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While the emergence of a new player in the Lithuanian banking market would be welcome, establishing a state-owned bank would be a costly process, the country's central bank governor said on Friday.
Central banker says establishing state bank would be costly
© Shutterstock

Vitas Vasiliauskas' comment came a day after President Gitanas Nauseda said the establishment of a state commercial bank "shouldn't be a taboo in the current situation".

The chairman of the Bank of Lithuania's board told members of the parliament's Committee on Budget and Finance that a clear cost-benefit analysis should be conducted before deciding on such a bank.

"Is that plane going to fly?" he asked rhetorically, noting that a new player would have to invest heavily to be able "to shoulder its way" into the Lithuanian banking sector that is now dominated by three incumbents holding 80 percent of the market.

According to Vasiliauskas, a state-owned bank, like any other bank in the country, would have to meet capital adequacy, liquidity and other supervisory requirements, and IT standards.

After completing its investigation into the 2009 financial crisis, the Committee on Budget and Finance said in late October that the government should consider establishing a state commercial bank.

Lithuania's last state-run bank, Zemes Ukio Bankas (Agricultural Bank), was sold to Germany's Nord LB in 2002. That followed the acquisition of Lietuvos Taupomasis Bankas (Lithuanian Savings Bank) by Estonia's Hansabank a year earlier.

BNS
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