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ECB Grants Banking Licence To SME Bank

On the proposal of the Bank of Lithuania, the European Central Bank (ECB) has issued a specialised bank licence to a neobank, SME Bank, to be established by SME Finance. As previously planned, SME Bank will be fully operational from mid-2021 and will offer new services that SME Finance has not yet provided.

SME Bank will operate as a separate legal entity with a separate management team and will provide new services already offered by SME Finance such as factoring, leasing, business loans and real estate loans as well as new ones − payment orders, deposits − that will also be accepted from natural persons. Business guarantees are also an option for the future.

“We have been preparing diligently and responsibly for the establishment of a neobank. First of all, we wanted to build a strong customer and capital base and to see a greater demand for this type of banking services in the market. And it is finally there, because we have one of the fastest growing small and medium-sized enterprise (SME) sectors in the whole of the EU. In addition, statistics show that in Lithuania the portfolio of bank loans to business shrank in 2020, and as banks have reduced their risk appetite and tightened lending standards, Lithuanian businesses have begun to explore alternative financing opportunities even more actively. We hope that SME Bank will be able to expand those opportunities”, said Mindaugas Mikalajūnas, Head of SME Finance.

SME Bank plans to stand out with competitive service pricing with a much faster and simpler service delivery process compared to traditional banks, as well as extremely straightforward administration, which allows for a more efficient management of the client portfolio. All this will be ensured by the combination of a sophisticated IT platform and a mobile app.

According to Paulius Jauga, Head of SME Bank’s Corporate Clients Department, even though quite a few important steps leading to the launch of SME Bank’s operations have already been taken, the preparatory work in the company is still in full swing.

“As of now, contracts have been signed for the development of the platform […] our team of employees, which already consists of 12 people, keeps growing. However, in anticipation of the launch of the bank’s operations the most important thing is to keep analysing the market in detail, trying to figure out the advantages of neo banks against conventional financial institutions which the potential customers are most interested in. We are witnessing a rapidly rising need for cheaper, faster services and a simpler, less bureaucratic process, therefore we are strongly focused on technological progress, which allows customers to save not only time but also money’, he added.

The development of SME Bank is also planned in other Baltic countries and Poland, and management of a portfolio amounting to approximately €200m million serving 5,000 business clients.


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