Lithuania Business News: Archive 2003-
Saturday, 31st of January
Clouds are gathering above flyLAL
The Lithuanian Prosecutor General's Office on Friday launched a pretrial investigation into suspicions that FlyLAL-Lithuanian Airlines has been intentionally driven into bankruptcy. "It has been decided today to launch a pretrial investigation into possible criminal offences by FlyLAL-Lithuanian Airlines. These include debtor's dishonesty, criminal bankruptcy, abuse [and] failure to perform official duties," said Algimantas Kliunka, chief prosecutor of the Organized Crimes and Investigation Department of the Prosecutor General's Office. Kliunka said that the prosecutors had received requests from Transport Minister Eligijus Masiulis and other persons to begin a probe. He added that the office would investigate the legality of actions and decisions by both public officers and other persons, and of deals concluded starting from the privatization of the carrier back in 2005. The state sold FlyLAL-Lithuanian Airlines, formerly Lietuvos Avialinijos (Lithuanian Airlines), to a group of local companies in 2005 for LTL 25.6 million. The new owners have since restructured the enterprise and spun off some of its business operations into separate companies.
Lietuvos Rytas, Respublika
Bank has prevented the crime
Lithuania intends to expropriate millions of "dirty" dollars blocked in a domestic bank for the first time ever. The authorities aim to add this money, which Russia's mafia attempted to launder through Austrian and Lithuanian banks back in September 2006, to the budget. The State Tax Inspection of the Kaunas Region intends to ask the court to declare the body a co-owner of USD 3.75 million blocked in Ukio Bankas and expropriate the funds in behalf of the state late in February. A total of USD 16 million and EUR 1 million were transferred to the accounts of 13 limited liability companies at Ukio Bankas back in 2006.
Donations with shadows
Participants of the 2008 Seimas election campaign accumulated some LTL 29.5 million and spent LTL 33 million. The Central Electoral Committee on Friday presented these figures in a press conference. The press conference also featured the State Tax Inspectorate's conclusions on the audit it did on Seimas elections financing reports. Some 463 legal entities and 553 natural persons donated to the political campaign, said member of the Central Electoral Committee Pavelas Kujalis. Parties allocated most LTL 26.5 million - of the accumulated funds to advertising, 53 percent of which went towards printed press ads. The State Tax Inspectorate didn't find any gross violations as it checked financial reports filed by campaign participants and said there were fewer violations than found in the previous elections.
Friday, 30th of January
The combined profits of Lithuanian commercial banks and foreign bank branches fell to LTL 902.6 million last year, down 21.9 percent from LTL 1.156 billion in 2007, the central bank reported on Thursday. The banking system recorded a decline in profits for the first time in six years, the Bank of Lithuania said. Last year, seven commercial banks and two foreign bank branches operated at a profit, while two commercial banks and five foreign bank branches ended in the red. The bulk of the profits were made in the first three quarters of the year as profits in the fourth quarter came in at a mere LTL 18.2 million, according to the report. Based on preliminary data from the Bank of Lithuania, the aggregate assets of all commercial banks and foreign bank branches reached 89.785 billion litas as of late December, a rise of 10.9 percent compared with a year ago.
Lietuvos Rytas, Verslo Zinios, Lietuvos Zinios, Respublika
Euro is not far away
The Lithuanian central bank governor sees 2011 or 2012 as realistic target dates for adopting the euro. Reinoldijus Sarkinas, the chairman of the Bank of Lithuania's board, believes that the country's inflation rate could come close to the Maastricht criterion at the end of this year or next year, but he does not rule out missing other criteria for euro adoption -- for budget deficit or for interest rates. "I think that we will have a rise in inflation for another month or two, but then it will ease and could approach the Maastricht criteria in 2010, possibly at the end of this year if the circumstances are right. But we could miss other criteria -- that for interest rates on long-term government securities and for budget deficit," he said at a news conference on Thursday. The central bank governor said that he sees 2011-2012 as realistic dates for euro adoption, but added that he does not like making guesses.
Verslo Zinios, Respublika
Procedures against Lithuanian
The European Commission has initiated the second stage of the infringement procedure against Lithuania for failing to transpose the directive on the efficiency of energy use into national legislation. Lithuania now has two months to take the necessary measures. Otherwise the Commission may bring the case before the European Court of Justice. If the country fails to follow the court's decision, it may face monetary sanctions. On Thursday the Commission sent a reasoned opinion to twenty Member States, including Lithuania, who have failed to communicate their transposition of the Energy Services Directive, the EC Representation in Lithuania said in a statement. Last July the Commission sent to those Member States a formal notice reminding of their obligation to inform the Commission about the transposition of that directive into national legislation.
