Central bank puts lid on Litimpeks' activities

  • 1999-08-19
  • Paul Beckman
VILNIUS - On Aug. 12 the Bank of Lithuania made a decision to suspend Litimpeks Bankas' usual operations. Central bank officials said the move was inspired by the bank's inability to resolve its liquidity problems.

After the central bank's board of directors made the decision, a lengthy list was released describing exactly which activities Litimpeks could no longer undertake. Accepting client deposits, granting and receiving loans, offering credit, and conducting transactions with stocks, bonds and foreign currencies were among the many activities from which Litimpeks must now refrain.

"Actually, all main operations were suspended," a central bank spokesman summed up.

Even before the central bank's decision, Litimpeks was not among the giants of the Lithuanian banking sector. Recently, its struggles with liquidity problems further belittled the bank. According to an ELTA news agency report, Litimpeks currently owes approximately 35 million litas ($8.75 million) in unsettled bills.

Litimpeks is down, but it is also still breathing. While activities have been halted, that does not stop the bank from shopping around for investors who would be willing to help Litimpeks solve its liquidity woes. In a news conference, central bank officials said that a couple of unnamed investors may be willing to invest in Litimpeks.

"There were a few suggestions from foreign countries to invest and solve the liquidity problem," said the central bank's spokesman. "The decision by the Bank of Lithuania yesterday leaves a possibility open for Litimpeks to solve its problem. These [potential] investors know the bank's situation and the Bank of Lithuania's suspension gives Litimpeks one more chance."

Avydas Kregzde, a deputy director of the central bank, admitted that the decision on Litimpeks' activities may not do much to bolster the public's trust in the banking sector. It has been a gradual process of rebuilding public confidence after the country was hit with a banking crisis in 1995. But Kregzde made sure to add that the banking system in Lithuania was "sufficiently solvent" and that all the other banks have successfully met risk reduction requirements.