VILNIUS: Lithuania banks total deposits fell 13 percent over November, mostly due to the bankruptcy of the third-largest depositor, Snoras bank, the commercial banks association said on Tuesday.
The Lithuanian banking sector is dominated by Scandinavian banking groups such as SEB and Swedbank, while there are few local banks, including Ukio bank and Siauliu bank.
Total banks' deposits fell by 12.9 percent to 39.1 billion litas ($14.77 billion) as of end-November from 44.9 billion a month ago, the association added in a statement.
However, the association said the fall was temporary, and should not have a long-term effect on the whole system.
"Snoras' bankruptcy was a painful, but an isolated event, which would not have a long-term negative impact on the stability of the banking system," Stasys Kropas, the president of the banks association, said in the statement
Kropas told Reuters the fall in deposits was mostly due to the exclusion of Snoras deposits, as well as some withdrawals from other banks.
Snoras deposits accounted for 13.3 percent of all bank deposits in Lithuania as of the third quarter, the association said.
The state deposit insurance facility is to pay 4.1 billion litas in compensation for lost deposits at Snoras, but those were not included in the data, Kropas said.
"We expect some 70-80 percent of compensation now being paid via other commercial banks to remain within the system, and we should see deposits (for December) on the rise," he added.
Total banks' loans portfolio contracted by 5.7 percent to 54.3 billion litas at end-November from 57.6 billion litas a month ago, the association added in the statement.
The Tier 1 capital adequacy ratio of the whole banking system of Lithuania was 11.2 percent as of Oct. 1, before the Snoras event, the association said.
The total capital adequacy ratio, including Tier 1 and Tier 2 capital, was 14.1 percent as of Oct. 1, compared to a minimum requirement of 8 percent, the central bank added.
No capital adequacy ratio data was available from the central bank or banks association for Dec. 1.
Lithuania's central bank last week restarted deposit and repo auctions after a break of more than a decade in such operations, saying the move was aimed at providing banks with more options to manage their liquidity.
The central bank has said it filed for Snoras' bankruptcy after discovering assets missing, and prosecutors have started a probe of former owners.
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