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On Wednesday, the Minister of Economy and Innovation, Rimantas Sinkevičius, presented to the state the idea of acquiring a commercial bank as one of the alternatives, considering the establishment of a state bank in Lithuania, which would be dedicated to granting loans to small and medium-sized companies in the regions.
According to R. Sinkevičius, such an option is being considered by the interinstitutional working group formed by his order.
“The Commission must continue its work and explore various options, including the possible acquisition of an existing bank. These are the banks of our country,” the minister told reporters.
Photo by Valdas Kopūstas / 15min / Rimantas Sinkevičius
He said it after a meeting with President Gitan Nauseda, who also supported the creation of a state development bank.
What bank could the state buy?
According to the minister, when acquiring a bank that operates in the market, the entire computer system, licenses and infrastructure of the bank would be acquired, from which it would be possible to expand the bank by connecting state units that have state finances.
In addition to Scandinavian banks and smaller specialized banks, there are only two banks with Lithuanian capital operating in Lithuania: Medicinos Bankas, which is currently over the counter, and Šiaulių Bankas, managed by Lithuanian investors and the European Bank for Reconstruction and Development.
15 minutes Nitin Shelke, a businessman from the United Arab Emirates who manages the financial and investment services group Growmore Group, intended to acquire 100 percent of the shares of Medicinos Bankas with Lithuanian capital.
However, as 15 minutes The Bank of Lithuania has not yet applied for a permit from the Bank of Lithuania.
15min and PRNewsfoto / Growmore group photo / Nitin Shelke
“The buyer assessment of Medicinos Bankas is not being carried out at the Bank of Lithuania, we have not received a request,” states the response from the Bank of Lithuania.
R. Sinkevičius declined to name which of the banks currently operating on the market are the most realistic candidates to become a state bank. According to him, it is too early to talk about it, because it has not yet been selected whether the national bank will be created by merging state institutions or by acquiring an existing bank.
“We are currently at a point where the commission is considering these options and we are not yet buying or doing anything. The conclusion of our commission will be presented to the Government and the Government will make a decision on the path we are taking. Only then can we talk about the purchase, “the minister told reporters Wednesday afternoon.
The initiators of the State Bank do not rule out the possibility of acquiring only a part of the shares of a bank that operates in the market, but R. Sinkevičius added that he believes a controlling stake is necessary. It is true that he agreed that there is not a great option on the market.
Photo by Šiaulių bankas / Šiaulių bankas
“There are not many options on the market; you should offer to sell to existing branches or banks. Perhaps no one would agree to sell. Then when choosing a bank, there would be a criterion of how much you are selling, and you should evaluate both the loan portfolio and the funds available. It is not such a simple purchase here, not buying a pencil or an eraser here, “said the Minister.
According to him, the sale of shares would be offered to all banks, including Scandinavians operating in Lithuania. “It just came to our knowledge then. If you want to buy something, it is a good idea to offer a sale to everyone, so that you can be sure and that there will be no conflict, that I could not participate in the buying and selling process,” said the Minister.
M.Dubnikov: it is a parody and a performance
Financial analyst M. Dubnikov described the idea as “a certain performance”, considering that in any case this government will not buy or create a state bank, because there are two months left before the Seimas elections.
“The new government will decide for itself if this problem arises, because it must be understood that the Lithuanian Green and Peasant Union had anticipated these things in its program, but did not deliver on its promises to the voters. 15 minutes said the expert.
With the exception of banks with Scandinavian capital, Medicinos Bankas and Šiaulių bankas with Lithuanian capital operate in Lithuania. 15 minutes He directed comments to representatives of these banks, but has not yet received a response.
“Anyone who is going to buy them is a parody,” Dubnikov said.
Photo by Vidmantas Balkūnas / 15min / Marius Dubnikovas
According to him, the state has not yet responded at all to the question of which bank it would like.
Politicians still disagree on whether the state should go into retail banking or just make loans to businesses.
“It makes no sense to consider whether one or the other will cost how much. Until you know what you need, how can you do it? If you don’t know if you go to the market to buy socks or potatoes, you won’t get what you need, ”said the expert.
A. Bartkus: the state would risk buying “just the problem”
Algirdas Bartkus, an economist at Vilnius University, says that the creation of a state development bank could make sense in the face of economic growth, but not in the case of an unpredictable situation, such as a coronavirus pandemic.
He also added that the development of a state bank through the purchase of a commercial bank will become more expensive and the acquisition of a cheap bank will be a burden.
“It is possible to buy a cheap bank unless it has a lot of bad assets, providing bad loans and the like. In other words, then we would only buy the problem cheap.” 15 minutes said the economist.
According to the expert, the creation of a state bank would make sense if the state identified priority areas for development and declared that commercial banks do not maliciously credit businesses in these areas.
Managed by Cabbage / Photo 15min / Dr. Algirdas Bartkus, Professor, Faculty of Economics and Business Administration, Vilnius University
“We don’t have similar data right now,” Bartkus said, adding that the state would increase pressure not only on the budget, but also on borrowers themselves by distributing loans to unpromising companies simply because it operates in the region.
Also considering the merger of institutions
In addition to acquiring a commercial bank, the working group is considering an alternative to the creation of a state bank by merging national development institution Inversiones y Garantías Comerciales (Invega) and others. In the past, it has been said that, in addition to Invega, the bank would be established on the basis of the Public Investment Development Agency and the Agricultural Loan Guarantee Fund.
This working group evaluates the establishment of the State Development Bank, the request to the EC of the possibilities and scope of technical assistance, and other issues. It is expected to present its findings to the government in the second half of August, the Ministry of Economy and Innovation informed the BNS news agency.
The working group is chaired by the Deputy Minister of Economy and Innovation, Jekaterina Rojaka, and includes Deputy Minister Marius Skuodis, the Director of the Department of Investment Coordination of the European Union of the Ministry, Rita Armonienė, the Foreign Minister Alenas Gumuliauskas, the Deputy Minister of Agriculture Evaldas Gustas, the adviser to Finance Minister Algimantas Rimkūnas and other representatives.
The establishment of the bank is recognized as an important economic project for the state. The Seimas approved the establishment of the state bank in June.
According to the European Commission, the Lithuanian banking sector is currently one of the most concentrated in the EU, so systemic risk is increasing. The three largest banks, Swedbank, SEB and Luminor, own about 80 percent. Markets.
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