Mr. Nerijus Mačiulis at the Economic Research Department, Swedbank, gives a flash comment on the fact that AB Snoras Bank goes into bankruptcy.

1. Flash comment: Lithuania
Economic commentary by Economic Research Department November 28, 2011
AB Bank Snoras goes into bankruptcy
Lithuanian banking sector: Bank assets
(as of September, 2011), EUR bn On 24th of November the Bank of Lithuania revoked the license AB
bankas Snoras and will apply to court regarding bankruptcy. The
SEB 6.47
Swedbank 5.08
Board of the Bank of Lithuania took the decision after the analysis
DNB 3.18 performed by the temporary administrator of AB bankas Snoras
Nordea Bank 2.52 revealed that the bank’s situation is significantly worse than
Snoras 2.36 previously identified. The Bank of Lithuania reports that out of
Dans ke Bank 1.35 previously thought EUR 2.36 billion assets around EUR 1 billion is
Ūkio bank 1.33
missing or was incorrectly accounted1.
Šiaulių Bank 0.79
UniCredit Bank 0.37
Citadele 0.25 Outcome
0 1 2 3 4 5 6 7 The bank is not systemic and does not pose any significant risk to
Source: Association of Lithuanian Banks, 2011 the whole banking system in Lithuania. The total deposits in all
banks were little changed during last week.
Credit default swaps (CDS), basis points The remaining assets are sufficient to cover all insured deposits;
600 government will not suffer direct losses but will need to provide
Lithuania, EUR
550 Latvia, EUR temporal liquidity to deposit insurance fund. Deposits amounting to
Italy, USD
500
Germany, 10 Year, USD
EUR 1.2 billion are insured and will be paid out within one month
450 since the initiation of bankruptcy. Total corporate and private
400 deposits at AB bankas Snoras amounted to EUR 1.75 billion.
350
300
Initial estimates show that ca 250 companies have deposits in
250
excess of insured amount and around 30 of them might become
200
insolvent. Some municipalities and government institutions will also
150 be affected, but Bank of Lithuania said there will be no preferential
100 treatment.
50
01 02 03 04 05 06 07 08 09 10 11 Considering the losses of private sector, direct effects to the
11
Source: Reuters EcoWin economy will be small and short-lived. However, loss of consumer
and business confidence, liquidity problems (depositors still have
no access to their accounts) and uncertainty regarding counterparty
risk will have a noticeable affect on output this quarter.
Bankruptcy of AB Bankas Snoras is less significant for the
economic developments in 2012 and 2013. Already before this, the
worsening euro area debt problem has nudged some companies
into taking precautionary action and reducing inventories and
postponing wage increases, hiring and capital investments.
Nerijus Mačiulis
Chief Economist
+ 370 688 76578
nerijus.maciulis@swedbank.lt
1
More on this can be found at:
http://www.lbank.lt/the_bank_of_lithuania_revoked_the_licence_of_ab_bankas_snoras_and_will_apply_to_court_regarding_bankruptcy
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reliable sources and methods in the preparation of the analyses reported in this publication.
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