The finance minister is inclined to support the consolidation of the state-owned credit guarantee agency INVEGA, the Public Investment Development Agency and the Agricultural Loan Guarantee Fund, but he opposes the state's participation in the retail banking business.

"There's a lot of confusion in discussions about the state bank, something reminiscent of the construction of the Tower of Babel," he told the Ziniu Radijas radio station.

"Some want more physical service locations in remote regions and others perhaps want lower rates. The third group wants better access for businesses, and the fourth group wants funding for public infrastructure," he said.

According to Sapoka, all European Union countries have national development agencies, like Invega, the Public Investment Development Agency and the Agricultural Loan Guarantee Fund in Lithuania.

“I think the wisest solution would be to consolidate these three institutions into one strong structure that would cover the shortcomings in all areas," the minister. "This would increase competition and could help attract funds from private institutional investors."

"We don't need a banking license for that, but we may call it a National Development Bank if it sounds better," he added.

Sapoka sticks to his position that the state's participation in the retail banking business would be a costly and risky project that would do "more harm than good".

"If someone wants to create a conventional bank that would compete with the private sector, I think this path leads to nowhere," he said.

The ruling bloc's initiative to begin preparations for setting up a National Development Bank passed the first reading in the Seimas earlier this week.

They suggest creating such a bank on the basis of the existing guarantee agencies. It would apply for a banking license and would be supervised by the central Bank of Lithuania.

President Gitanas Nauseda has backed the idea of setting up a state bank, but both Sapoka and Vitas Vasiliauskas, the central bank's government, have taken a cautious stance on the matter.

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