The investors highlighted their willingness to collaborate with the government to enhance the financial sector’s role in the Lithuanian economy, while also hoping for a more predictable business environment in the long-term and improved communication between decision-makers and the business community.
In the meeting, representatives of bank shareholders voiced their concerns regarding the unpredictability of recent tax policies for banks and the lack of cooperation with the business community. Coupled with the current geopolitical situation, this has caused significant uncertainty for banks and investors, severely damaging the investment environment of Lithuania and the country’s attractiveness to investors.
The shareholders pointed out that governments, in the past five years, have introduced no fewer than two additional taxes for banks operating in Lithuania: an extra 5 percent corporate tax rate in 2019, and, in 2023, a solidarity tax through the Temporary Solidarity Contribution Law. Both of these taxes were, when introduced, meant to be temporary in nature but have both been extended. Moreover, the Temporary Solidarity Contribution Law was adopted in haste, without giving time for market participants to familiarise themselves with the tax and without respecting the six-month deadline required for preparation before a new law comes into force. In addition, the Ministry of Finance last month doubled the Deposit Insurance Fund premium paid by banks without giving any prior notice to credit institutions.
The investors emphasised the importance of a stable and predictable tax environment for maintaining confidence in the Lithuanian market. They also noted that external factors such as the COVID-19 pandemic, energy crises, and geopolitical tensions related to Russia’s war in Ukraine have further impacted the investment climate. At the same time, tax changes have created significant doubts among investors about the predictability of the regulatory environment.
The shareholder representatives also assured the prime minister that they are ready to work with the government to strengthen the role of the financial sector in the national economy and see great potential for cooperation in areas such as digital transformation and sustainability. However, they also stressed the need for a continuous dialogue between the current and future decision-makers, the financial sector, and investors.
To conclude, the shareholders expressed their hope that the concerns raised during the meeting will be duly addressed by the prime minister and other Lithuanian policymakers.
The meeting with Prime Minister Ingrida Šimonytė was attended by Jon Lidefelt, head of Baltic banking, Swedbank AB; Niina Äikäs, head of Baltic Division, SEB Group; Wojciech Sass, CEO, Luminor Bank AS; Matias Huhtala, head of Baltic banking, OP Corporate Bank Plc; Timothy C. Collins, chairman of the Supervisory Board of Citadele banka AS, Partner at Ripplewood; Elizabeth Critchley, vice-chair of the Supervisory Board of AS Citadele banka, Partner at Ripplewood; Jean-Yves Hocher, senior advisor to the Management Board of AS Citadele banka.