Authors of the material are partner Dalia Augaitė and associate Nortautas Zenevičius. The article is published on Baltic Capital Markets website: here.
Historically, asset-backed securitisation has tended to be employed as a source of financing where two principal conditions are satisfied: (i) bank lending has become less accessible or more costly, prompting undertakings, particularly SMEs, to seek alternative sources of funding,[1] or banks themselves require additional capital and liquidity;[2] and (ii) a portfolio of assets suitable for securitisation has been, or can effectively be, accumulated on a revolving basis.[3]
Securitised portfolios most commonly comprise residential mortgage, consumer or business loans[4] and, in the Lithuanian context, loans for the modernisation of multi-apartment buildings. In 2025, the portfolio of bank loans and other advances in Lithuania amounted to EUR 49.4b, representing an increase of 24.9% compared with 2024.[5] Loans to households alone grew by 19.8% in 2025, reaching EUR 20.4b.[6]
Against this background, since the adoption of the Law on Securitisation and Covered Bonds of the Republic of Lithuania[7] in 2022, loan portfolios with an aggregate value of approximately EUR 772m have been securitised in the Lithuanian market. The pioneering transactions were structured by Artea bankas AB, which established two separate special purpose vehicles (SPVs) to finance the renovation of multi-apartment buildings: “SB Modernization Fund” in 2022, with a value of EUR 275m, and “SB Modernization Fund 2” in 2024, with a value of EUR 200m.[8] Not long after other market participants followed: HEAVY FINANCE UAB structured two securitisation vehicles backed by sustainable agricultural loans in 2024,[9] worth EUR 17.5m, and 2026,[10] worth EUR 120m. And, considered as one of the landmark deals – UAB ILTE (ILTE) achieved the first green securitisation in the Baltic States with the issuance of EUR 112 million AAA rating Class A bonds listed on the Regulated Market of Nasdaq Vilnius through the SPV “Vytis Reno Loans 2025-1 DAC” (Vytis Reno Loans).[11] The listing of securitisation-backed bonds on a regulated market is a pivotal development, signalling that Lithuanian securitisations can meet the quality and transparency thresholds. Market participants and regulators alike have signalled that this is only the beginning. ILTE’s CEO has indicated that the same structure could underpin further issuances of up to EUR 800 million.[12]
Although these transactions reflect growing interest in securitisation and a potential emerging securitisation hub in the Baltic States, they also reveal certain complexities. While Lithuania did adopt a dedicated local law to regulate securitisation transactions, a unique, but a necessary approach in Eastern Europe, the national law and local market is not without its’ nuances and requirements for improvement. These are most apparent in reliance on foreign law and market participants. A model example of this is ILTE’s securitisation transaction, where Vytis Reno Loans was incorporated as a designated activity company in Ireland and securitisation transaction documents were governed by multiple laws, including Lithuanian, Irish and English law.[13] The reasons for this offshoring are structural. At the beginning Lithuania lacked a developed local market and specialised legislation for corporate service providers (the CSP). This creates additional struggles for originators to create the requisite “orphan entity” structures that would be bankruptcy remote from the originator and would mitigate the claw-back risks. Furthermore, servicing fees and other securitisation transaction related cash flows remain subject to taxation uncertainty without a separate binding ruling from the national tax authority, thus creating a less investor and securitisation-friendly ecosystem than is desired. By contrast, Ireland has a tax-neutral system and a dedicated CSP market, making it one of the leading European countries for securitisation.
Thus, while the Lithuanian businesses are expanding and seeking alternative sources for financing, the regulatory framework must evolve correspondingly. To perceive itself as an Eastern European securitisation hub, Lithuania needs to address the requisite legal changes: implementing tax clarity and neutrality for both securitisation and covered bonds transactions, fostering a domestic corporate service provider market, and streamlining regulatory procedures.[14] With a clear SPV tax framework and a growing domestic service provider ecosystem, Lithuania has the opportunity to establish itself as a competitive securitisation jurisdiction in the Baltic region and beyond.
[1] Council of the European Union (2020). Securitisation: improving the financing of the EU economy. Link.
[2] Ibid.
[3] IORGOVA, Silvia, ONG, Li Lian (2008). The Capital Markets of Emerging Europe:Institutions, Instruments and Investors. IMF Working Paper, WP/08/103, p. 25.
[4] LBA (2024). Securitisation Guidelines. P. 10.
[5] Bank of Lithuania (2025). Banking Activity Review. Activities of Financial Market Participants, p. 8.
[6] Ibid, p. 9.
[7] The Register of Legal Acts (TAR), 15394.
[8]SORAINEN (2022). Šiaulių bankas establishes EUR 275 million SB Modernisation Fund for renovating apartment buildings. Link; TEGOS (2024). TGS Baltic assisted Šiaulių Bankas on the implementation of „SB Modernization Fund 2“ as securitisation vehicle. Link.
[9] TEGOS (2024). HeavyFinance started partnership with Multitude Bank. Link.
[10] INSOIL (2026). InSoil secures €120m facility from Pollen Street to scale agri-SME lending across Europe. Link.
[11]ALVAREZ & MARSAL (2026). CASE STUDY: ILTE – SECURITISATION OF MULTI-APARTMENT BUILDING RENOVATION LOANS ORIGINATED BY THE GOVERNMENT OF LITHUANIA. Link.
[12] Ibid.
[13]TEGOS (2025). A Landmark EUR 160 Million AAA-Rated Green Bond and Loan Note Issuance: ILTE’s “Vytis Reno Loans” Project. Link.
[14] ZENEVIČIUS, Nortautas (2026). LinkedIn post on Securitisation. Link.
