Banks, Crisis, Financial Services, Lithuania

Vitas Vasiliauskas. Photo: lb.lt.

He acknowledged that the central bank was not cautious enough before the crisis.

"There were opportunities (to tighten requirements for banks – BC), but they were smaller than they are now," Vasiliauskas told the parliamentary Committee on Budget and Finance, looking into the circumstances of the 2008 crisis.

In his words, the credit market's pre-crisis expansion was fast and subsequent events showed that "it was not sustainable".

"It was not based on cautious, conservative sources, it was based on sources from the parent companies," Vasiliauskas told committee members.

In his words, the parent banks transferred around 12 bln euros to their subsidiaries in Lithuania in 2008. "It made 30-40% of GDP. It’s not easy to manage such a financial flow," the central banker said.

Last spring, the Seimas of Lithuania ordered the Committee on Finance and Budget to look into how previous governments managed the country's finance since 2005. The Committee is analyzing how right-wing and left-wing political forces managed the country's finances and is due to finish its investigation by April 15.