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Economy and Banking Sector of Lithuania

Lithuania
Location
Northern Europe
Population  (2017)
2 847 904  (-0.01%)
EU Status
member since 2004
Currency
EUR (Euro)
Nominal GDP (2016)
38.6 bln EUR  (+0.04%)
Credit Ratings (as of Sep 2016)
A-/A3
Consolidated Banking Assets (2016)
25 753.97 mln EUR  (+9.89%)
Deposit Guarantee
100 000 EUR
Number of Banks
84

Located in Northern Europe, Lithuania is one of the Baltic States and a memberof the European Union since 2004.

Lithuania is a developed country with high-income economy.Main industries of Lithuanian economy are electronics, machinery, food processing, production of furniture and textiles.

Lithuanian banking sector is relatively small, highly concentrated,with high share of foreign capital and is dominated by Scandinavian banks.

List of Banks in Lithuania

National Currency

Euro (EUR)

Lithuania joined the Euro Area on 1 January 2015. The preceding national currency, Lithuanian litas (LTL), was replaced by Euro.

GDP

Nominal GDP (2016)Nominal GDP per Capita (2016)Real GDP Growth (2016)
38.6 bln EUR  (+0.04%)13 500 EUR  (+0.05%)2.3 %  (2015: 1.6 %)

According to Eurostat, nominal GDP of Lithuania in 2016 was 38.6 bln EUR.

Lithuania outperforms the European Union in terms of real GDP growth with the average annual differential coming to 1.2% over the past 10 years (2006 - 2016). In 2016 real GDP growth was 2.3% which was above the Euro Area average (1.8%) and above the European Union average (1.9%). Real GDP growth in 2017 - 2022 are IMF's estimates.

Real GDP Growth in Lithuania.

Chart 1. Real GDP Growth in Lithuania. Source: Eurostat, International Monetary Fund.

In 2016, nominal GDP per capita in Lithuania was 13 500 EUR.

Lithuania has a below-average level of wealth in terms of per-capita GDP at purchasing power parity (PPP); this economic welfare indicator has, on average, fell behind that of the European Union by -18.3% over the past 10 years (2006 - 2016). GDP per capita at PPP in 2017 - 2022 are IMF's estimates.

GDP Per Capita at Purchasing Power Parity in  Lithuania; European Union = 100.

Chart 2. GDP Per Capita at Purchasing Power Parity in Lithuania; European Union = 100.

Inflation Rate

CPI, MoM (Sep 2017)CPI, YoY (Sep 2017)CPI, Year Average (2016)
0.8 %  (Aug 2017: 0.0 %)4.6 % (unchanged)0.7 %  (2015: -0.7 %)

According to Eurostat, inflation rate in Lithuania in 2016 expressed as annual percentages of average consumer prices was 0.7% which was above the Euro Area average (0.2%) and above the European Union average (0.3%). Inflation rates in 2017 - 2022 are IMF's estimates.

Inflation Rate in Lithuania.

Chart 3. Inflation Rate in Lithuania. Source: Eurostat, International Monetary Fund.

Unemployment Rate

Unemployment Rate (2016)
7.9 %  (2015: 9.1 %)

Government Bond Yield

Government Bond Yield (Sep 2017)
0.31 % (unchanged)
According to Eurostat, government bond yield in Lithuania in Sep 2017 was 0.31%, compared to 0.31% in Aug 2017.
Government bond yield of Lithuania.

Chart 4. Government bond yield of Lithuania. Source: Eurostat.

Credit Ratings (as of Sep 2016)

Fitch Moody's
A- (high credit quality), outlook stable A3 (upper medium grade), outlook stable

Double Taxation Agreements

Double Taxation Agreement (DTA) is an agreement between two or more countries for the avoidance of double taxation.

DTAs of Lithuania: 55 Signed Agreements

Lithuania signed DTAs which already came info force with the following jurisdictions (for agreements which came into force after 1 January 2013 the date of coming into force is given in brackets):

 Armenia
 Austria
 Azerbaijan
 Belarus
 Belgium
 Bulgaria
 Canada
 China
 Croatia
 Czech Republic
 Denmark
 Estonia
 Finland
 France
 Georgia
 Germany
 Greece
 Hungary
 Iceland
 India
 Ireland
 Israel
 Italy
 Kazakhstan
 Korea, Republic of
 Kyrgyzstan (Jun 2013)
 Latvia
 Luxembourg
 Macedonia
 Malta
 Mexico
 Moldova, Republic of
 Netherlands
 Norway
 Poland
 Portugal
 Romania
 Russian Federation
 Serbia
 Singapore
 Slovakia
 Slovenia
 Spain
 Sweden
 Switzerland
 Turkey
 Ukraine
 United Kingdom
 United States
 Uzbekistan

