Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Lithuania's Agricultural Bank Goes on the Block




VILNIUS, Lithuania -- The second attempt to privatize Agricultural Bank should attract foreign players keen to gain a foothold in the market, analysts said Friday.


Lithuania's State Property Fund will accept bids for the state's 76 percent stake in the top tier bank until Monday but it remains unclear when the winner will be picked, although Lithuania expects to complete the sale in the third quarter.


"Bank privatization in the region is drawing to an end and this is why I think there could be some sense of urgency among banks where geographic areas fit their strategic objectives," said Andrei Ilyin, an emerging markets bank analyst at Nomura International in London.


Lithuania failed to sell Agricultural Bank in 1998 when only Latvia's Parex Bank submitted a bid that officials rejected as too low.


Banking sources say the auction failed because analysts feared the bank's balance sheet was rife with problems.


Since then Agricultural has undergone a major restructuring, which analysts said will make it an attractive buy - especially for foreign institutions - with a minimum price seen of around 123 million litas ($30.75 million), the bank's current shareholder equity value.


Agricultural Bank, which has assets of 1.54 billion litas ($385 million), is 11.37 percent owned by the European Bank for Reconstruction and Development. Local Vilniaus Bank holds 11.44 percent, but has said it plans to divest thisinterest.


Among the leading contenders are thought to be Poland's largest bank, Pekao SA, a subsidiary of UniCredito Italiano, and Germany's Norddeutsche Landesbank Girozentrale, which already runs a subsidiary in Vilnius and plans to buy Latvia's Pirma Latvias Komercbanka.


Estonian Hansapank, the largest Baltic financial institution, could also be eyeing the sale. Hansapank is majority-held by Sweden's Swedbank, which has been looking to make inroads in the Lithuanian market.


The winning bidder should have at least a BBB- Standard & Poor's rating or an equivalent rating from another agency and none of the local banks qualify.


Analysts said a successful sale of Agricultural Bank would bode well for the upcoming sale of Savings Bank, ranked Lithuania's secondlargest bank immediately ahead of Agricultural, which is the last remaining state bank set for privatization.