October 22, 2009 / 7:54 AM / 10 years ago

Lithuania banks can absorb more losses-c.bank

VILNIUS, Oct 22 (Reuters) - Lithuania banks could absorb up to 2.2 billion litas ($951.1 million) of further losses before failing to meet capitalisation requirements, the central bank said on Thursday.

Nordic banking groups such as SEB (SEBa.ST) and Swedbank (SWEDa.ST) have seen their losses mounting in Lithuania due to bad loan provisions as the country faces a 18.2 percent recession this year.

“Banks are able to absorb 2.2 billion litas losses of credit risk, without failing to meet the capital adequacy ratio,” the central bank quoted governor Reinoldijus Sarkinas as saying.

The banking system’s capital adequacy ratio was 13 percent at the begining of October, above the minimum requirement of 8 percent, the bank added.

The central bank said last week that preliminary provisions for bad debt totalled 3.1 billion litas for the whole banking sector at end-September, up from 2 billion litas at end-June.

Sarkinas said banks faced another 1.6 billion litas of liabilities from companies going through bankruptcy or restructuring. (Reporting by Nerijus Adomaitis)

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