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A billion-dollar affair, representatives of the country’s financial elite quietly tremble in a secret evening meeting at a fancy restaurant. This is not a line from the script of the film about the Italian mafia, but the reality of Lithuania when Ūkio bankas was shared.
After the bankruptcy of Snoras, the Bank of Lithuania’s biggest headache was the remaining two Lithuanian banks: Ūkio bankas (ŪB) and Šiaulių bankas (ŠB). His financial situation was poor, especially in Šiaulių bankas.
The decision to merge the two banks and sell them to the European Bank for Reconstruction and Development (EBRD), and after finding an investor together, was made in mid-2011, when Vitas Vasiliauskas became the Governor of the Bank of Lithuania.
Negotiations between the EBRD and ŪB on the acquisition of part of the shares began a year and a half before the restriction of ŪB’s activities. The first meeting of principalB Vladimir Romanov’s main shareholder with EBRD representatives took place in Scotland, during the competition of the football club “Hearts”.
Negotiations on the sale of ŪB shares to the EBRD were slow, although V. Romanov, chairman of the board of directors, Edita Karpavičienė, who also provided translation services to Romanov, and V. Vasiliauskas, chairman of the Bank’s board of directors from Lithuania, visited the EBRD headquarters in London.
However, during the last meeting with EBRD representatives in London, Romanov behaved inappropriately and stated that “he would teach everyone to do business immediately.” Following this statement, EBRD representatives stood up and abandoned the negotiations. When the “Master” returned to Lithuania, the decision on ŪB had already been made. A moratorium was declared for the bank and it was decided to transfer its assets to ŠB.
Šiaulių bankas’ financial situation at that time was such that there was no discussion of a bank merger. The SC Supervision Report was presented to the Council of the Bank of Lithuania in 2013. in January
The report identified a number of deficiencies in loan pooling and valuation and identified large volumes of loans related to bank shareholders Algirdas Butkus and Arvydas Salda in the construction sector, which, incidentally, also killed ŪB.
According to the Authority, the additional special provisions could amount to 100 million euros. LTL, which would have significantly damaged the bank’s capitalization and obviously would have remained too weak to join ŪB without the capital increase.
However, said SC supervision report did not detain V. Vasiliauskas, the Governor of the Bank of Lithuania. Formally, the decisions of the Board of the Bank of Lithuania are made at the Board meetings.
In reality, however, the most important decisions are largely discussed and made informally at board meetings a couple of days ago, which are closed and unregistered, and at those meetings, those decisions are only announced. formally.
The Chairman of the Board of the Bank of Lithuania resolved the situation with the “inconvenient” report of the Supervisory Authority radically, as far as we know, he did not present it at all, although it was discussed at the previous meeting, including the draft Board resolution .
Therefore, all comments made on the results of the SB inspection did not receive any formal evaluation that would undoubtedly have been made at the formal hearing. On the basis of these evaluations, the Bank of Lithuania could not have allowed ŠB to join much of ŪB.
In this way, the merger was carried out without formal verification of the recipient’s financial position. In reality, the Bank of Lithuania was aware of SC’s bad position prior to the bank’s merger, but decided not to “notice” it.
According to a source from “Respublika”, the decision on how to close the ŪB was made on February 10, 2013. at night in a restaurant in Vilnius near Valakampiai, possibly with the participation of Vitas Vasiliauskas, then manager of ŠB Audrius Žiugžda (“hard to remember, I don’t remember”), temporary administrator of AdB Adomas Ąžuolas Audickas, representative of ŪB Arnas Žalis (and Darius Čerkas, then Deputy Director of the Deposit and Investment Insurance Fund (IIDF).
The journalist was unable to clarify the final list of participants, since V. Vasiliauskas did not respond to the official inquiry regarding participation in the meeting. According to the source, a representative from the EBRD also attended the meeting.
In the final days of ŪB, a high EBRD delegation visited the Bank of Lithuania. It was during this meeting that it was decided which deB assets to transfer to Šiaulių bankas and at what prices.
There also appears to have been an agreement to value activosB’s assets in such a way that at least € 800 million could be pledged by the state through the IIDF. Lieutenant As more events will show, the scenario set during this meeting was consistently implemented.
Four days later, the Bank of Lithuania’s Supervisory Authority presented the valuation of ŪB’s assets to the Bank’s Board. According to the most pessimistic assessment, the decrease in ŪB’s assets amounted to LTL 1.1 billion. Lieutenant
It was also noted that V. Romanov still promised part of the building he owned in Moscow, so the depreciation had to be reduced to 900 million. Lieutenant
The valuation prepared by the International Business Audit, Tax and Consulting Company (KPMG) was presented, which was only slightly worse: KPMG’s first valuation indicated that the decrease in ŪB assets amounted to 1.2 billion. LTL, and good assets totaled LTL 2.7 billion. LTL and was practically equal to the insured deposits in that bank.
Consequently, all of ŪB’s assets would have been sufficient to cover the insured deposits.
Therefore, ŪB’s capital adequacy was approximately zero. Many banks in Europe have survived the crisis with only 2-3% capital adequacy. It took very little time for ŪB to achieve that indicator. It would have been enough to mortgage the entire building in Moscow.
