Baltic States – CIS, Banks, EU – Baltic States, Financial Services, Investments, Legislation, Lithuania

The banking group's shares fell as much as 16% on February 5 in Vilnius, that was the biggest intraday drop since February 2000, closing down 12% at 0.095 euro.

The company's value of 32.9 million euros ($44 million) is less than half what it was a year ago.

"Everyone knows the bank's in poor shape and there are lots of rumors about what will happen," Andrius Suminas, a broker at Swedbank in Vilnius, said by phone to Bloomberg.

Ukio Bankas in October reported a group net loss of 44 million litas for the first nine months of 2012. Since then, it has had to assuage investor concerns about the quality of its loans, the valuation of real-estate it owns and probes of Russian money that was laundered through its accounts.

As reported, prosecutors decided to freeze some accounts in Ukio Bankas related to the so called Magnitsky list in January this year. It is suspected that the bank was used to launder money pumped from the Russian budget – around 13 million US dollars.

Lithuanian law enforcement institutions are contributing a globally known investigation launched by Russian lawyer Sergei Magnitsky who died in mysterious circumstances. A total of 28 accounts at Ukio Bankas were frozen.

In December last year, speculations about Ukio Bankas' and another Lithuania-based bank Siauliau Bankas' merger appeared in press; as said, in order to create a viable, solid bank. However, the managers of both credit institutions denied rumors on that subject.

Ukio Bankas is controlled by Edinburgh soccer club Heart of Midlothian Plc owner Vladimir Romanov, as Bloomberg reported.

Romanov owns 64.9% of Ukio Bankas shares, according to a note in the bank’s earnings report. He is also chairman of the board and at least part owner of a sister investment company, Ukio Banko Investicine Grupe, or UBIG. UBIG controls Scottish football team Hearts.