Lithuania reassures on banks after Snoras takeover

Thu Nov 17, 2011 2:22am EST

Related Topics

* Lithuanian PM says no wider bank sector problems

* Government on Wednesday seized control of Snoras

* Bank accuses govt of "robbery"

By Nerijus Adomaitis

VILNIUS, Nov 17 (Reuters) - Lithuania's prime minister said on Thursday that the state takeover of a leading bank was a limited problem and other banks were safe.

He spoke after the state on Wednesday swooped to take control of Snoras Bank, the fifth largest by assets but third largest by deposits.

The government and central bank said they had found a risk of insolvency and possible criminality. The bank meanwhile has accused the government of "robbery".

"It is the problem of one bank ... Any information that other banks could have problems are rumours," Prime Minister Andrius Kubilius said in a radio interview.

He said authorities had discovered a hole in assets of 1 billion litas ($392 million).

Snoras was 68 percent owned by Russian businessman Vladimir Antonov, who had also tried and failed to buy Swedish car maker Saab after being denied ownership by a Saab creditor, the European Investment Bank.

His partner in Snoras is a Lithuanian businessman, Romanas Baranauskas, who said he was angry at the takeover.

"It's robbery ... it's political repression by the president and the central bank against a private bank, and its consequences would be painful for the rest of the country," newspaper Lietuvos rytas quoted Baranauskas as saying.

Snoras owns about 35 percent of the daily.

The central bank said on Wednesday the bank had reported some foreign securities as assets, which on investigation did not exist. On the streets of capital city Vilnius, there seemed to be few signs of panic, with no queues at cash machines.

"I am not concerned. I don't think anything bad is going to happen, because Snoras has only a 10 percent share. I am confident other banks are safe," said Aleksey Burov, 33, a university lecturer.

Finance Minister Ingrida Simonyte said on Wednesday the bank's good assets would be separated off into a new bank.

Snoras also owns Latvian bank Krajbanka, which said its operations would not be affected.

Lithuania's biggest banks are controlled by Nordic groups Swedbank, SEB, DnB NOR and Nordea , but there are a handful of locally owned banks, of which one of the biggest is Ukio Bank. ($1=2.553 Lithuanian Litas) (Writing by Simon Johnson in Stockholm; Editing by David Holmes)

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