November 23, 2011 – LATVIA - Last week Lithuania’s fifth largest bank, Snoras, was nationalized as Lithuanian authorities shut down the bank after it observed irregularities in the bank’s operations. This morning the Latvian authorities suspended the Latvijas (Latvian Savings Bank). Krajbanka is Latvia’s ninth largest bank. We think the systemic risk from these events should be relatively limited if handled properly by the authorities. That said, the collapse of especially Snoras is not good news for the Lithuanian economy as it creates uncertainty about the economic outlook. In our view it is especially important that the nationalization of Snoras is handled in such a way as to put minimal pressure on Lithuanian public finances that are in a precarious state as it is. A full nationalization of Snoras in the sense of taking over all liabilities would be unwarranted. Yesterday Lithuanian Prime Minister Kubilis said that the problems at Snoras might involve “shady financial transactions” (according to the news agency Reuters) and the case was more “complicated” than initially thought. Lithuanian central bank governor Vasiliauskas at a news conference said that “we thought it was a flu, but now it seems to be a small cancer.” These comments obviously give some reason for concern. (Above) Customers stand in line to withdraw money from Krajbanka in Latvia on November 23, 2011. –FX Street

According to Snoras, the bank is Lithuania’s fourth-largest by capital size and ranks fifth in terms of assets. The exact causes behind Snoras’s financial difficulties have not been made clear. The idea of a bank-run causes shivers in Latvia. In November 2008, it nationalized Parex, the Baltic state’s largest locally-owned bank, after depositors jittery about the country’s deepening economic crisis began withdrawing their cash. A month later, Latvia was forced to turn the EU and International Monetary Fund for a 7.5-billion-euro emergency loan package, which has been paid out in tranches amid one of the most draconian austerity drives in Europe. Latvia’s economy shrank by 18 percent in 2009, the deepest recession in the 27-nation EU, but has been recovering for a year. –MSN excerpts

http://theextinctionprotocol.wordpre...tvia-collapse/

A Bankrun in Latvia?

Bloomberg had reported on Tuesday that as much as 100m lati ($191m) may be missing from the bank. The shortfalls come on the back of the liquidation of Lithuania’s Bankas Snoras, according to the report. Depositors were told on Tuesday that they would only be able to withdraw as much as 50 lati from ATMs starting on Wednesday for the next two to three days, depending on how the Lithuanian government proceeds with Snoras. Lithuania’s government took over Snoras on November 16 after the central bank discovered about €300m of assets may be missing and the lender was at risk of insolvency, according to another report by Bloomberg.

[YOUTUBE]cOh11mOuJVs[/YOUTUBE]


Krajbanka May Be Missing $191 Million, Regulator Says

As much as 100 million lati ($191 million) may be missing from Latvijas Krajbanka JSC (LKB1R), Latvian bank Regulator Irena Krumane said at a news conference today in Riga.

A liquidation of Lithuania’s Bankas Snoras AB (SRS1L) will force a liquidation of the Latvian bank as well, Krumane said. She also said depositors will be able to withdraw 50 lati from ATMs starting tomorrow. The withdrawals will be allowed for two to three days, depending on how the Lithuanian government proceeds with Snoras.

The bank’s board has been detained, said Police Chief Ints Kuzis. Latvian Prime Minister Valdis Dombrovskis said at the same news conference that Lithuania will make a decision about the future of Snoras this week.

It is too early to say what the possible effect may be on the Latvian state budget from Krajbanka, Finance Minister Andris Vilks also said at the news conference.

http://www.bloomberg.com/news/2011-1...r-says-1-.html


Snoras Bankas to Remain Closed as Lender Carries Out Inspection

Bankas Snoras AB (SRS1L), the Lithuanian lender seized by the government last week, will remain closed during an unspecified inspection, said Simon Freakley, the lender’s temporary administrator.

“In the near future, after performing all the procedures for the Bank Snoras inspection, we will inform you in a separate notification about the further actions of the bank,” Freakley said in a statement on the bank’s Website.

The government took over Snoras on Nov. 16 after the central bank discovered about 300 million euros ($404 million) of assets may be missing and the lender was at risk of insolvency. Some securities reported as assets by the bank don’t exist, the regulator said. The prosecutor general opened an investigation into possible fraud and embezzlement.

Depositors will still be able to withdrawal 500 litai ($195) a day from the lender’s bank machines, and deposits are insured up to 100,000 euros, Freakley said in the statement.

http://www.bloomberg.com/news/2011-1...nspection.html