Lithuania’s parliament, Seimas, has given its initial backing to establish a state-owned bank, a proposal put forth by the ruling coalition and backed by the president.
On Tuesday, MPs voted 69 to 12, with 15 abstentions, to allow the government make preparations for turning an existing fund or agency into a national development bank.
Authors of the initiative argue that a state-owned bank would create competition in the market currently dominated by three commercial banks and improve access to loans for businesses.
Prime Minister Saulius Skvernelis has said that the government had problems finding financial intermediaries to distribute state aid during the coronavirus crisis.
Meanwhile an aid to President Gitanas Nausėda has said that the public bank should lending to small and medium-sized businesses, but not engage in retail banking.
“In the president’s opinion, a national development bank should focus on providing loans to businesses, on loans geared towards investment and strengthening production capacity, which is urgent at the moment, given the Covid-19 situation and plans to relocate some production from Asia closer to Europe,” the president’s adviser Simonas Krėpšta told the radio station Žinių Radijas on Tuesday.
Prime Minister Skvernelis has also suggested that public and private capital could participate in equal parts in the new bank.
The bill on the public bank will be further considered by the Seimas on June 23. It would need a licence from the Bank of Lithuania, which would also supervise the would-be national development bank.
The bill also urges the government to immediately start consultations with the European Commission on technical assistance and also consider the government supplying capital to the bank.
While the president has backed the idea of a public bank, Finance Minister Vilius Šapoka and central bank governor Vitas Vasiliauskas have expressed caution. Šapoka said earlier that setting up the bank would take about a year and cost around 1 billion euros.