According to the source, V. Vasiliauskas was dissatisfied with this first evaluation. Therefore, KPMG was asked to review the assessment and make it more “conservative”. It was quickly adjusted and presented in the range of possible depreciation values: 1.7 to 1 billion. LTL “recommends” staying at 1.5 trillion. Lieutenant
Adopting it would mean that the state deposit and investment insurance company would have to cover some 400 million LTL. LTL difference between insured liabilities and bank assets. AdministratorB Acting Administrator Adomas Ąžuolas Audickas accepted this assessment without verification.
Subsequently, KPMG recognized that it had used the so-called ‘Quick Sell’ method for valuation, whereby assets are valued in such a way that they can be completed in approximately half a year.
As this was too small a donation, ŪB’s assets were also undervalued by around LTL 400 million at the start of the “negotiations”. Lieutenant For example, the ŪB building in the old town, Vilnius, was devalued to 12 million. LTL and Žalgiris Stadium: up to LTL 40 million. Lieutenant In the end, we managed to make the volume of good assets as planned: 1.9 billion. LTL, which far exceeds even the maximum KPMG offer, and to demand LTL 800 million for deposit and investment insurance. Lieutenant
February 28 A.A. Audickas, the temporary administrator of ŪB, officially announces that the bank’s assets transferred to ŠB amount to LTL 1.9 billion. LTL and liabilities: 2,700 million. Lieutenant In addition, the amount paid by the State to the SC through the IID cannot exceed 800 million euros. Lieutenant
Despite these guarantees, in May 2, 2013 ŠB and KPMG signed a new ŪB valuation agreement, which reduces the value of assets and increases liabilities to the point that IID has to pay an additional 128 million . Lieutenant The IID pays this amount in the same year, thus increasing the donation to the SC to EUR 928 million. Lieutenant
There are more interesting things in this contract. For some reason, it was decided to divide activosB’s assets into 4 packages and sell them in unopened auctions, although this form of sale is generally recognized as the most profitable for the seller, as the highest price can be obtained during a public auction .
Summa’s advisers were selected on a confidential basis, which divided the assets into packages and selected the buyers of those assets.
According to the Republic, entrepreneurs interested in ŪB’s property were not even allowed to receive a copy of the description of the property package. Furthermore, ŪB’s assets were divided in such a way that the packages would look as unattractive as possible to a potential buyer.
One investor described the options as follows: “Imagine being offered a spare tire, a glass of beer, and baby diapers in one package. I have never seen such nonsense. “
This seemingly strange behavior of sellers is easily explained. After all, the deal stipulates that if the value of the offers submitted by investors for the option portfolios did not exceed the price at which the assets that make up those portfolios were valued in the official KPMG report, the assets remain with ŠB. The options had a maturity of only 8 months.
Not surprisingly, January 31, 2014. Summa’s advisers stated that the investor price did not exceed the value of the property and remained with ŠB. IID, as chairman of the Creditors Committee, most interested, at least in theory, in obtaining the highest possible price for the property for sale, did not attempt to reorganize the presentation of the property for sale in any other way and attempted to do it again.
Then, another even stranger contract provision went into effect: after the options expire, the sale of the property no later than 2 years after the transfer, and if it is sold at a higher than estimated price, the profit goes to ŪB’s creditors, i. mainly to the state.
Completely incomprehensible when you think about creditors, i. IID’s positions on why this two-year period arose and for whom it was necessary. However, it is very well understood from ŠB’s point of view.
ŠB spent as much time as possible during those two years, because there was no shortage of people who wanted to acquire valB’s valuable legacy. Arvydas Avulis, the owner and manager of the Hanner Group, even publicly resented Šiaulių bankas’ behavior, as he was forced to keep a large amount of money reserved.
Finally, at the end of that two-year period, ŠB was unleashed. Then, the real value of the assets taken from ŪB became clear. 40 million The Žalgiris Hanner stadium, valued at LTL 43 million, sold for more than LTL 43 million. 148 million euros. LTL. In this transaction alone, they lost more than LTL 100 million due to an openly discriminatory agreement with ŪB’s creditors. LTL.
The following year, ŠB was a record. ŠB group of companies in 2014 earned 11.76 million. Unaudited net profit in euros. The bank itself – 10.6 million. Unaudited net profit in euros. T.y. 2.2 and 3.4 times more, respectively, than in 2013. The group’s net interest income amounted to LTL 41.12 million. EUR (29.64% more than EUR 31.72 million in 2013). ŠB net interest income – 33.01 million. EUR (37.26% more than EUR 24.05 million a year ago).
All the participants in this story were separated from the “border” by the wall of silence. As mentioned, the participants of the meeting held in the Valakampiai restaurant are not available or do not speak, the Bank of Lithuania did not respond to written questions, and Šiaulių bankas stated that “the information and documents it requested are confidential.
The only ones that gave a response were the state-owned Deposit and Investment Insurance Company. The Deposit and Investment Insurance (IID) did not have and is not competent, did not participate and did not make any decision regarding the “closure” of BAB Ūkio bankas.
According to the IID, “they had no legal basis to familiarize themselves with the information and documents collected by the Bank of Lithuania, which led to the 2013 February 12 decision on Ūkio bankas.”
KPMG’s assessment of Ūkio bankas’ assets is, in IID’s view, impeccable. The evaluation carried out by KPMG Baltics is an independent evaluation carried out by professional service providers, the result of which cannot, by its nature, be negotiated. The valuation cannot be influenced and, we believe, is not affected by any of the counterparties.
Is it “do you believe” or “couldn’t”? Or maybe it could still?
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