"The key difference between Snoras and Ūkio Bankas is that Snoras was much more active in selling uninsured products, such as certificates of deposit and bonds. It was also very active in working with large public and business customers," Vytautas Plunksnis, the chairman of the board of the Lithuanian Investors' Association, said in a press release.
"Meanwhile, Ūkio Bankas mostly relied on deposits by private individuals, which are insured, to fund its operations. Therefore, in Snoras' case, the biggest losers were the bank's creditors and shareholders, while in Ūkio Bankas' case, a large part of losses will have to be borne by the Deposit Insurance Fund," he said.
The Bank of Lithuania on Monday declared Ūkio Bankas insolvent and revoked its operating license.
Adomas Audickas, Ūkio Bankas' temporary administrator, said that the bank's liabilities exceeded its assets by 1.1 billion litas (EUR 320 mln). It is said that Ūkio Bankas had around 2.7 billion litas in state-insured deposits. In transferring these liabilities and the "good" assets of Ūkio Bankas to another lender, the state-owned Indėlių ir Investiciju Draudimas (Deposit and Investment Insurance) may have to contribute about 800 million litas.
Snoras' shareholders were accused of misappropriating 1.7 billion litas worth of assets of the bank, which collapsed in 2011. More than 4 billion litas had to be set aside in provisions during the bank's bankruptcy. However, the deposit insurance company, which paid about 4 billion litas in claims resulting from Snoras' closure, may expect to recover almost all of the money after the bank's assets are sold, the association said.
"All banks operating in Lithuania contribute about 170 million litas to the Deposit Insurance Fund annually in the form of insurance payments. Thus, we may state that customers of other banks will pay for Ūkio Bankas' problems as well," said Plunksnis.
The central bank's board on Monday decided to split Ūkio Bankas into "good" and "bad" parts and authorize its temporary administrator to negotiate with Šiaulių Bankas on a takeover of the "healthy" part. It is expected that the talks could be completed by the end of this week and that services to Ūkio Bankas' customers could be resumed next week.
Ūkio Bankas was Lithuania's sixth-largest bank by assets until the central bank suspended its operations on February 12.
