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. Last Updated: 07/27/2016

Lithuanian Banking Crisis To Cost Over $300 Million

VILNIUS, Lithuania -- The Baltic state of Lithuania faces a bill of more than $300 million to restructure its troubled banking sector under an International Monetary Fund and World Bank scheme, the government said Friday.

The announcement was made after Lithuania signed a new deal with the World Bank, preparing the country for a major structural adjustment loan.

The country is trying to cope with the aftereffects of the closure in December of two of its top banks, Innovation Bank and Litimepks, and a special IMF-World Bank mission has been examining the situation.

"According to the assessment of the IMF and World Bank mission, the cost of the reconstruction program will be 1.3 billion litas [$325 million]," Prime Minister Adolfas Slezevicius told a news conference.

Finance Minister Reinoldijus Sharkinas said that some 1.1 billion litas of the funds would come from long-term domestic securities, although he did specify what kind.

Slezevicius, himself under intense pressure to quit from President Algirdas Brazauskas, said Innovation and Litimpeks will be merged with another ailing bank, Vakaru Bankas.

The huge state-run Savings Bank and the State Commercial Bank will also be merged and later privatized.

"The essence of the program is restructuring the banking system," said Jonas Niaura, recently appointed governor of the central bank.

Niaura, former deputy governor, took the place of bank chief Kazys Ratkevicius, forced to quit after the banking crisis.