Neither the Bank of Lithuania, the Government, nor finance analysts would dream of equating Snoras and Ūkio Bankas, two Lithuanian banks that went under, the former over a year ago, the latter this month. Ūkio Bankas is much smaller and the shortage of funds in its accounts is not as dramatic (1.1 billion litas, or 319 millio euros, compared to 3.4 billion litas, about 1 billion euros, in Snoras case). Ūkio Bankas, unlike Snoras, did not own a bank in Latvia.
What pushed Ūkio Bankas into its downfall were overambitious projects by its main shareholder Vladimir Romanov, whereas Snoras bankruptcy was the outcome of possibly criminal deeds. Foreign experts were paid millions to hunt for Snoras assets, while Ūkio Bankas will have to do with a Lithuanian for several dozen thousands.
Most of the assets in Ūkio Bankas were insured deposits. Meanwhile Snoras collapse took away billions of state money and assets belonging to other companies. The Deposit and Investment Insurance Fund, too, will be far less devastated by Ūkio Bankas – this time, the collapse will set it back some 600 million to one billion litas (174-290 millio euros), depending on the outcome of talks with Šiaulių Bankas, which has offered to take over some of the assets of Ūkio Bankas.
And yet, despite different repercussions that each of them left in the society, business, and the economy, both banks are no more. Through different routes, but both Vladimir Antonov and Vladimir Romanov achieved the same result – killed a bank.
Snoras cancer
When it was announced on 16 November 2011 that Snoras was to be nationalized, it took some time before anyone spoke about its eventual dissolution. Just like in the case of Ūkio Bankas, the initial discussions included the option of splitting it into a “good bank” and a “bad bank.”
Back then, the Bank of Lithuania board assembled three times to discuss the fate of Snoras. After receiving a report by Simon Freakly, who was appointed to administer the nationalized bank, the board dispersed twice without arriving at a decision.
It was clear that they knew not how to handle the situation. Public statements of Ingrida Šimonytė, the minister of finance at the time, and the Bank of Lithuania head Vitas Vasiliauskas left little doubt that Snoras was doomed.
Giving testimony in parliament, Šimonytė said bluntly that Snoras was insolvent. Vasiliauskas referred to a cancer that was eating the bank.
So when it finally emerged, in late hours of 24 November, that Snoras was to be declared bankrupt, the news came as little surprise.
What did raise some eyebrows was the sheer extent of embezzlement that had taken place – of the 8 billion litas in Snoras balance sheets, 3.4 billion were missing. And even though Vladimir Antonov and Raimondas Baranauskas, former owners of Snoras suspected of stealing the money, were handcuffed in London on that same night, hardly anyone was relieved by that. Especially private and state-owned companies that were keeping their assets in Snoras accounts.
It is still not entirely clear what happened to money from Snoras. Bankruptcy administrator Neil Hunter Cooper once remarked that the help of Fairy Godmother could be very useful in the hunt for disappeared assets.
Antonov and Baranauskas had been offering above-market interest rates to attract depositors to their bank. Some of the deposits had to be returned by the state, since Snoras assets were big on paper only. Some of the money was gone altogether, the rest is still to be recovered through sale of Snoras holdings. So far, only its chain of retail outlets has been successfully sold.
Over the coming months, Snoras administrators expect to sell the bank's vehicles, find buyers for Finasta, its subsidiary bank, and Snoras Leasing, sell some of the bank's real estate.
Part of the money had been transferred to accounts in tax haven countries. At the moment, talks are underway with funds in the Cayman Islands over redeeming items related to twenty-two Russian loans.
Ambitions of Vladimir Romanov
Tracing back money in Ūkio Bankas is much easier. At least the Bank of Lithuania must have thought so, when it hired former vice-minister of economy Adomas Audickas to administer the bank. In Snoras case, the central bank opted for international heavyweights from the very start – first Simon Freakley and then his colleague Neil Hunter Cooper.
According to the Bank of Lithuania spokespeople, troubles in Ūkio Bankas have mostly to do with eccentricities of its owner Vladimir Romanov and his over-ambitious projects – loans in Moscow, Scotland, an ill-advised investment into Žalgiris Stadium and other projects.
Even though Romanov was only majority shareholder and was not directly involved in managing the bank, Ūkio Bankas would give out loans to people with links to him. Among the people who ran Ūkio Bankas and related companies were Romanov's sister Olga Goncharuk, two other relatives, Romanov's wife Svetlana.
It is suspected that the bank would purposefully overvalue mortgaged property in order to satisfy capital requirements. In other words, the bank would give out huge loans without demanding any collateral at all or the mortgaged assets would be overvalued. It is therefore doubtful if administrators will be able to sell Ūkio Bankas' assets for the price they were valued at in its balance sheets.
For example, a piece of forest land was valued at 60 million litas, whereas its actual market price is closer to one million.
Back in 2011, Baltijos Turto Vertinimo Agentūra (Baltic Estate Evaluation Agency) estimated the value of Žalgiris Stadium in Vilnius at 420 million litas (122 million euros). It is possible that when the agency did its estimates, it took into account plans by Ūkio Bankas Investment Group to invest 500 million litas into it. The project, however, remained on paper only.
In late 2012, Ūkio Bankas was forced to take over Žalgiris Sports Arena, the company that was managing the stadium. The land underneath the stadium was then evaluated at 357 million litas (over 100 million euros). Many independent experts were shocked by the figure.
Only gems remain?
Speculations about troubles in Ūkio Bankas started almost immediately after Snoras nationalization. However, for more than a year, state agencies were negotiating with Vladimir Romanov, hoping to save the bank without too much intervention. Only after this plan failed, did the Bank of Lithuania take direct control of the bank.
Now, two of Lithuania's seemingly most troubled banks have been closed, but that does not mean that the rest of the finance market is flawless.
Raimondas Kuodis, deputy chairman of the board at the Bank of Lithuania, tells 15min that he would be lying if he claimed that no other financial institution in the country was in danger of going bankrupt.
After Snoras and Ūkio Bankas, the most trouble-ridden institutions now are the small players in the market – credit unions.
