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Balkans: Estonias Buying Big Into Lithuanian Shares

Vilnius, 8 August 1997 (RFE/RL) -- Estonian investors are buying into Lithuanian shares in a big way. Lithuanian brokers say with some admiration that the Estonian invaders lack neither money nor confidence, and they are moving in upon some of the country's most popular banks and companies.

Kazimieras Liepis, the director of the Lithuanian brokerage house Mendes Prior Europe, told an RFE/RL finance correspondent in Vilnius that one reason for the Estonian move onto the Lithuanian Stock Exchange is that comparable shares are considerably more expensive in their home country. Liepis also says the money is moving into a lot of companies in Lithuania that still do not know how to use that capital injection effectively.

Lithuanian brokers says that the recent rise in share prices in Estonia is due to two factors, namely the invitation to Estonia from the European Union to open talks on prospective EU membership, and also to the good financial results obtained by many Estonian companies in the past half year.

At the same time, Lithuanian experts say they do not believe that the absence of an immediate invitation to Lithuania from the EU will significantly damage the Lithuanian capital market.

An example of how the share-hungry Estonians are moving into the Lithuanian market is provided by the banking sector. In Lithuania the shares of only two commercial banks -- the Vilniaus Bankas and the Hermis Bank -- are traded actively. The biggest Estonian commercial bank Hansapank and the investment fund Talinvest have already purchased 12 percent of the share capital of Hermis, which is one of the biggest Lithuanian commercial banks. The same companies also hold a 3.4 percent share package of the Vilniaus Bankas, which is even bigger than Hermis.

In addition, the Estonian savings bank Hoiupank announced at the beginning of this year its intention to purchase a controlling stake in one of three Lithuanians banks. Our correspondent reports one of the target banks is state owned and the others are private. As a reason for its takeover ambitions, Hoiupank said that it just doesn't have enough room for expansion in its home country. It said at the same time that it planned to establish a representative office this summer in Lithuania.

Our correspondent reports that so far, however, neither the office nor the purchase of the big stake in a local bank have eventuated, even though the Lithuanian banks say they know Hoiupank shows a keen interest in their financial results.

In fact, Lithuanian analysts suggest that the Hoiupank is setting its sights too high, and is probably too small to purchase any Lithuanian bank.