Lithuanian Ukio bankas, Siauliu bankas agree on asset transfer
VILNIUS. Feb 25 (Interfax) - The temporary administrator of Lithuanian problem bank Ukio bankas Adomas Audickas, the bank Siauliu bankas and government deposit insurance company Indeliu ir investiciju draudimas have signed a deal on the transfer of part of Ukio bankas liabilities, assets, rights and deals, Bank of Lithuania and Siauliu bankas said in press releases.
Siauliu bankas will undertake obligations of around 2.7 billion litai, according to preliminary estimates, on insured deposits in Ukio bankas. It will also obtain assets to the same value: about 1.9 billion litai in "good" Ukio bankas assets and 800 million litai from Indeliu ir investiciju draudimas.
"As a result of intensive talks an agreement was reached to first resolve the insolvency problem at the bank in a way that would enable banking services to Uko bankas clients to be resumed very soon. This means that the most important short-term aim has been achieved: the absolute majority of people and companies can once again dispose of their funds at Ukio bankas," the Bank of Lithuania press release cites its chairman Vitas Vasiliauskas as saying.
"Our most important task for the short-term is to resume services to Ukio bankas customers as soon as possible," said the Siauliu bankas administration chief, Audrius Ziugzda.
Siauliu bankas, which is managed by the European Bank for Reconstruction and Development (EBRD owns 19.57% of the bank) and local investors, is financially strong and will ensure obligations before Ukio bankas customers will be met, he said.
Earlier the EBRD allocated Siauliu bankas a 20 million euro subordinate loan to strengthen its position and speed up the process of acquiring Ukio bankas assets as well as for financial sector stabilization in Lithuania.
Bankruptcy will be declared on the "bad" assets that will not be transferred to Siauliu bankas, A. Audiskas said. The value of the "bad" assets is 400 million-500 million litai.
Standard & Poor's said Monday that the transfer of Ukio bankas assets to Siauliu bankas would probably not have an impact on Lithuania's rating (BBB/stable outlook). S&P does not think the transfer will worsen the stability of the country's bank sector.
Vasiliauskas said last week that Ukio bankas problems were of a local nature and would not threaten the stability of the financial system.
However, lawyers, cited by the Lithuanian press, say the division of Ukio bankas could result in an avalanche of lawsuits: as the decision to divide assets does not leave any opportunity for recovering deposits exceeding 100,000 euros, so major depositors may complain about how the bank was divided in court.
Bank of Lithuania on February 12 suspended the activities of Ukio bankas - the country's sixth largest bank - and appointed a temporary administrator. Bank of Lithuania management later decided that Ukio bankas would be divided into "bad" and "good" assets. The central bank also submitted materials to the prosecutor's office on suspicious deals at Ukio bankas in 2005-2012, which were revealed during an inspection of the bank.
This is the second bank in Lithuania that has been suspended by the regulator in the past year and a half: 2011 saw the nationalization of Snoras, which went bankrupt and is now in liquidation.
Businessman Vladimir Romanov is the majority shareholder of Ukio bankas. As of September 30 2012, Romanov owned 64.92% of Ukio bankas and First Partneriai - 9.47%.
The litas is pegged to the euro at a rate of 3.4528 litai/EUR1.