There are also several agreements between Lithuania and other jurisdictions which were signed but haven't yet come into force (for agreements signed after after 1 January 2013 of signing the agreement is given in brackets):

 Cyprus (Jun 2013)
 Kuwait (Apr 2013)
 Morocco (Apr 2013)
 Turkmenistan (Jun 2013)
 United Arab Emirates (Jun 2013)

Information Exchange

There are 3 ways for jusrisdictions to exchange information on tax matters:

  • spontaneously;
  • on request;
  • automatically.

Spontaneous exchange of information is provision of information that is forseeably relevant to another party without a request being previously sent.

Tax Information Exchange Agreements (TIEAs) enable exchange of information on request relating to a specific tax investigation, either criminal or civil.

Automatic information exchange allows jurisdictions to exchange information automatically, without having a specific tax investigation.

Exchange on Request: 1 Signed Agreements

There are also several agreements between Lithuania and other jurisdictions which was signed but haven't yet come into force (for agreements signed after 1 January 2013 of signing the agreement is given in brackets):

 Guernsey (Jun 2013)

Automatic Exchange: Starts in September 2017

Lithuania signed the automatic information exchange agreement on 29 October 2014 and committed to start the automatic information exchange in September 2017.

Automatic Excnange: 56 Bilateral Agreements to Receive Information

Lithuania has signed bilateral agreements with 56 jurisdictions to automatically receive information:

 Andorra
 Argentina
 Australia
 Austria
 Belgium
 Brazil
 Bulgaria
 Canada
 China
 Colombia
 Croatia
 Cyprus
 Czech Republic
 Denmark
 Estonia
 Faroe Islands
 Finland
 France
 Germany
 Gibraltar
 Greece
 Greenland
 Guernsey
 Hungary
 Iceland
 India
 Ireland
 Isle of Man
 Italy
 Jersey
 Korea, Republic of
 Latvia
 Liechtenstein
 Luxembourg
 Malaysia
 Malta
 Mauritius
 Mexico
 Monaco
 Netherlands
 New Zealand
 Norway
 Poland
 Portugal
 Romania
 San Marino
 Seychelles
 Singapore
 Slovakia
 Slovenia
 South Africa
 Spain
 Sweden
 Switzerland
 United Kingdom
 Uruguay

Automatic Excnange: 62 Bilateral Agreements to Send Information

Lithuania has signed bilateral agreements with 62 jurisdictions to automatically send information:

 Andorra
 Anguilla
 Argentina
 Australia
 Austria
 Belgium
 Bermuda
 Brazil
 British Virgin Islands
 Bulgaria
 Canada
 Cayman Islands
 China
 Colombia
 Costa Rica
 Croatia
 Cyprus
 Czech Republic
 Denmark
 Estonia
 Faroe Islands
 Finland
 France
 Germany
 Gibraltar
 Greece
 Greenland
 Guernsey
 Hungary
 Iceland
 India
 Ireland
 Isle of Man
 Italy
 Jersey
 Korea, Republic of
 Latvia
 Liechtenstein
 Luxembourg
 Malaysia
 Malta
 Mauritius
 Mexico
 Monaco
 Netherlands
 New Zealand
 Norway
 Poland
 Portugal
 Romania
 San Marino
 Seychelles
 Singapore
 Slovakia
 Slovenia
 South Africa
 Spain
 Sweden
 Switzerland
 Turks and Caicos Islands
 United Kingdom
 Uruguay

Further Information

FATCA

Foreign Account Tax Compliance Act (FATCA) which became law in the United States in March 2010, focuses on reporting made by foreign financial institutions about financial accounts held by US taxpayers or foreign entities in which US taxpayers hold a substantial ownership interest. The FATCA-reporting is facilitated by Intergovernmental Agreements (IGAs).

FATCA Status in Lithuania
IGA in effect since 26 August 2014, Model 1

Lithuania has FATCA agreement with the U.S. in effect since 26 August 2014 (Intergovernmental Agreement Model 1). Financial institutions operating in Lithuania are required to identify U.S. taxpayers by January 1, 2017 and to report the information for 2017 and the subsequent years. The agreement is reciprocal: Lithuanian financial accounts hold in U.S. financial institutions will be reported to Lithuanian authorities.

