Lithuania’s PM to urge Scandinavian banks to lend more actively to Lithuanians‏

February 10, 2009 at 10:41 pm 1 comment

The marginal politician Ozolas on a radio interview claimed that at the end of December the Swedish banks have transferred some 2 bln Litas (1 EURO – 3,45LTL) back to Sweden.  There are other rumours about the Swedish capital’s return to Sweden also.  However, the Chairman of the Central Bank of Lithuania Mr Sarkinas is trying to do his best to calm down the situation.  The Government is also doing its share.

As the BNS reports the Lithuanian Prime Minister Andrius Kubilius said on Feb 10 that he would call on Scandinavian banks, which control 85 percent of Lithuanian commercial banks’ capital, to be more active in providing loans to the country’s businesses and private individuals.

“I will call on those Scandinavian banks to be more active in lending money to Lithuanian businesses and people. Now we can see certain crediting restrictions, which are perhaps too strict. Even a well performing business with export markets and well-developed production capacities experiences big problems in borrowing money from banks to finance its operations,” Kubilius said in an interview with Lithuanian Radio.

The BNS reported also that the prime minister said that the government was also planning economic stimulus measures.  “This plan is highly ambitious: to raise up to 4 billion litas (EUR 1.16 b) in additional money and allocate around half of that money for business crediting. Borrowing possibilities both for the state and to businesses were much better if the Lithuanian state finance system had clear stability prospects,” he said.

Kubilius next week is leaving for Sweden to meet with the heads of the Swedish government and financial institutions. He plans to invite Scandinavian banks to contribute to a stabilization fund that is being set up in Lithuania.

At the same time the daily Lietuvos Rytas informed on Feb 9 that Lithuania’s government, which would not disclose its borrowing terms to the public, borrowed from foreign banks in euros at the interest of almost 10 percent in December and January.

The same paper stated that late in December, the government raised 75 million euros via the offering of 13-year government securities, which were all acquired by France’s Natixis. The bonds were sold 10 percent below their face value at the floating rate of almost 10 percent.

A couple of weeks ago the government raised 142 million euros through the placement of another issue of government securities at the interest of 9.95 percent, i.e. about 1 point more compared with the current interest on Lithuania’s Eurobonds maturing in 2016.

According to the same paper the Credit Suisse International acquired that issue. The bonds will be redeemed starting from the end of 2011 till December 2015.

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Entry filed under: Baltic States, Economics, Estonia, EU, France, Latvia, Lithuania, Northern Europe, Scandinavia, Sweden. Tags: .

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1 Comment Add your own

  • 1. magnus  |  February 11, 2009 at 3:36 am

    Protectionism
    Sweden is having a hard time, the Government debt of 1075 000 000 000 SEK (€10 000 per inhabitant 2009 02 11) is something the government want to reduse. (USA have about the dubble.) The best way to do that is to increase the export and tourism. To many swedes spend their vacations in thailand and savings in chinese electronics. That makes a negative cashflow.
    “Money as debt”…the debt which should be to the government is indirect to asian countrys.
    The value of swedish houses falls and when the unemployment rises to 9,5 % (usually 5%) many of the house owners are forced to sell ther houses or reduce their consuming.
    Swedens great companys needs to loan more money to invest in the future. We have 4 small dominating banks: Nordea, Handelsbanken, SEB and swedbank. These banks are relative small in propotion to our biggest companys. Many governments forces ther banks to lend out money with restrictions.
    These restrictions will give advantages to companys that belongs to the same countrys. “Protectionism”
    Because of the swedish banks kapital limits the swedish government have to lend out more money and increase the “Money supply” which should increase the inflation and Government debt.
    One question in media is if we should put a electric cable overseas to export electric power.
    This would rice the prices of electric power in sweden and probably norway. That would make the differances of poor and wealthy even bigger and swedish companys would have to pay more too.
    So to comment your article, the governments main issue is to lend out money to the swedish companys and support export. The protectionism is ruling in european financial politics and I do not think swedish banks want to take more risks by lend out money to private individuals.
    I guess Swedbank is the main swedish bank in your country and I´m not shore about their situation, there will be a report at friday.

    Reply

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