Respublika, Verslo Zinios
Thursday, 29th of January
EU will support electricity interconnection
The European Commission on Wednesday approved additional financial assistance for two Baltic electricity interconnection projects, EU Budget Commissioner Dalia Grybauskaite said. The EU's executive body earmarked EUR 175 million for the planned power link with Sweden, known as Swedlink, and EUR 100 million for a second Estlink cable project, she said. "The European Commission on Wednesday approved a list of electricity interconnection projects, and earmarked LTL 604 million and LTL 345 million for two Baltic projects, Swedlink and Estlink, respectively, so that these two interconnections could be build by 2014," Grybauskaite told reporters after meeting with Lithuania's prime minister and other members of the Cabinet. She added that the financial assistance is yet to be approved by the European Council. The two Baltic projects account for nearly 40 percent of the total funding earmarked for European electricity interconnections, around EUR 700 million, the commissioner said.
Lietuvos Rytas, Lietuvos Zinios, Respublika
Does not hear the bells of risk
The total loan portfolio held by commercial banks in Lithuania shrank by LTL 696.412 million, or 1 percent, in December from November to LTL 71.302 billion, according to data from the Lithuanian Banks' Association. Year-on-year, the aggregate loan portfolio increased by LTL 11.283 billion, or 18.8 percent. Loans to privately-owned companies rose by LTL 5.327 billion, or 16.6 percent, over the year, to LTL 37.335 billion. Month-on-month, the portfolio declined by LTL 539.711 million, or 1.4 percent. Loans to private individuals reached LTL 28.479 billion in late December, up by LTL 4.802 billion, or 20.3 percent, from a year ago. Month-on-month, the loan portfolio shrank by LTL 12.397 million. The total loan portfolio of the banking system at the end of 2008 accounted for 64 percent of the gross domestic product. Loans to privately-owned companies accounted for 33.5 percent of GDP and loans to private individuals for 25.6 percent.
Lietuvos Zinios, Lietuvos Rytas, Verslo Zinios, Respublika
Amount of euro-denominated deposits is rapidly growing
The amount of euro-denominated deposits of private and corporate bank customers is growing fast in Lithuania while the amount of deposits denominated in the national currency - the litas - is decreasing, the analysts of Lithuania's investment bank claim. As of late November, 2008, the total amount of residential and corporate deposits made up LTL 32.4 billion. Some 73.3 percent of residential deposits and 67.4 percent of corporate deposits were denominated in litas, Finasta said in a statement. The amount of litas-denominated residential deposits shrank by LTL 699 million, to LTL 17.7 billion, while the amount of deposits in euros increased by LTL 1.3 billion, to LTL 5 billion from January 2008 till the end of November.
Wednesday, 28th of January
Country’s economy began to go down
Lithuania's gross domestic product (GDP) grew by 3.2 percent last year compared with 2007, the Statistics Department reported on Tuesday. However, the economy contracted by 1.5 percent in the fourth quarter of last year compared with the same period a year ago. "A quarterly decline in GDP was registered for the first time since [the start of] 2000. The last time negative growth was recorded was in the third and fourth quarters of 1999," Vilija Lapeniene, acting director general of the Statistics Department, said at a news conference.
Lithuania's retail sales rose by 4.1 percent last year compared with 2007 to reach LTL 35.785 billion, preliminary data from the Statistics Department showed on Tuesday. The annual growth rate is down from 17.2 percent in 2007. Retail sales in December dropped by 8.8 percent from a year ago to LTL 3 billion. Month-on-month, sales increased by 14.1 percent, according to the report. Food retailers posted a 2.4 percent rise in sales for 2008 compared with 2007 and non-food retailers registered a 6.9 percent increase. Sales in the automotive sector, including car and motorcycle dealers, service centers and fuel retailers, went up by 3.4 percent.
Lietuvos Rytas, Verslo Zinios
Dismissed Estonian reports
The largest Baltic retail chain Maxima, which plans to build an approximately EUR 40 million worth logistics center in Estonia, has dismissed as untrue the reports of Estonian media about millions-worth debts to local businessmen. Estonia's real estate company Rebasepollu, owned by Alta Capital partners Andres Ratsep and Indrek Rahumaa, would seek to recover from Maxima an approximately EUR 3.8 million debt for a property and threatened the Lithuanian company with bankruptcy, Estonia's daily Aripaev reported. "The amount we have paid to the owners of the property even exceeds the fine foreseen for the contract's termination. Our plans to build a logistics center in Estonia are a part of costs streamlining, thus we do not intend to scrap the project or terminate cooperation," Giedrius Juozapavicius, Maxima Group image and communication director, said.
