Editor’s note: Third of a three-part series on Baltic banks’ struggle in 2009 and outlook for 2010.

VILNIUS — After a horror year in 2009, it’s predicted that the Lithuanian banking sector may recover and even turn a profit this year.

Banks suffered heavy losses in 2009 as people who had been given loans could not pay the bank back. The banks, most of which hail from Scandinavia, have been criticized in the past for lending frivolously in the Baltics and the loans that they gave came back to haunt them when the economic crisis hit this side of the Baltic Sea.

SEB’s economic analyst Vilija Tauraitė told Baltic Reports that [private_supervisor]because the big banks had written as many losses as possible into their 2009 books, that 2010 would be rosier.

“The biggest banks tried to clean up last year and put everything in last year. This year at the end of the year, the net result will be profit,” she said.

SEB suffered the worst losses out of all the banks in Lithuania, with net losses for 2009 coming to 1.55 billion litai (€448 million).

“The year 2009 has been exceptionally complicated for the Lithuanian economy … last year there was a significant deterioration in the financial standing of many companies and private individuals, therefore the bank’s lending volumes decreased, accordingly decreasing the bank’s income,” the bank said in its annual financial report.

Swedbank, one of the biggest banks in the country, also suffered massive losses during 2009.

“The year 2009 was a great challenge for the whole economy of Lithuania. The economic downturn also weighed upon the banking sector causing considerable large losses for banks. Swedbank group was not an exception. Net consolidated loss of the group in 2009 totaled 1.18 billion litai (€342 million),” Swedbank said in its financial report for 2009.

DnB NORD Bank recorded a net loss of 406.9 million litai (€117 million) in 2009, the company reported, with the bulk of provisions made in 2009 set aside on loans in the real estate development, construction and transport sectors.

Danske Bank also reported a loss of 434 million litai (€125 million) for the year.

Banks look set to relax their lending requirements this year, so the future looks brighter, Tauraitė said.

“On one hand, I think the quality of loans will improve, but we have the fear that it will not be easy, even though it will be easier than last year. For households, income is decreasing and there isn’t much to give loans with. Purchasing power decreases and they cant take some credit. That’s one part. The other is companies. In 2009, the financial situation was not good and banks will stay cautious. However, banks are already turning to softer loan conditions and are relaxing compared to 2009, so households and companies can borrow,” Tauraitė said.

Spanner in the works

People looking for loans in the Baltics this year might encounter more denials, though if the Seimas chooses to pass a law saying that the banks can’t evict people from their homes and repossess the assets if it is their only place to live.

The Lithuanian Commercial Banks Association said the populist measure, which was proposed by the left-wing opposition, would raise interest rates by up to 0.75 percent for consumers. Prime Minister Andrius Kubilius said that the bill, which will be voted on mid-May, would make it very hard for average Lithuanians to borrow if passed. [/private_supervisor] [private_subscription 1 month]because the big banks had written as many losses as possible into their 2009 books, that 2010 would be rosier.

“The biggest banks tried to clean up last year and put everything in last year. This year at the end of the year, the net result will be profit,” she said.

SEB suffered the worst losses out of all the banks in Lithuania, with net losses for 2009 coming to 1.55 billion litai (€448 million).

“The year 2009 has been exceptionally complicated for the Lithuanian economy … last year there was a significant deterioration in the financial standing of many companies and private individuals, therefore the bank’s lending volumes decreased, accordingly decreasing the bank’s income,” the bank said in its annual financial report.

Swedbank, one of the biggest banks in the country, also suffered massive losses during 2009.

“The year 2009 was a great challenge for the whole economy of Lithuania. The economic downturn also weighed upon the banking sector causing considerable large losses for banks. Swedbank group was not an exception. Net consolidated loss of the group in 2009 totaled 1.18 billion litai (€342 million),” Swedbank said in its financial report for 2009.

DnB NORD Bank recorded a net loss of 406.9 million litai (€117 million) in 2009, the company reported, with the bulk of provisions made in 2009 set aside on loans in the real estate development, construction and transport sectors.

Danske Bank also reported a loss of 434 million litai (€125 million) for the year.

Banks look set to relax their lending requirements this year, so the future looks brighter, Tauraitė said.

“On one hand, I think the quality of loans will improve, but we have the fear that it will not be easy, even though it will be easier than last year. For households, income is decreasing and there isn’t much to give loans with. Purchasing power decreases and they cant take some credit. That’s one part. The other is companies. In 2009, the financial situation was not good and banks will stay cautious. However, banks are already turning to softer loan conditions and are relaxing compared to 2009, so households and companies can borrow,” Tauraitė said.

Spanner in the works

People looking for loans in the Baltics this year might encounter more denials, though if the Seimas chooses to pass a law saying that the banks can’t evict people from their homes and repossess the assets if it is their only place to live.

