Lithuania

Lithuania’s banking regulator said hundreds of millions of dollars in assets may be missing from Bankas Snoras AB after the government took over the Baltic nation’s fifth-biggest lender on concern it may be insolvent, Bloomberg reported. More than 1 billion litai ($392 million) of assets may be unaccounted for, central bank Governor Vitas Vasiliauskas told reporters yesterday in the capital, Vilnius. Snoras’s operations were halted until Nov. 21 and a state administrator appointed after the lender ignored recommendations to reduce its credit risk, the regulator said in a statement.

As Greece resists European demands for wider austerity measures, the contrast with the Baltic states couldn't be starker, The Wall Street Journal reported. Faced with similar market worries about their fiscal positions a year ago, Estonia, Lithuania and Latvia bit the bullet. Now there is light on the horizon: Standard & Poor's has lifted its rating outlook on all three to stable from negative, citing the successes achieved in fiscal consolidation. Greece should take note. All three have retained effective currency pegs rather than take the option of devaluation.

Swedish banking group SEB said on Tuesday it would inject more capital into its operations in Lithuania and Latvia due to rising bad loan provisions. SEB spokeswoman Viveka Hirdman-Ryrberg said the bank made 5.95 billion Swedish crowns ($847 million) of loan loss provisions in the first half of the year due to the global financial crisis. Lithuania's economy nosedived into its worst recession since early 1990s with gross domestic product falling 20.2 percent in the second quarter.

Lithuania’s economy plunged a preliminary 22.4 percent in the second quarter, the worst recession since 1990 independence, as output crashed and retail sales slumped, Bloomberg reported. The decline, the deepest in the European Union, compares with a revised 13.3 percent contraction in the first quarter, the Vilnius-based statistics office said in an e-mailed statement today. The economy grew 5.2 percent in the same period last year.

Latvia faces bankruptcy in three months if it fails to deliver budget cuts required by the International Monetary Fund and the next installment of its bailout is delayed, Premier-designate Valdis Dombrovskis said. Latvia, in the grip of the severest crisis since independence in 1991, was granted a €7.5 billion ($9.5 billion) bailout last quarter after the economy shrank 10.5 percent and the state seized its second biggest bank. The government fell on Feb. 20 after agreeing to budget cuts needed to keep the deficit below 5 percent of gross domestic product.

Moody's Investors Service placed the bond ratings of Estonia and Lithuania on review for possible downgrade Tuesday, citing severe deterioration in the regional macroeconomic environment. Analysts said a downgrade was likely. The three Baltic Sea-hugging neighbors Latvia, Lithuania and Estonia face an uphill struggle to resuscitate their economies, mired in recession or headed there, rein in their current-account deficits and maintain their currency pegs, MarketWatch reported. Within the emerging-markets universe, Eastern Europe is the region most vulnerable to economic and financial risk.

Lithuanian carrier flyLAL, which was privatized in 2005 and counts Scandinavian airline SAS among its competitors, said on Friday it had filed for bankruptcy, Reuters reported. The indebted airline grounded its flights last weekend after failing to attract an investor. "Being unable to continue flights and without seeing any real chances to renew operations, we were forced to file for bankruptcy," CEO Vytautas Kaikaris said in a statement.

Lithuania's troubled FlyLAL airline said Saturday it has suspended its operations after a buyout deal by Swiss investment firm SCH Swiss Capital Holdings failed, the Associated Press reported. Airline officials said it terminated a preliminary agreement with the Swiss company after it failed to pay $1 million (€756,000) that would have cleared FlyLAL's debts and potentially saved it from bankruptcy. Company Chief Executive Vytautas Kaikaris said the suspension was one of the few options left to try to save his company.