Respublika, Verslo Zinios
Tuesday, 27th of January
Stumbras withdraws forecasts
Stumbras, Lithuania's largest spirits producer, has withdrawn its forecasts till 2011 amid market uncertainty. Stumbras previously planned its turnover to exceed LTL 200 million in 2011. The pretax profit was expected to reach LTL 52.2 million that year. In April 2007 Stumbras announced that in 2009 its turnover would increase by 16.7 percent, year-on-year, to LTL 172.6 million. In 2010 the turnover was seen growing by 15.2 percent, to LTL 198.9 million, and in 2011 - by 13 percent, to LTL 224.8 million. Pretax profit was projected to increase by 15.4 percent, to LTL 38.2 million in 2009, by 17 percent, to LTL 44.7 million in 2010 and by 16.7 percent, to LTL 52.2 million in 2011.
Verslo Zinios, Lietuvos Rytas
Addressed the prosecutors about flyLAL
special task group under Lithuania's Transport Ministry has worked out preliminary findings on the actions taken by the shareholders of collapsing air carrier FlyLAL-Lithuanian Airlines and intends to propose to Transport Minister Eligijus Masiulis to ask the prosecutor's office to conduct an investigation. Transport Vice-Minister Arunas Staras confirmed to BNS that the proposal would be submitted after all required signatures were obtained. Observers warn that the investigation may backfire on Mindaugas Ivanauskas, ex CEO of Vilnius Airport, to which FlyLAL-Lithuanian Airlines owes about LTL 20 million. The airport, when headed by Ivanauskas, failed to force FlyLAL to pledge assets as a guarantee of long-terms debts repayment. The airport only intended to take that measure in 2010. Former CEO of the airport possibly failed to take a position that would be strong enough for defending the state's interests, Staras said. The pledge of FlyLAL assets was only to be demanded if the company failed to repay a part of its debts by 2010. Staras also pointed out the doubts concerning the split of FlyLAL-Lithuanian Airlines' activities by its current shareholders after the privatization of the carrier back in 2005.
Verslo Zinios, Lietuvos Rytas, Lietuvos Zinios, Respublika
Will sell the company?
The Vilnius Stock Exchange (VSE) on Monday suspended trading in shares of Agrowill Group after Gediminas Ziemelis, one of the shareholders of the agricultural investment firm, mentioned that it could be sold to a larger company in the same business sector. Vilija Nausedaite, the chairwoman of the Lithuanian Securities Commission, said that the supervisory authority requested the suspension after Ziemelis mentioned that Agrowill Group could be merged into a larger company. Ziemelis, who is the main shareholder of ZIA Valda, the largest single shareholder of Agrowill Group, mentioned during a live news conference hosted by Vz.lt on Monday that the management of the agricultural investment firm would soon unveil a plan for further actions.
Monday, 26th of January
Will not change debts into shares
Transport Minister Eligijus Masiulis has waived a proposal of shareholders of collapsed flagship carrier FlyLAL-Lithuanian Airlines that the state should participate in the capitalization of the company's debts. The state should not solve any financial problems caused by private business, the Transport Ministry said in a statement. "If the shareholders of FlyLAL-Lithuanian Airlines truly wish to help the company's customers who have been hit by its collapse, they could do that on the account of profitable companies of FlyLAL Group," the statement quoted Masiulis as saying. The ministry says it does not consider any options of cooperation with the carrier now. The shareholders of FlyLAL-Lithuanian Airlines - a group of local businessmen - have proposed to the state to capitalize the company's debts in exchange for about 41.72 percent interest in the company.
Verslo Zinios, Respublika
Number of Verslo Zinios
Lithuania is to receive EUR 32 million in EU funds for strengthening border protection and an additional EUR 108 million for strengthening the control of the transit of persons to the Russian exclave of Kaliningrad. The funds are earmarked in a multi-annual program under the External Borders Fund 2007-2013, which was adopted by the European Commission on Thursday. Lithuania has also adopted its first annual program 2007, the EU's executive body said in a press release.
The turnover of the research agency TNS Gallup stood at LTL 17.4 million last year, which was by six percent bigger than in 2007. Still, the profitability of the company decreased from 10 percent down to 4.8 percent in 2008. Zydrunas Gaudiesius, director of TNS Gallup, said that the profitability of the company fell last year and the shareholders in London were concerned about it. The director noted that the company considered the possibly to cut down salaries at first, however, it was decided to dismiss a part of employees. Currently, Gaudiesius said that the salaries would not be cut down for the remaining employees.
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