Banks, EU – Baltic States, Financial Services, Lithuania, Real Estate

"In our view our housing market is seriously out of equilibrium and it has been so for quite a while. Because for various reasons and number of them structural, house prices has been going up for long time and at the same time house owned debt has been increasing for too long. So, things are not going well in our housing market and that is a well known position of the central bank," Ingves told on Friday.

In his words, Sweden's real estate market constitutes indirect risks upon banks in Lithuania, as in case of difficulties, the Swedish banks will no longer be able to expand operations in Sweden and on other markets, including Lithuania.

"There is a risk in an indirect way because if our banks were to run into trouble, then they would end up with a problem everywhere. (...) If they had problems at home, it would be more difficult to expand in Lithuania and in other places. That is the interconnection. They would have less capital. If they had losses, it would make it more difficult for them to expand in Sweden and in Lithuania and other places as well because you then would have to spend more time trying to fix the problem and you can't provide credit the way you did before," he told.

Housing prices have been soaring in Sweden for years due to economic growth and low interest, therefore, some market analysts have warned about a real estate bubble.

Three Swedish-capital commercial banks operate in Lithuania, namely, SEB, Swedbank and Nordea.