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Strengthening the banking sector in Lithuania
EBRD provides €11 million loan to NORD/LB Lietuva
Having undergone considerable restructuring, the Lithuanian bank sector today
faces another big challenge: providing efficient access to credit for the
fast-growing small-business sector. An extension of maturity of the existing
subordinated loan of €7.7 million and the increase of commitment by €3.3
million constituting in aggregate €11 million subordinated loan from the EBRD
to NORD/LB Lietuva aims to help meet the challenge.
The subordinated loan will strengthen NORD/LB Lietuva’s capital base to enable
it to grow in line with a quickly expanding market. Kurt Geiger, EBRD Director
of Financial Institutions, said the EBRD’s experience in providing facilities
for small and medium-sized enterprises should contribute in particular to
NORD/LB Lietuva’s efforts to target the SME sector.
Despite strong growth, financial intermediation in Lithuania remains the
lowest among the new EU member countries, with bank loans to GDP only 23.6 per
cent, compared with a central European average of 47.5 per cent. This implies
that bank loans in particular are expected to grow strongly in the coming
years and that lending banks in Lithuania will need substantial amounts of
additional capital.
NORD/LB Lietuva has a long-term relationship with the EBRD. We will use our
strengthened capital base to cater our target products – SME and mortgage
loans – to our clients, said Hinrich Holm, Chief Financial Officer of NORD/LB
Lietuva.
NORD/LB Lietuva is owned by Germany’s Norddeutsche Landesbank, which won the
privatisation tender for the Lithuanian Agricultural Bank in 2002 and
rebranded it NORD/LB Lietuva in 2003. Today it is the third largest bank in
Lithuania, with 85 branches and sub-branches and more than 1,200 employees.
The bank is concentrating its activities on company financing and retail
banking services.
The EBRD has been operating in Lithuania since in 1991 and so far has signed
projects worth more than €970 million.
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