2020.06.11 13:00

Lithuanian ruling party proposes to set up state development bank

BNS2020.06.11 13:00

A group of MPs from the ruling Lithuanian Farmers and Greens Union have proposed to establish a State Development Bank.

The bank would be “a viable alternative to traditional commercial banks that can channel financial resources into projects focused on long-term social and economic well-being”, according to the proposal.

Read more: Most Lithuanians would like a commercial state bank – survey

The draft parliamentary resolution has been put forth by leader of the Farmers and Greens Union, Ramūnas Karbauskis, as well as the chairman of the parliament’s budget committee, Valius Ažuolas, and nine other other MPs.

"This is a different business model than that applied by commercial banks where short-term profitability is the key goal and social responsibility is often lacking,” the document reads.

Among other things, the resolution calls for authorising the government to immediately open consultations with the European Commission to request technical assistance. The development bank would be supervised by the Central Bank of Lithuania.

According to the European Commission, the current level of concentration in the Lithuanian banking sector is among the highest in the EU.

Lithuanian President Gitanas Nausėda has also previously called for a state bank, saying the country’s financial market is too concentrated, thus stifling competition and inflicting costs on consumers.

Three major banks – Swedbank, SEB and Luminor –make up around 80 percent of the Lithuanian market.