Lithuania’s central bank told the administrator of Ukio Bankas AB to negotiate the sale of the insolvent lender’s assets to keep the institution’s collapse from having an impact on the state budget.
“The temporary administrator has been given permission to begin preliminary negotiations with Siauliu Bankas, which has already expressed interest in taking over the assets, rights, contracts and liabilities of Ukio Bankas, as well as with other banks that have expressed similar interest,” the Bank of Lithuania in Vilnius, the capital, said today by e-mail.
The government and the central bank, which suspended Ukio’s operations on Feb. 12, want to avoid its bankruptcy, which would require payments of as much as 2.6 billion litai ($1 billion) from the state deposit-insurance fund. The fund itself would have to borrow the money from the government, which also helped it survive the bankruptcy of Snoras Bankas AB in 2011.
Siauliu Bankas AB, supported by the European Bank for Reconstruction and Development, its largest shareholder, said yesterday it wanted to begin talks on buying Ukio’s “good” assets.
Preliminary data showed Ukio’s liabilities were 500 million litai more than its assets, according to the Bank of Lithuania. That is mainly due to 1.6 billion litai of risky loans that the bank granted to companies related to its 64.9 percent owner, Vladimir Romanov, the central bank said.