UPDATE (2nd December): The Lithuanian government will need to find up to €1 billion next year to cover deposit insurance after its 5th biggest bank, Bank Snoras, filed for protection from its creditors on 24th October. This will put great pressure on government budgets, leaving no reserves to refinance maturing debt.
Meanwhile, Vladimir Antonov, who owned 68% of Snoras (and Portsmouth Football Club) has appeared in court on asset stripping charges. Both Mr Antonov and his business partner, Raimondas Baranauskas, were released by Westminster Magistrates’ Court, London, on conditional bail.
The collapse of the Lithuanian bank, Snoras, and it’s Latvian subsidiary, Latvijas Krajbanka, has been widely reported in the UK media within the context of the worsening euro-zone crisis. The reality of the situation is somewhat more dramatic. The Lithuanian authorities have issued an arrest warrant for the former shareholders of the bank, Vladimir Antonov and Raimondas Baranauskas, who are suspected of large-scale misappropriation of assets.
The Lithuanian authorities had hoped to bail out Snoras but, as the extent of the false book-keeping emerged today, it became apparent that this would not be possible. The Latvian government, which is currently preparing an austerity package to reduce its budget deficit, was unable even to consider bailing out Latvijas Krajbanka. The collapse of these banks is a further setback for the Latvian and Lithuanian economies as they struggle to recover from deep recessions.