The Commission has found out that the measures taken by Lithuania’s central bank have been appropriate to remedy a serious disturbance in the country’s economy.
“European Commission has authorized, under EU state aid rules, liquidation aid supporting the resolution of the Lithuanian bank Ukio Bankas… The Commission found the aid measure to be in line with its guidance on state aid to banks during the crisis,” the Commission said in a press release.
According to the Commission, the cash grant of nearly 800 million litas (EUR 231.88 mln), which bridged the gap between the value of the transferred assets and liabilities, ensured liability of the bank’s transferred business.
“In particular, the measure ensures the viability of the bank's transferred business in the context of its integration into a sound bank, while limiting distortions of competition by the market exit of Ukio Bankas as an independent entity. Moreover, a sufficient own contribution by the bank to the losses and costs of restructuring is ensured through absorbing losses with previously available capital, transfer of substantial proportion of its assets to Siauliu Bankas and the contribution of the shareholders and subordinated loans holders of Ukio Bankas”, the Commission said.
Siauliu Bankas, which is controlled by the European Bank for Reconstruction and Development (EBRD) and a group of local investors, on Feb. 23 signed a trilateral agreement with Adomas Audickas, the temporary administrator of Ukio Bankas, and the state company Indeliu ir Investiciju Draudimas (Deposit and Investment Insurance) to take over part of Ukio Bankas' liabilities, assets, rights and transactions.
Siauliu Bankas took over 2.7 billion litas worth of insured deposits and around 1.9 billion litas worth of assets. Indeliu ir Investiciju Draudimas contributed the remaining nearly 800 million litas.
The operations of Ukio Bankas were suspended on Feb. 12. The Bank of Lithuania on Feb. 18 declared the bank insolvent and permanently revoked its operating license.
