Lithuania’s credit rating won’t be affected by the restructuring of Ukio Bankas (UKB1L) AB, Standard & Poor’s said.
The lender’s restructuring probably won’t affect the financial stability of the Lithuanian banking system, S&P, which rates the country’s debt BBB, its second-lowest investment grade, the ratings company said in a statement from London today.
“As Ukio Bankas was predominantly deposit funded, accounting for less than 8 percent of total system resident deposits, we do not expect the likely restructuring of the bank to affect the financial stability of Lithuania’s banking system,” Ivan Morozov, an S&P credit analyst in London, wrote in the report.
Lithuania is lending 800 million litai ($305 million) for six years to cover the payouts for Ukio’s depositors, which had its license revoked on Feb. 18, since the lender’s liabilities exceeded its assets, according to the central bank. The loan will raise S&P’s forecast for net general government debt to 39 percent of gross domestic product by the end of the year, Morozov wrote.
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