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Under the agreement, Hansapank pledged to pay 150 million litas ($37.5 million) for the shares at 9.88 litas per share, which has a face value of 10 litas. Hansapank also intends to offer to buy the outstanding shares in the bank at the same price. The deal is awaiting approval from the Lithuanian Competition Council, which is expected within 30 days. The deal is also subject to approval from Estonia's central bank.
Hansapank is planning to merge the Taupomasis Bankas and its local subsidiary Hansabankas to create a leading bank capable of posing serious competition to Vilniaus Bankas, Lithuania's largest commercial bank, Hansapank officials said.
"Today is a good day for the whole Baltic financial system. Taupomasis Bankas will remain a Lithuanian bank with a strong backup from Hansapank and its main shareholder, the Swedish bank Swedbank," Anders Sahlen, chairman of the council at the Hansapank Group, said in a news conference on April 23.
"Our goal is to be the best measured on the international level. The program is an ambitious one. We will be a strong competitor," he said.
Under the agreement, Hansapank is to invest 150 million litas into Taupomasis Bankas' stock capital within two years after the closing of the deal. The investment will go toward the development of new products and information technologies, as well as strengthening the capital base of the bank.
The Lithuanian central bank wants the investments to be made in half a year, and Hansapank confirmed its resolve to do so.
"There will be changes while setting up the new bank. But I don't think many people will be forced to leave their jobs. The current employees will have to compete for positions in the new bank, but there will be no massive lay-offs," Sahlen said.
Taupomasis Bankas employed over 3,400 people at the end of 2000.
After the bank's privatization deal is closed and a new council and board are appointed, the merger processes between Taupomasis Bankas and the local Hansabankas will be launched and take up to two years to complete. The newly merged bank would control about one-third of the Lithuanian banking market.
As of late 2000, Taupomasis Bankas and Hansabankas had a combined share of about 36 percent of the Lithuanian deposits market, and Vilniaus Bankas had a 41 percent share.
Taupomasis Bankas is Lithuania's second largest commercial bank and the biggest retail bank.
As of late 2000, the bank had assets worth 3.43 billion litas. Taupomasis Bankas and Hansa-bankas had combined assets of 3.9 billion litas. Taupomasis Bankas reported an audited loss of 32.6 million litas in 2000 after setting aside 77 million litas in additional provisions for loans and assets. In 1999, the bank posted an audited net profit of 16.6 million litas.