After several years of stellar growth, the Lithuanian banking sector ground to a halt in 2008. Today, it is back on a stable footing, and seems well positioned for steady medium-term growth. The domestic market is dominated by prudent Scandinavian banks, which own about 85% of assets, with the biggest two, SEB and Swedbank (both Swedish), accounting for 54% between them, according to Stasys Kropas, president of the Association of Lithuanian Banks.
Lithuania experienced Europe’s second-deepest recession after the international financial crisis hit in 2008, with output shrinking by about one-quarter. As in many other markets around the world, banks took a hit, having played their own role in the boom, particularly with credit extended to the real estate and construction sectors. “The market entered a vicious cycle of easy lending, which inflated asset prices, driving more lending to developers,” says Mr Kropas.
