently not ruled out the possibility of boosting its approximate one-third stake in Estonia's Uhispank and Lithuania's Vilniaus Bankas.

The three Baltic banks established a cooperative agreement last year and, before February, SEB seemed to be treating each with a similar strategy.

"It all depends on the right moment and the price at which shares are offered," Mats Kjaer, head of SEB Baltic Holding told BNS.

Vilniaus Bankas officials, however, said that SEB will not increase its stake in their bank anytime soon, but also refused to rule out the possibility.

"The answer [to whether SEB will increase its holding] today is 'No,'" said Alexander Federas, director of Vilniaus Bankas' marketing department. "What it will be tomorrow is another question. It would all depend upon bilateral agreements between the two banks. But so far, there has been no indication by SEB."

Lithuanian banking analyst Eugenija Martinaityte suggested that such a move by SEB in Vilniaus Bankas could be far down the road. The analyst called Lithuania's current economic picture "complicated" and said investors like SEB might not be interested in increasing their stake until the fog clears toward the end of the year.

"The development of banking has shown rather good trends since the banking crisis in 1995," explained Martinaityte. " But at the same time, other sectors have not fully developed. Overall, the capital market is complicated and experiencing some sort of stagnation. And banking is [in some ways connected to] the capital market, so it is also in an uncertain situation."

Perhaps uncertainty in the banking sector is best displayed by the sluggish process Vilniaus Bankas has been through in its attempts to acquire a 43 percent stake with 50 percent voting rights in Lithuania's second largest bank, Hermis. After seeking to snag the shares last year, Vilniaus retracted the idea when the central bank decided to postpone giving its permission.

With Vilniaus Bankas' interest in the idea rekindled this year, the central bank is expected to announce its decision some time this March. Although Martinaityte feels Vilniaus will finally receive a nod from the central bank, she said the sector will still be too hazy to make reliable predictions about the following months.

"It's not clear what will happen after that," said Martinaityte. "It will be clear only at the end of the year - how banks, customers and stocks react to this move."