Scandal damages Adamkus

  • 2003-01-09

In one of the many microbattles waged on the eve of the run-off poll, President Valdas Adamkus reacted angrily to rumors that Vilniaus Bankas, the country's largest commercial bank, had allegedly been experiencing financial difficulties, saying they were related to the presidential election campaign.

Speaking to reporters on Jan. 3, Adamkus said, "I have just met with representatives of the Bank of Lithuania and I want to say to you that this is not a problem of Lithuanian banks. The problem is the presidential election campaign which has gone beyond all limits of decency and I, as the head of the state, find it unacceptable."

Adamkus met with Julius Niedvaras, chairman of the board at Vilniaus Bankas, Arunas Siksta, chairman of the board at Hansa-LTB, the country's second-biggest commercial bank, Audrius Misevicius, deputy chairman of the central bank's board, and Mecys Laurinkus, head of the State Security Department.

As he was speaking to the press conference, Adamkus threw a copy of the Jan. 3 issue of the local newspaper Vakaro Zinios on the microphone stand. The president's aides said they had never seen Adamkus so enraged before.

Adamkus lost in the subsequent run-off vote to Rolandas Paksas.

On Jan. 3, Vakaro Zinios quoted Paksas as saying that "the stability praised by the present authorities would prove to be no more than a house of cards" if it turned out that one of the countries' leading banks had problems.

The Jan. 3 issue was printed in 350,000 copies, while Vakaro Zinios' usual circulation is about 40,000 copies.

SSD head Laurinkus warned the public not to believe the information contained in the publication. He pointed to market competition and the presidential election campaign as two reasons behind the rumors, which he dismissed as groundless.

"The bank's statements and all documents show that the situation is stable and normal," he told reporters.

Rumors had been circulating about Vilniaus Bankas for several weeks, giving rise to concern among the bank's customers about the safety of their deposits and the future of Lithuania's largest commercial bank.

Financial experts, however, say there are no grounds for worry, the daily newspaper Lietuvos Rytas reported Jan. 3.

Vilniaus Bankas' managers have appealed to the country's law enforcement bodies, asking to track those spreading what they call unfounded rumors. On Jan. 2 this issue was discussed during a meeting at the State Security Department.

Eduardas Vilkelis, president of the Lithuanian Banks' Association, said there were no grounds for doubts about the financial stability of Vilniaus Bankas, which is 98 percent owned by the Swedish group SEB, one of the leading providers of banking services in the Nordic region.

Niedvaras said he did not know yet whether or not the rumors had any effect on the bank's performance. He noted that the bank's results as of late 2002 had improved compared with those at the start of the year.

"It would be difficult to find a company in Lithuania with an annual profit of over 100 million litas (28.9 million euros)," he was quoted as saying.

"We can neither deny nor confirm that the rumors [about Vilniaus Bankas] were started by competitors. It is clear, however, that the rumors are unfounded," said Reinoldijus Sarkinas, president of the Central Bank of Lithuania. He added that Vilniaus Bankas had enough funds to meet all liabilities.

Meanwhile, the business newspaper Verslo Zinios reported that things were not perfect either at Vilniaus Bankas or at Sweden's SEB. Reportedly, a representative of SEB has admitted that around 40 accounts of the Nordic bank's customers were not settled in due time, but said that the unsettled amount was not large.

The SEB representative was quoted as saying that there were no grounds to worry about Vilniaus Bankas' stability because the bank's performance results were good. She would not comment on SEB's results for the first nine months of 2002, only reiterated the bank's earlier statement that the pretax profit for this period had declined due the deteriorating market conditions.