headquarters in Lithuania, Gintaras Ugianskis, chairman of the board and chief executive officer, said: “At the meeting of the Board of AB Ukio bankas as of August 20, 2012, a resolution was taken to abandon plans in Edinburgh and to terminate the activities of the Edinburgh branch.”
He said the reason was “to improve the operating performance” of the bank.
Former Hearts chairman Lord Foulkes said he hoped the decision to close the bank branch would not lead to a pull-out on the football front.
Mr Romanov has made no secret of his frustration with Scottish football and the media and insiders say he would be ready to listen to offers to buy Hearts if they were to arise. His main sporting passion nowadays is said to be his basketball team in Lithuania.
Lord Foulkes said: “Although he announced about a year ago that he was prepared to sell Hearts and no-one has come forward, he has kept the club going. There have been no stories recently about late payment of wages, he has not been signing players with big salaries, local management are given a fair degree of autonomy in day-to-day running of the club and we have progressed.”
The branch, in rented premises at 10 Castle Street, is the bank’s only UK office and employs four staff.
Ukio Bankas first announced its plans to open an Edinburgh branch in 2006 and it began renting the Castle Street premises in 2007, but was unable to open for business because of difficulties obtaining a banking licence. The obstacles were eventually overcome and it began operating in January.
The decision to close comes just weeks after the bank’s losses soared by 8.5 per cent.
Graham Birse, managing director of Edinburgh Chamber of Commerce, said the bank closure was unfortunate.
He said: “We want all inward investment to Edinburgh to succeed. However, the banking climate at the moment is extremely difficult.
“We’re not privy to the business information the board has, but Ukio has obviously found the cost of the operation in relation to its performance makes it unsustainable.”
He said it was always hard for banks to break into new markets. “It is difficult for international banks without any brand presence in the consumer marketplace to establish themselves. People tend to go to names they recognise.”
The city council’s deputy economic development convener, Gordon Munro, said: “The closure decision is disappointing, but not surprising in view of the retrenchment that is going on in the banking sector at the moment. Whole countries are having to look at themselves. This is just part of that ripple from central Europe.”