VILNIAUS BANKAS SUBORDINATED LOAN

Location:

Lithuania

Project number:

5389

Business sector:

Financial institutions

Notice type:

Private

Environmental category:

FI

Approval date:

21 Jul 1998

Status:

Completed

PSD disclosed:

02 Jul 1998

Project Description

The project consists of a subordinated loan to Vilniaus Bankas in the amount of DEM 20 million.

The project's main objectives are to:

  • contribute to the capitalisation of VB in the form of Tier 2 capital,
  • enable VB to expand its business operations, primarily using its own resources,
  • enable VB to attract additional financial resources, thus supporting the projected growth along with appropriate capital adequacy levels.

Transition Impact

The aggregate lending by banks in Lithuania is much lower in terms of percentage of GDP than that in Western economies. Therefore, it is reasonable to expect that the expanding trend in VB's loan portfolio and balance sheet growth will continue at least for the next two years, alongside the progress in the Baltic states' economies and the resulting demand for bank financing. The subordinated loan will enable VB to sustain the projected growth while retaining healthy capital adequacy.

The Client

Vilniaus Bankas (VB) is the largest private sector bank in Lithuania, providing a full range of wholesale commercial banking services and certain types of investment banking services. As of end-1997, the bank reported US$ 459 million in total assets, US$ 43 million in total equity and US$ 12 million in net after-tax income. VB has a network of 15 branches and 871 full-time staff. Its senior debt is rated BB by Bank Watch.

EBRD Finance

A 6-year DEM 20 million (ECU 10.2 million) subordinated loan.

Project Cost

DEM 20 million (ECU 10.2 million).

Environmental Impact

VB carries out its operations in accordance with the EBRD's Environmental Procedures for Local Banks. In implementing these procedures, VB requires its borrowers to comply, at a minimum, with national/local health, safety, environmental and public consultation requirements.

Technical Cooperation

None

Company Contact

 

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