A new security legal regime will came into effect from July 1 2012 which
is expected to harmonise the Lithuanian markets along EU lines and
create more security for potential investors. Beyond the potential boost
to the economy as a whole this is expected to significantly increase
regulatory work for firms across the board....
[more]
A new security legal regime will came into effect from July 1 2012 which
is expected to harmonise the Lithuanian markets along EU lines and
create more security for potential investors. Beyond the potential boost
to the economy as a whole this is expected to significantly increase
regulatory work for firms across the board.
[Read about law firms' performance in this practice area]
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CONTEXT AND TRENDS
The takeover of Lithuania's fifth largest bank in November 2011 was the first major crisis to hit the country since the deep recession of 2009. The government assumed control of Snoras bank after finding a risk of insolvency, irregularities and possible criminality....
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CONTEXT AND TRENDS
The takeover of Lithuania's fifth largest bank in November 2011 was the first major crisis to hit the country since the deep recession of 2009. The government assumed control of Snoras bank after finding a risk of insolvency, irregularities and possible criminality.
Looking for the silver lining one lawyer remarked: "Yes, this took us and the Baltic states by surprise. People were thinking how this could happen. But Snoras generated M&A work for us and confidence is up. Little by little the market is developing with 5% growth since last year." The major law firms continue to be involved with complex issues and work thrown up by Snoras.
In the banking and finance sector the outlook is gloomier. "Last year we were exclusively busy but this year there has been a slowdown." Across the board lawyers agree banking and finance has hit a roadblock. "Banks are being very careful" says one lawyer. "They are prepared to lend but only for the really good projects and the selection process is very thorough."
In 2011 lawyers observed a "meltdown of the financing freeze", with banks beginning to lend significant amounts. By 2012, the bounty had dried up, along with Greece's fortunes. "The positivity we had ended along with 2011 but there has been some degree of recovery since June 2012."
Loan restructuring remains low in Lithuania since the banks cleaned up their books. In contrast regulatory work is set to boom off the back of the new security legal regime which came into effect from July 1 2012. "We expect to receive mandates for consultations related to the application of the new regime" explains a lawyer.
Stagnation in capital markets throughout 2011 started to subside in 2012, which many predict is a growing trend: "The positive, albeit vulnerable trends in capital markets in the beginning of 2012 allow us to project slow pace recovery of the practice."
The slowdown of banking and finance does not appear to have affected the M&A market with reports of foreign investors returning from Europe and North America. "There are surprisingly more deals" according to one lawyer. "There is a basket of private equity and strategic investors investing their money with our banks rather than Luxembourg."
Though not an established trend, there are indications that Lithuania could become a popular choice as a platform for private equity funds to open, in light of improvements to legislation due to be enacted by the end of 2012.
One trend is for large and expanding companies to buy a base in Lithuania as a foothold in Eastern Europe and is most prevalent in specific sectors including pharma, IT and the food industry.
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