Lithuania Seeks Missing Assets in Takeover of Fifth-Biggest Bank

Lithuania’s banking regulator said hundreds of millions of dollars in assets may be missing from Bankas Snoras AB (SRS1L) after the government took over the Baltic nation’s fifth-biggest lender on concern it may be insolvent.

More than 1 billion litai ($392 million) of assets may be unaccounted for, central bank Governor Vitas Vasiliauskas told reporters yesterday in the capital, Vilnius. Snoras’s operations were halted until Nov. 21 and a state administrator appointed after the lender ignored recommendations to reduce its credit risk, the regulator said in a statement.

The Baltic region is recovering from the worst recession in the European Union, during which Latvia sought an international bailout after rescuing Parex Banka AS to protect it against a run on deposits. With 19.4 billion litai in foreign-currency reserves, Lithuania can handle the takeover of Snoras, the country’s largest locally owned bank, according to AB DnB Bankas economist Jekaterina Rojaka.

“This isn’t a systemic problem for the banking sector,” Rojaka said yesterday in a telephone interview from Vilnius. Still, “the situation requires speedy and smooth action to contain panic and prevent a fall in government bonds.”

Lithuania’s 10-year dollar bond declined yesterday, sending the yield 4 basis points higher to 6.26 percent, the highest since Oct. 14.

‘Minimal Costs’

The takeover won’t have “a substantial effect” on the economy because “this is a problem of one bank and it’s possible to solve the problem with minimal costs for taxpayers,” Finance Minister Ingrida Simonyte told LNK television yesterday.

Prime Minister Andrius Kubilius said he doesn’t plan to ask the International Monetary Fund or other international lenders for financial help.

Snoras, which competes with Scandinavian lenders including SEB AB, Swedbank AB (SWEDA) and Nordea AB, also controls investment bank Finasta and Latvian lender Latvijas Krajbanka AS. It held 6.05 billion litai in deposits and had assets of 8.14 billion litai at the end of September, according to the Lithuanian Banking Association. The government guarantees bank deposits of up to 100,000 euros each.

“The decision was taken to effectively protect the interests of the bank’s clients and the public interest to ensure confidence in the domestic banking system and its stability,” the central bank said.

The lender is “unauthorized to provide comments and all requests should be directed to the central bank,” Snoras spokeswoman Virginija Zygiene said in a telephone interview yesterday.

‘Ignored Instructions’

Snoras “ignored the instructions of the Bank of Lithuania to reduce operational risks” and made no changes to its business activities following advice from the central bank, the regulator said.

The lender also “avoided providing information needed for the supervisory purposes,” according to the central bank, which said “there are indications that information submitted to the supervisory institution was false.”

The Prosecutor General’s office started an investigation into Snoras’s operations, it said in a statement on its website. No indictments have yet been made, it added.

Snoras is 68.1 percent-owned by Vladimir Antonov, a 36- year-old Russian who resides primarily in London and is the controlling shareholder of Portsmouth Football Club, with a 75 percent stake.

Antonov was barred from investing in Sweden’s Saab Automobile AB in July by the European Investment Bank, which didn’t give a reason for its decision.

The U.K.’s Financial Services Authority denied Snoras permission to operate in Britain because the bank’s executives withheld information, calling the tactic “an ongoing pattern of behavior by institutions controlled by Mr. Antonov” in a February 2009 statement.

Antonov’s spokeswoman, Natalja Olesik, declined to immediately comment when contacted by e-mail yesterday.

To contact the reporter on this story: Milda Seputyte in Vilnius at mseputyte@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net

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