Banks, Financial Services, Lithuania

International Internet Magazine. Baltic States news & analytics Tuesday, 22.09.2020, 06:02

Lithuania may ask EU commission for technical help on national development bank

BC, Vilnius, 14.09.2020.Print version
The Lithuanian Economy and Innovation Ministry will suggest that the government ask the European Commission for technical assistance on the establishment of a National Development Bank, reported LETA/BNS.

Deputy Economy and Innovation Minister Jekaterina Rojaka, the head of a special task group, said on that Lithuania could receive experts' conclusions in about a year.  

"The task group has analyzed the current situation as to the availability of financing markets and found that small and medium-sized businesses are experiencing difficulties in accessing financing today," Rojaka told. "It is especially difficult to get financing for start-ups and young companies operating for up to three years". 

"Some potentially economically viable and important projects are not being carried out, so changes in this area are necessary," she added.

The group has analyzed several possible options, each with its advantages and disadvantages, and decided that a more in-depth analysis is needed for the optimal solution, according to the vice-minister.

"Our proposal is that the government apply to the European Commission for technical assistance under the Structural Reform Support Program on the establishment of the National Development Bank and on the issue of retail financial services," she said. 

The task group considered three options for setting up a state-owned development bank. The first option calls for consolidating Lithuania's existing national development agencies – the Agricultural Loan Guarantee Fund, the Public Investment Development Agency, and the state-owned credit guarantee agency INVEGA. 

The second option provides for setting up a holding company on the basis of these agencies, and the third one calls for acquiring an operating bank or setting up a new state bank. 

According to Rojaka, the third option appears to be the most expensive and lengthiest of the three. It requires a completely new legal regulation and is the "riskiest" one.

The group was tasked with drafting proposals on how to implement the parliament's resolution of June 26 on the establishment of a National Development Bank and the state's participation in the capital of credit institutions. The establishment of such a bank has been named an economic project of national importance. 

The European Commission says Lithuania's banking sector is one of the most concentrated in the EU, which increases systemic risks. Three biggest banks – Swedbank, SEB and Luminor – hold around 80% of the Lithuanian market.  

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