Lithuania's Snoras Bank attempts tenfold capital increase

A member of Monaco's royal family wants to buy a $300 million share issue in Snoras Bank, which would increase its capital nearly tenfold and make it one of the wealthiest banks in the Baltics.

Snoras announced March 7 that 1.2 billion litas ($306.12 million) of new shares had been acquired by Jean Phillip de Grimaldi, who sits on the board of the Luxembourg-based Incorion Investment Holding Company.

Incorion presently owns 49.9 percent of Snoras Bank. Grimaldi's consortium will hold an 89.7 percent stake in the bank if the new shares are registered.

But first the Bank of Lithuania wants to figure out where exactly the money is coming from, said central bank spokesman Mindaugas Vinkus.

It could issue a permit for the capital increase within 30 days if Snoras Bank and the potential investors share the necessary background information.

Vinkus said the central bank refused to consider a petition that Snoras presented on March 7 because the documentation was incomplete.

Snoras Bank, which is based in the town of Siauliai, presently controls about 5 percent of the Lithuanian banking market. It is the country's fourth largest bank in terms of assets and third in share capital. It has 160 branches spread in 10 towns, a network of 220 automated bank machines, and representative offices in Minsk, Kiev and Moscow.

The bank reported an unaudited net profit of 5.1 million litas in 2001. Last year its total assets grew 42 percent to 884 million litas. "Given the recent privatizations in Lithuania, the markets are becoming more concentrated and the bank needs to strengthen its position," said Snoras Bank spokesman Gintaras Jatkonis.

More specific plans will be announced after the shareholder meeting scheduled for March 29, Jatkonis said.

When Snoras first announced expansion plans in December, bank officials said it would continue to develop local retail operations and likely create new investment funds and insurance subsidiaries. It might also take part in the privatization of large Lithuanian industrial enterprises, officials said.

The international ratings agency Fitch said in January it was changing Snoras Bank's long-term debt rating from BB- to BB+ because of the planned capital increase. Fitch noted that the bank recently had significantly increased its share of the local market for resident deposits and credit cards and was shifting its investment portfolio away from high-risk Commonwealth of Independent States' bonds in favor of loans.