The Seimas explained why banks are getting more out of Lithuanian companies: they will focus on increasing competition

Delfi has already written about how prices vary for companies. A Lithuanian company pays between 23 and 29 cents for a transfer within the same bank, while in Latvia, up to 21 cents, in Estonia, between 5 and 16 cents. Generally, you have to pay 41 cents for a transfer to another bank, more than your neighbors. In Estonia, companies do not pay a monthly fee for invoices, the only Lithuanian businessmen pay to deposit small amounts of cash into an ATM account.

Mykolas Majauskas, chairman of the Seimas Budget and Finance Committee (BFK), noted that Lithuanian companies tend to pay more for banking services than companies from Latvia, Estonia or Poland.

“Unlike the activities of the Seimas and the BFK during the previous term, we do not have the objective of demonizing commercial banks. The competition authorities approach, effective regulation and transparent pricing can benefit both consumers and businesses, but I am aware that banks will continue to do what they do best, which is to take advantage of limited competition. to get the most out of consumers and businesses. . ”, – said M. Majauskas.

He assured that the only antidote is to increase competition and attract new market participants.

“We are well aware that we will not achieve a large and sustainable result by stripping the banks. We may be angry, harassed, threatened, but our pressure will not equal pressure from bank shareholders to increase profits and counterfeit as much money as possible. Under current conditions, the antidote and effective solution, what the Bank of Lithuania and the Ministry of Finance are doing, is trying to pave the way for new entrants in financial services.

Jurgilas: consumers are satisfied, but the price is not satisfactory

Marius Jurgilas, member of the Board of Directors of the Bank of Lithuania, confirmed that bank fees generate not only passions, but also reasonable questions. It provided four key performance indicators for banks.

“Profitability has been declining for the last three years. It fell 16.4 percent last year. That said, profitability is still high, one of the highest in the EU. Banks are operating stably, their level capitalization is very high, which means that even with very high capital they can work profitably. What is a record is the coverage of liquid assets. Its minimum is 100 percent. Currently, this figure is 8 times higher than the minimum. This indicator shows that the banking sector is in a situation of excess liquidity, “explained M. Jurgilas, explaining that this may be related to rates.

He explained that the banking baskets for companies vary in size, scope of services. Private consumers spend a small part of their income on banking services.

“The rates for companies are the most or the most difficult to compare between countries, because often large companies enter into direct negotiations with service providers, with banks. But standard plans are offered and we have tried to compare those plans as much as possible In Lithuania, the smallest business plan ranges from 4.5 to 12 euros per month, while the largest plan, which includes a bank credit card, is from 18 to 35 euros per month, ”said M. Jurgilas .

The Bank of Lithuania commissioned a survey on consumer satisfaction with payment services conducted by Spinter. Research shows that over the years, indicators of how a business rates banking services, such as a payment account, a bank link, or others, have improved.

“It just came to our attention then. But one may wonder why.” It is due to the deterioration of the economic situation or the increase in prices, “said M. Jurgilas, noting that any additional cost is very painful for small businesses during economic difficulties.

He highlighted that small entrepreneurs operating under individual activity certificates or business licenses can use standard bank baskets that apply to individuals.

M. Jurgilas pointed out that payment services in the country are provided by 786 providers, both Lithuanian and foreign. However, even companies often choose non-cheaper alternatives.

“There are definitely cheaper options on the market for each service individually, but the package is chosen by the consumer,” says Jurgilas, noting that the choice is often determined by other services such as credit, investment or savings.

M. Majauskas pointed out that services are more expensive in Lithuania, although the sizes of the markets are similar, the regulatory environment is similar:

M. Jurgilas, assured that it is not yet so uniform.

“If the economic situation in Latvia, Estonia and Lithuania is really the same, we can discuss. There are indications that not quite. Does the market participant operate under the same conditions and have the same infrastructure? Luminor Bank, to my knowledge, uses 6 different IT systems, costs may differ, said M. Jurgilas.

Mr Jurgilas added that wider and cheaper access to public records could make services cheaper, as Lithuania has high costs to prevent money laundering and the single window principle has not been implemented.

“Why does Swedbank have a stake in Latvia and Luminor is established in Estonia? As far as we know, the costs of economic activity examined by decision makers were the lowest in Lithuania. Other costs may have also been involved. It worked, ”asked M. Jurgilas rhetorically.

Promises to work in a competitive environment

The fintech strategy was approved by the government every year, according to which the goal is to develop the financial sector to make it attractive to new players, said Deputy Finance Minister Vaida Česnulevičiūtė.

There is also a Payments Council, where all market participants seek solutions to troublesome problems.

We must also consider whether there are unreasonable regulatory restrictions that, even with all efforts in the financial services field, do not allow us to achieve the desired result. It is very good that since January 1 we have begun to remove these restrictions and now companies can open accounts not only in banks, but also in financial services and payment institutions, ”explained the deputy minister.

He assured that he would also return to the topic of financial education, since this is one of the reasons why small companies do not dare to try to use the services of other service providers.

The president of the Competition Council (CC), Šarūnas Keserauskas, assured that competition depends on the size and regulation of the market. Lithuania is a small market, so “we have something to think about in the state” on regulation.

“The CC works with market distortions or seeks to preserve competition in the market if bank mergers restrict competition. Also clarification and elimination of violations. But not necessarily high prices or prices different from those of other states constitute an infraction. Each country would probably bring a new package, a basket of prices, and we would always find a country where those prices are higher, where they are lower ”, Š. Keserauskas.

He reported that the CC, together with the Bank of Lithuania, has launched an important market study to find out what opportunities for small and medium-sized enterprises to receive financing services, conclusions and recommendations are formed on the basis of this study and will be submitted for public discussion.