Further Information

Financial Market Development

Financial Market Development
4.1 (max 7.0), 59th out of 138 countries
Banks' Soundness
4.8 (max 7.0), 72nd out of 138 countries

According to World Economic Forum's Global Competitiveness Report 2017-2018, financial market development in Lithuania is scored 4.1 out of maximum 7.0 and ranked 59th out of 138 analysed economies, trustworthiness and confidence of financial market is scored 4.3 (65th place).

Financial Market Development in Lithuania.

Chart 5. Financial Market Development in Lithuania. Source: WEF.


Soundness of banks is scored 4.8 bringing Lithuania into the 72nd place.

Soundness of Banks in Lithuania.

Chart 6. Soundness of Banks in Lithuania. Source: WEF.

Further Information

Deposit Guarantee Scheme

Maximum Protected Amount
100 000 EUR

Deposit Guarantee Schemes compensate certain deposits held by depositors of a bank that becomes unable to meet its obligations.

From a depositor's point of view it is important to know:

  • if the depositor is eligible within the terms of the deposit guarantee scheme;
  • if the depositor's bank is a participant in the deposit guarantee scheme;
  • if the depositor's type of deposit is covered by the deposit guarantee scheme.

All these details about deposit guarantee scheme in Lithuania are summarised in Table 1.

Scheme Participantsall credit institutions operating in Lithuania (including branches of foreign banks), branches of Lithuanian banks abroad
Eligible Depositorsnatural persons, legal entities
Covered Accountsall deposit accounts
Covered Currenciesall
Maximum Protected Amount100 000 EUR
Paid In CurrencyEUR

Table 1. Deposit guarantee scheme in Lithuania.

Further Information

Country Ceiling for Deposits

Moody's country ceilings for deposits specify the highest rating that can be assigned to local- or foreign- currency denominated deposit obligations of a bank or other deposit taking institution domiciled within that country.

Local Currency (Euro) Foreign Currency
Aaa (prime) Aaa (prime)

Local currency (Euro) deposit ceiling for Lithuania is set to Aaa (prime), foreign currency deposit ceiling is Aaa (prime).

Deposit Rates

Average Deposit Rate (Aug 2017, EUR)
0.19 %  (Jul 2017: 0.15 %)
In Aug 2017, an agreed annualised deposit rate in local currency (Euro) of new contracts with agreed maturity up to 1 year between credit institutions and households was 0.19% which was below the Euro Area average (0.36%).
Deposit Rates in Lithuania.

Chart 7. Deposit Rates in Lithuania. Source: ECB.

Banking Sector Structure

Number of Banks
84
Consolidated Assets (2016)
25 753.97 mln EUR  (+9.89%)
Recent Changes (2016)
new banks: 0, closed banks: 2

Currently there are 84 credit institutions operating in Lithuania.

In 2016 consolidated banking assets in Lithuania were 25 753.97 mln EUR. The consolidated banking assets' evolution is shown at Chart 8 below.

Consolidated banking assets in Lithuania.

Chart 8. Consolidated banking assets in Lithuania.

Recent structural changes (2013 - 2016) of the banking sector of Lithuania are summarised in Table 2.

2013201420152016
Number of Opened Banks1120
Number of Closed Banks3312

Table 2. Recent structural changes in the banking sector of Lithuania.

The list of the most recently opened banks in Lithuania is provided in Table 3.

NameStart Date
 Telia Finance AB Lietuvos filialas „Telia Finance Lietuva” (new)October 2015
 Scania Finans Aktiebolag Lietuvos filialas (new)July 2015
 Nordea Bank AB Lietuvos skyrius (closed)March 2014
Kredito unija „Saulėgrąža” (new)August 2013
 

Table 3. The most recently opened banks in Lithuania.

All the credit institutions operating in Lithuania can be classified into several categories. Table 4 summarises the number of banks in each category.

CategoryNumber of Banks
Banks6
Branches of foreign banks7
Central banks1
Credit unions70

Table 4. Number of banks by category in Lithuania.

There are 7 branches of foreign banks from 5 different countries in Lithuania. Table 5 shows the number of branches grouped by the country of origin.

Country of OriginNumber of Branches
 Sweden3
 Latvia1
 Estonia1
 Denmark1
 Finland1

Table 5. Number of branches of foreign banks in Lithuania grouped by country of origin.