Ukio bankas will be divided up, there will be no bankruptcy - Bank of Lithuania
VILNIUS. Feb 19 (Interfax) - Lithuania's Ukio bankas, which had its activities suspended due to financial difficulties, will be divided up with good assets possibly going to Siauliu bankas, Bank of Lithuania Chairman Vitas Vasiliauskas said Monday evening at a press conference after the central bank had met to discuss Ukio's fate.
"After listening to the report from the temporary administrator and proposals for resolving the problems at Ukio bankas, the Bank of Lithuania management board decided that it would be best to select the third alternative of the four given: ask the temporary administrator to start talks with Siauliu bankas on a transfer of [Ukio bankas] assets, rights and obligations," he said.
"It was decided that the insolvency situation at Ukio bankas would be resolved by selling the business as a complex to market players and at the same time reacting to the proposal from Siauliu bankas [that it is willing to take over the good assets]," he said.
Negotiations could be completed this week and services for Ukio bankas customers resumed next week. "We think the talks should be finished this week in order to enable a gradual resumption of operations next week," Vasiliauskas said.
The temporary administrator Adomas Audickas said the four alternatives were: re-capitalization of the bank and a partial write-off of non-insured loan claims; bankruptcy; transfer of property and obligations to another Lithuanian bank or transfer of assets and obligations to a temporary specially set up bank.
Audiskas said it was established that Ukio bankas has obligations that exceed the value of its assets by 1.1 billion litai (around 320 million euros) and that after looking at all the alternatives it was decided that transferring assets and obligations to another Lithuanian bank was the best option.
Bank of Lithuania Supervision Service Director Vytautas Valvonis said that an audit of Ukio bankas showed that the majority of the bank's losses had been caused by loans allocated to companies associated with the bank's biggest shareholder - Vladimir Romanov.
The Bank of Lithuania management board on Monday also declared Ukio bankas insolvent and revoked its license indefinitely.
Bank of Lithuania on February 12 suspended the activities of Ukio bankas - the country's sixth largest bank - and appointed a temporary administrator. 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.
As of September 30 2012, Romanov owned 64.92% of Ukio bankas and First Partneriai - 9.47%.
Siauliu bankas began non-binding talks last Wednesday about acquiring Ukio bankas. Siauliu bankas had by Friday already spoken to the antimonopoly service about acquiring Ukio bankas, leasing company Ukio banko lizingas and life insurance company Bonum Publicum (both of which are part of the Ukio bankas group).
The European Bank for Reconstruction and Development owned 19.57% of Siauliu bankas on September 30 2012 and clients of Scandinavian group SEB - 5.5%.
The litas is pegged to the euro at a rate of 3.4528 litai/EUR1.