Operations suspended at bank owned by Hearts' Vladimir Romanov
The central bank in Lithuania have appointed temporary administrator to the bank over 'risky tendencies'.
Operations have been suspended at a bank owned by Hearts' Vladimir Romanov.
On Tuesday, the central bank in Lithuania announced they had appointed a temporary administrator to Ukio Bankas.
The decision was made after the board of the Bank of Lithuania looked at inspection reports from December 2012 to January 2013.
It was decided the bank had "risky tendencies" in recent years, actions of shareholders had been "harmful" to the bank and these threatened the bank’s stability.
A statement from the central bank said: "During the inspections of Ukio bankas in December 2012-January 2013 it was established that the bank performed risky activities, inappropriately assessed credit risks, in not all cases made sure of the borrower's possibilities to fulfil debt obligations, didn't form enough specific provisions for problem loans, applied unacceptable methods of portraying transactions in accounting, and also violated prudential legal acts."
It goes on to say shareholders and management did not follow a loan restructuring plan and ignored the central bank’s orders to reduce the number of loans related to the main shareholder.
The statement said: "Particularly the loans issued to companies related to the main shareholder make up the largest part of the problem loan portfolio."
Romanov is the main shareholder at Ukio Bankas.
The administrator now has six days to work out how to fix the problems at the bank.
The central bank said they were keen for a solution to be found for Ukio Bankas, with restructuring the most likely outcome.
Chairman Vitas Vasiliauskas said: "A lot will depend on the actual financial standing of the bank, which will be registered by the administrator and the auditors who inspect the bank, but our priority is clear - continuity of the operation of the bank in fulfilling obligations to its clients and ensuring that the restructuring would be the most effective, rational and cheapest means for the state in solving the problem."
In response to the news, Hearts said Ukio Bankas had little to do with the business and only provides banking services.
Director Sergejus Fedotovas said: "The Board wishes to make it clear that Heart of Midlothian Plc and Ukio Bankas are two separate companies. Hearts is majority owned by Ukio Banko Investicine Grupe (UBIG), a multi-national business conglomerate. UBIG is an entirely separate entity and stands alone from Ukio Bankas.
"At a service and operational level, Ukio Bankas does provide the club with some banking services and debt facility and the Board is liaising with Ukio Bankas on these matters.
"The supporters of Hearts can be assured that the Board of the club continues to be diligent in financial matters and we believe that today's events in Lithuania will have very little effect on our day-to-day business."
Hearts are owned by Ukio Banko Investment Group (UBIG) which started off life as an arm of Ukio Bankas before becoming a company in its own right.