* Decision on Lithuania's 2015 euro zone bid due in July
* Lithuania has begun ECB-style banking review
* Bank of Lithuania says review is "in co-operation with"
* ECB says work will not prejudge outcome Lithuania euro
By Laura Noonan
LONDON, May 8 Lithuania's top lenders have
effectively been admitted to the euro zone's landmark banking
tests as the country prepares to join the currency union next
The Baltic state, which has long sought inclusion in the
European Central Bank's (ECB) assessment, has now secured the
ECB's involvement in its own parallel review.
A source familiar with the Lithuania review, the details of
which have only been finalised in recent days, said it would
place the country's top lenders under the same scrutiny as the
The ECB's comprehensive review of the euro zone's 128 most
important lenders is designed to banish lingering doubts about
their health before the ECB takes over as the region's banking
supervisor in November.
Lithuania had lobbied for inclusion in the ECB review
because successful navigation of the tests would give the
country's three biggest banks equal footing with other euro zone
lenders when they come under the new supervisory regime.
A second source confirmed that the Baltic state's banks are
now involved in the ECB process but would not give further
details of the exercise covering the Lithuanian offshoots of
Nordic banks Swedbank, DNB and SEB
Aldona Jociene, Director of the Prudential Supervision
Department of the Bank of Lithuania, said that Lithuania had
begun "co-operation" with the ECB over the banking health checks
but would not elaborate on the extent of its involvement.
The first source confirmed that Lithuania had hired auditors
in the past few days to carry out the health check, mirroring
moves taken by national supervisors across the 18-country euro
zone in recent months.
A Frankfurt-based ECB spokesman, meanwhile, acknowledged
that Lithuania had contacted the ECB about the preparatory
efforts it would make ahead of joining the euro zone, focusing
on the comprehensive assessment.
"The ECB has made clear that such contacts can in no way
prejudge the assessment of convergence by the ECB," the
spokesman added, in a reference to a formal decision on
Lithuania's EU accession that is not due to be taken until July.
By starting its own review now, Lithuania aims to help its
banks slot in to the formal ECB process smoothly if the July
decision on euro zone entry goes its way.
An Oslo-based spokesman for DNB declined comment, as did a
Stockholm-based spokesman for Swedbank. SEB could not
immediately be reached for comment.
Lithuania is beginning its tests two months later than the
rest of the euro zone, where many banks have described the
timetable as ambitious, given the vast volumes of data that must
be submitted by lenders.
Neither the ECB nor the Bank of Lithuania would comment on
whether the Lithuanian tests would be held to the same
timetable. The ECB has insisted that it will meet an October
deadline to complete the euro zone tests.
The results of the ECB review will feed into EU-wide stress
tests that will decide whether Europe's banks should raise more
capital so that they could deal with potential future crises
without needing publicly funded rescues.
(Editing by David Goodman)