The Lithuanian Commercial Banks Association said the populist measure, which was proposed by the left-wing opposition, would raise interest rates by up to 0.75 percent for consumers. Prime Minister Andrius Kubilius said that the bill, which will be voted on mid-May, would make it very hard for average Lithuanians to borrow if passed. [/private_subscription 1 month] [private_subscription 4 months]because the big banks had written as many losses as possible into their 2009 books, that 2010 would be rosier.

“The biggest banks tried to clean up last year and put everything in last year. This year at the end of the year, the net result will be profit,” she said.

SEB suffered the worst losses out of all the banks in Lithuania, with net losses for 2009 coming to 1.55 billion litai (€448 million).

“The year 2009 has been exceptionally complicated for the Lithuanian economy … last year there was a significant deterioration in the financial standing of many companies and private individuals, therefore the bank’s lending volumes decreased, accordingly decreasing the bank’s income,” the bank said in its annual financial report.

Swedbank, one of the biggest banks in the country, also suffered massive losses during 2009.

“The year 2009 was a great challenge for the whole economy of Lithuania. The economic downturn also weighed upon the banking sector causing considerable large losses for banks. Swedbank group was not an exception. Net consolidated loss of the group in 2009 totaled 1.18 billion litai (€342 million),” Swedbank said in its financial report for 2009.

DnB NORD Bank recorded a net loss of 406.9 million litai (€117 million) in 2009, the company reported, with the bulk of provisions made in 2009 set aside on loans in the real estate development, construction and transport sectors.

Danske Bank also reported a loss of 434 million litai (€125 million) for the year.

Banks look set to relax their lending requirements this year, so the future looks brighter, Tauraitė said.

“On one hand, I think the quality of loans will improve, but we have the fear that it will not be easy, even though it will be easier than last year. For households, income is decreasing and there isn’t much to give loans with. Purchasing power decreases and they cant take some credit. That’s one part. The other is companies. In 2009, the financial situation was not good and banks will stay cautious. However, banks are already turning to softer loan conditions and are relaxing compared to 2009, so households and companies can borrow,” Tauraitė said.

Spanner in the works

People looking for loans in the Baltics this year might encounter more denials, though if the Seimas chooses to pass a law saying that the banks can’t evict people from their homes and repossess the assets if it is their only place to live.

The Lithuanian Commercial Banks Association said the populist measure, which was proposed by the left-wing opposition, would raise interest rates by up to 0.75 percent for consumers. Prime Minister Andrius Kubilius said that the bill, which will be voted on mid-May, would make it very hard for average Lithuanians to borrow if passed. [/private_subscription 4 months] [private_subscription 1 year]because the big banks had written as many losses as possible into their 2009 books, that 2010 would be rosier.

“The biggest banks tried to clean up last year and put everything in last year. This year at the end of the year, the net result will be profit,” she said.

SEB suffered the worst losses out of all the banks in Lithuania, with net losses for 2009 coming to 1.55 billion litai (€448 million).

“The year 2009 has been exceptionally complicated for the Lithuanian economy … last year there was a significant deterioration in the financial standing of many companies and private individuals, therefore the bank’s lending volumes decreased, accordingly decreasing the bank’s income,” the bank said in its annual financial report.

Swedbank, one of the biggest banks in the country, also suffered massive losses during 2009.

“The year 2009 was a great challenge for the whole economy of Lithuania. The economic downturn also weighed upon the banking sector causing considerable large losses for banks. Swedbank group was not an exception. Net consolidated loss of the group in 2009 totaled 1.18 billion litai (€342 million),” Swedbank said in its financial report for 2009.

DnB NORD Bank recorded a net loss of 406.9 million litai (€117 million) in 2009, the company reported, with the bulk of provisions made in 2009 set aside on loans in the real estate development, construction and transport sectors.

Danske Bank also reported a loss of 434 million litai (€125 million) for the year.

Banks look set to relax their lending requirements this year, so the future looks brighter, Tauraitė said.

“On one hand, I think the quality of loans will improve, but we have the fear that it will not be easy, even though it will be easier than last year. For households, income is decreasing and there isn’t much to give loans with. Purchasing power decreases and they cant take some credit. That’s one part. The other is companies. In 2009, the financial situation was not good and banks will stay cautious. However, banks are already turning to softer loan conditions and are relaxing compared to 2009, so households and companies can borrow,” Tauraitė said.

Spanner in the works

People looking for loans in the Baltics this year might encounter more denials, though if the Seimas chooses to pass a law saying that the banks can’t evict people from their homes and repossess the assets if it is their only place to live.

The Lithuanian Commercial Banks Association said the populist measure, which was proposed by the left-wing opposition, would raise interest rates by up to 0.75 percent for consumers. Prime Minister Andrius Kubilius said that the bill, which will be voted on mid-May, would make it very hard for average Lithuanians to borrow if passed. [/private_subscription 1 year]

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