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A hundred years of the Ūkio bankas

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Exactly 100 years ago, on 16 February 1919, the Lithuanian Government approved the statutes of the Ūkio bankas (the Economy Bank). Three of the Bank’s founders were also signatories of the Act of 16 February: Jonas Vailokaitis, Kazys Bizauskas and Aleksandras Stulginskis (who later also became the President of Lithuania).

The other two founders were Pijus Grajauskas and Andrius Dubinskas. Jonas Vailokaitis and his brother Juozas were the ones who purchased 98% of the Bank’s shares, therefore the Bank was later usually referred to as the Vailokaitis’ Bank. Who were these two brothers?


A short introduction to Juozas and Jonas Vailokaitis


Both Juozas (1880-1955) and Jonas (1886-1944) were born in Piktžirniai village (Šakiai district) to a family of wealthy farmers; they also had two more brothers and three sisters.


In 1887, Juozas enrolled at the Sejny Priest Seminary. There he joined an illegal organisation spreading Lithuanianness, supported illegal press and even opened a secret bookshop with other like-minded people. After graduating from the Seminary, Juozas was sent to Saint Petersburg Roman Catholic Theological Academy, where he got his master’s degree and was ordained as a priest. In 1905, he returned to Lithuania and from 1907 he became the editor of Šaltinis, a weekly catholic newspaper, whose articles resulted in many fines and even jail time for him. However, this was a periodical of the largest circulation (15,000!) in Lithuania at the time. Juozas was a member of many Lithuanian organisations and was also an active supporter of independence. In 1915, he moved to Saint Petersburg, where he remained active, and then returned to Vilnius in 1918. Later, when Vilnius was being taken over by the Bolsheviks, he and his peers took up organising the relocation of the Government to Kaunas. He stayed in Vilnius and was arrested by the Bolsheviks in February 1919, later moved from prison to prison and only in July 1919 was he released and could return to Kaunas. He was elected to the Constituent Assembly and became the Chairman of the Economic Commission. Juozas Vailokaitis significantly contributed to the adoption of litas and establishing the Bank of Lithuania. 


His younger brother Jonas chose the path of an economist. He graduated from St. Petersburg Institute of Trade and Industry. In 1908, he returned to Lithuania, where he worked as an accountant. In 1912 his brother and him founded Brothers Vailokaitis Trade and Industry Association, which aided Lithuanians in purchasing land, granted loans, accepted deposits and is sometimes even considered their first bank (though it was more of a small credit company). During World War I, Jonas was buying cereal for German institutions, later he was jailed by the Germans and persecuted as a political offender. Afterwards, he joined a Lithuanian fellowship supporting the victims of war and was elected to the Council of Lithuania in 1917 and, while on it, he was drafting projects to build Lithuanian industry. On 16 February 1918, Jonas Vailokaitis signed the Act of Independence. Later on, he worked at institutions that were building Lithuania’s industry and was elected to the Council of the Bank of Lithuania for four terms.


Brothers Jonas and Juozas Vailokaitis dedicated most of their time and energy to business, so they weren’t very active in politics. As already mentioned, they were two of the Ūkio bankas founders and the main shareholders; they also established companies specialising in various industry branches. While developing these companies, they introduced Lithuania to new things, for example, refrigerators in food industry and the cultivation of sugar beets. When they established companies AB Metalas for metal goods, AB Palemonas for bricks and roofing tiles (which produced more than half of all bricks in Lithuania), AB Maistas for meat processing and exports, AB Medis for wood processing etc., the brothers became millionaires and the wealthiest people in Lithuania.


After the 1940 occupation, their assets were nationalised.  Jonas Vailokaitis retreated to Germany and died there in 1944, whereas his brother stayed in Lithuania and was exiled to Altai. In 1944, he unexpectedly returned to Lithuania, because he agreed to cooperate with power structures, but did not do it, so he was persecuted and interrogated.  Until his death in 1955, he was a rector at St. Barbara’s church in Paštuva.


The Ūkio bankas


In 1919, the constituent assembly of the Ūkio bankas was held. The share capital was set at 2 million auksinas. In 1920, the capital was increased to 10 million and in 1921 - to 30 million. Interestingly, after the adoption of litas in 1922, the Ūkio bankas recalculated its capital at a much better rate than usual, 2:1, and it was set at 15 million litas. It strengthened the new currency and increased trust in it.


The Ūkio bankas also aided in another issue connected to Lithuania’s economy. In 1920, Lithuania received around 2.5 tonnes of gold from the Soviet Russia as reparations. The government thought about selling it but finally decided to save it, so the Ūkio bankas offered to store it and, in return, provided a loan to the Government which was later repaid.


In the beginning, a lot of attention was dedicated to establishing the bank’s branches in Lithuania and abroad. In 1921, 16 branches were established with 5 more in 1922. In 1923, the bank had its branches in Berlin, London and New York. By establishing many branches, the bank’s main objective was to become a serious player in the deposit market and take over the transactions of Lithuanians abroad to Lithuania. In 1925, branches abroad were closed due to competition.


The Ūkio bankas main clients were various farmer organisations and individual farmers, mostly newcomers and fire victims. The bank granted loans to them. Later, the bank also engaged in property renting, storage of goods, etc.


However, its main objective was investment. As already mentioned, brothers Vailokaitis purchased and established many companies (at least 11 large companies) connected to industry and trade through the bank. However, many of them were later liquidated or taken over by the Government.


The Ūkio bankas was way ahead of other commercial banks in terms of investment volume and asset operations. Nevertheless, it went through some difficulties from 1925 when the amount of deposits started to diminish, probably due to the crisis. This crisis persisted until 1930s. Still, the bank managed to withstand it and remained most probably the largest bank of Lithuania in terms of loans granted.


In 1940, the Ūkio bankas had correspondent relations with 49 foreign banks.


Since the bank was the largest in Lithuania, it received the most criticism from the press and the public. It was accused of having an especially strong backing from the Bank of Lithuania, causing huge losses by loaning money in exchange for gold, using pulpits in churches to attract depositors and so on. Why was this happening? There were many reasons. It was smeared by political parties as well as its competitors. Jealousy of the Lithuanians about the wealthiest people in the country also contributed to it.


However, the Ūkio bankas significantly contributed to the restoration and modernisation of the country. As already mentioned, it also strengthened litas and helped to maintain its stability. The bank’s generous donations to students and various public organisations were also often mentioned. The important fact is that donations were given to students even when universities were not yet functioning. Artists were also supported. The Bank was purchasing their paintings. There probably was no well-known organisation that was not supported by the Ūkio bankas. It also contributed to the Klaipėda Revolt and donated 25 thousand litas to the rebels. The bank also managed to obtain benefits from the US to the injured or the families of those who died in World War I.


In 1940, when Lithuania was occupied, the bank was nationalised.


Eighty years after the establishment of the Ūkio bankas in 1989, the infamous bank under the same name started its operation in Lithuania. It did not have much in common with the interwar bank. In 2013, it was declared insolvent and was liquidated.

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Last updated: 2021-07-08