THE BANKS OF LITHUANIA ARE PRIMARILY THE BANKS OF

UNCLAS SECTION 01 OF 02 VILNIUS 000858

SIPDIS

FOR EEB/IFD/OMA - AWHITTINGTON AND EEB/EPPD - RHUFF

E.O. 12958: N/A
TAGS: ECON EFIN LH
SUBJECT: THE BANKS OF LITHUANIA ARE PRIMARILY THE BANKS OF
SCANDINAVIA


1. Begin Summary. Lithuania's banking sector is composed of
15 banks, with the majority of assets held by Scandinavian
institutions. Entities besides the top 15 hold only 1
percent of all bank assets. So far the Scandinavian and
locally owned banks appear stable. Nonetheless, in response
to the worldwide financial crisis the GOL increased deposit
insurance to the equivalent of 100,000 Euros. End Summary.

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Are We In Scandinavia?
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2. Lithuania has 15 banks that control approximately 99
percent of all banking assets in the country. Nine of the
institutions are registered as Lithuanian entities, with the
remaining 6 being foreign bank branches. SEB, Swedbank
(previously known as Hansabankas) and DnB Nord, all
Scandinavian banks, dominate Lithuania's banking system.
These banks control two thirds of all banking assets in
Lithuania and also play an important role in the leasing and
insurance markets. Unlike their smaller competitors they saw
continual impressive profit growth in the first half of 2008
over the same period in 2007, although many smaller
institutions still recorded profits for the first half of

2008. Below is a list of the banks that compose the vast
majority of the Lithuanian banking system, with their
national origin in parentheses and their approximate
Lithuanian assets in USD as of June 30, 2008.

- SEB (Swedish): 9.9 billion USD
- Swedbank (Swedish, previously known as Hansabankas): 7.7
billion USD
- DnB Nord (Norwegian majority ownership with some German):
5 billion USD
- Nordea (Finnish): 2.9 billion USD
- Danske (Danish): 2.4 billion USD
- Snoras (Russian): 2.3 billion USD
- Ukio (Lithuanian): 1.7 billion USD
- Siauliu (Lithuanian): 833 million USD
- Parex (Latvian): 692 million USD
- UniCredit (Italian/German): 349 million USD
- Medicinos (Lithuanian): 306 million USD
- Allied Irish (Irish): 22 million USD
- MP Investment (Icelandic): 17 million USD
- Balti Investeeringute Grupi Pank (Estonian): 12 million
USD
- Finasta (Lithuanian): 8 million USD



3. There are other depository institutions, foreign bank
representative offices, foreign bank branches, credit unions
and EU banks providing cross-border services without a
branch. Their Lithuanian assets, however, are minor when
compared with the institutions listed above.

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In Sweden We Trust
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4. The banking sector in Lithuania appears fairly stable
compared to Western Europe and may escape the recent
challenges seen in many countries, including the United
States. The Senior Economist of SEB Bank in Lithuania,
Nerijus Udrenas, told us that financial difficulties in the
United States would not affect his bank's operations in
Lithuania, saying SEB has plans to grow not downsize in
Lithuania. He admitted that profitability might decline in
the banking sector in the short term but lending will
continue with greater investigation of credit recipients
before loan issuance. Gediminas Simkus, the Deputy Head of
the Financial Stability Division of the Bank of Lithuania,
told us that Swedish Central Bankers remain confident and
stand ready to provide liquidity if needed.


5. In one discordant note, the head of the local branch of
Danske bank cautioned that if bank analysts look at the
Baltic States as one, Lithuania could come under some
pressure.

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No Reason To Put Money In A Mattress
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6. Deposits in Lithuania were previously 100 percent insured
up to a 3,000 Euro equivalent and 90 percent of deposits
between 3,000 and 22,000 Euros equivalent were insured as
well. As part of the reaction to the world financial crisis,
the government increased deposit insurance to the

VILNIUS 00000858 002 OF 002


EU-recommended 100,000 Euros on October 14.

CLOUD