* Lithuania halts Bank Snoras operations
* Central bank says risk of insolvency, possible criminality
* Central bank appoints administrator
* To propose nationalisation of the bank (Adds finance minister, central bank quotes)
By Nerijus Adomaitis
VILNIUS, Nov 16 (Reuters) - Lithuania swooped to take control of one of its leading banks on Wednesday after finding a risk of insolvency, irregularities and possible criminality, the head of the central bank and the government said.
The decision to take control of Snoras Bank, the fifth largest by assets but third largest by deposits, took the small Baltic state by surprise.
“I cannot understand how this could happen so quickly,” said Alius, a customer who had come to the bank’s downtown office in capital city Vilnius. He declined to give his surname but said he had come to try and get out his money.
Finance Minister Ingrida Simonyte told a news conference that the government had decided to agree to a request from the central bank to take over Snoras.
“The government has decided to take over Snoras Bank in the public interest,” she said. Good assets from the bank would be separated off into a new state-owned bank.
The central bank said it had found irregularities.
“The decision was taken due to a risk of insolvency and possible criminal activity,” said central bank governor Vitas Vasiliauskas.
“During an inspection we have found that a significant amount of securities held at foreign institutions were missing. When we asked those foreign institutions about the securities, they replied that they did not exist,” he said.
An administrator has been appointed to run the bank, whose operations have been suspended. A further decision will be taken on Sunday, the central bank said.
The Bank of Lithuania, the central bank, said its decision was made to protect savers and the public and “to ensure the confidence in the domestic banking system and its stability”.
Lithuania, like fellow Baltic states Latvia and Estonia, is still climbing out of a deep 2009 recession. The takeover of Snoras is the first major crisis in the states since Latvia took over one of its major banks in 2008.
That in turn forced Latvia to seek a bailout from the International Monetary Fund and the European Union.
The central bank said Snoras had ignored instructions to reduce operational risks, had avoided providing information needed for supervisory purposes and may have given false information to regulators.
Latvia had to rescue Parex Bank at the end of 2008, forcing it to apply for a 7.5 billion euro ($11 billion) bailout from the International Monetary Fund and the European Union.
Bank Snoras had 6 billion litas ($2.3 billion) in deposits at the end of September, according to data from Lithuania’s commercial banks association.
It is majority owned by Russian businessman Vladimir Antonov, who once tried to become a shareholder in Swedish car maker Saab but who failed to get permission from key Saab creditor, the European Investment Bank.
Snoras also owns a bank in Latvia, Krajbanka. It said its operations would not be affected.
The central bank said it would propose the government take over Snoras, which will remain closed until Nov. 21.
“All the deposits that fall under the deposit insurance scheme are safe, and depositors will have access to them after the restructuring of AB Bankas Snoras is completed,” the central bank said.
The Bank of Lithuania said its actions would not have a significant impact on other local banks.
“The liquidity holdings of all the remaining foreign and local capital banks significantly exceed the ratio set by the Bank of Lithuania, and all the banks comply with the capital adequacy ratio,” the central bank said in its statement.
Lithuania’s biggest banks are controlled by Nordic groups Swedbank, SEB, DnB NOR and Nordea . ($1=2.553 Lithuanian Litas) (Writing by Simon Johnson in Stockholm; Editing by Greg Mahlich and Will Waterman)