Siauliu Bankas — Proxy Solicitation & Information Statement 2010

Apr 26, 2010

Approved by Minutes No. 17 of the Board meeting held on 26 April 2010

NOTICE

to the General Meeting of Shareholders of Šiaulių Bankas AB

A issue of increasing the authorized capital of the bank with additional contributions in the amount of LTL 24.5 million is entered onto the agenda of the Extraordinary General Meeting of Shareholders of AB Šiaulių Bankas AB, to be held on 18 May 2010 upon convocation by the Board of the bank. Withdrawal of the shareholders' pre-emption right to acquire shares of the new issue will be put on the agenda as a separate matter.

Referring to paragraph 6 of Article 57 of the Law of the Republic of Lithuania on Companies, the Board of the bank is giving the following notice to the General Meeting of Shareholders.

1. Reasons for the withdrawal of the pre-emption right.

1.1. Aim of a group of shareholders to consolidate the capital of the bank, thus making it possible for the bank to increase its market share. The year 2009 was difficult for the Lithuanian banking system. After several profitable years, last year Šiaulių Bankas AB suffered a significant loss (LTL 30 mio). Upon analysis of the immediate outlooks for the economy of the country, the business environment and the situation of the loans portfolio of the bank, a conclusion follows that the bank will need additional provisions for bad assets in 2010, too. This will lead to the decrease of the equity of the bank. Therefore, there may be a threat that marginal values of certain ratios (e.g. one debtor's ratio) can be approached. The increase in the authorized capital will restore the equity of the bank, which will make it possible for the bank to finance larger projects. The Board of the bank thinks that it would be logical, in the current situation, to give priority to consolidation of the capital within the shortest term possible, and if shareholders forming the group of main shareholders, having a permission of the Bank of Lithuania to acquire and hold 50 or more percent of the authorized capital of the bank and relevant votes, started such a consolidation, that would demonstrate long-term obligations of the main shareholders to the bank and set an example for other shareholders.

1.2. Aim to distribute the share issue as soon as possible. Due to the reasons mentioned above, it is sought to distribute this share issue quickly and to register the amended Charter on by the end of the first half of the year. Withdrawal of the pre-emption right would save time both in terms of the distribution of the issue and the registration of the bank's Charter amended due to the change in the authorized capital. The new share issue would be already subscribed for and paid by relevant persons, whereas in case of exercise of the pre-emption right, the distribution of the issue would not yet be able to be started. The number of new shares that the shareholders could acquire by the pre-emption right is proportionate to the number of shares held by the shareholders on the record date of the meeting (the record date of this meeting is 1 June). In such a case, the distribution of shares could really begin only in the first decade of June and the amended Charter reflecting the change of the authorized capital could not be registered at the end of the first half of the year.

1 In order to ensure the right for all the shareholders to acquire shares of the bank on the same conditions, the Board of the bank suggests that the General Meeting should take a decision to obligate the Board, after the registration of the Charter of the bank within the shortest term reasonably possible, to convene an Extraordinary General Meeting of Shareholders and to initiate consideration of a matter thereat of making of another share issue at the same issue price, and this issue would be offered without withdrawal of the shareholders' preemption right. The new share issue should be no less than 30 million shares, and shareholders in favour of which the pre-emption right was withdrawn in the first issue would be suggested not to take part in this issue. In this way, the result equivalent to capital increase without withdrawal of the pre-emption right would be reached in two stages. Such a sequence of issues would make it possible for all the shareholders, who will not participate in the first issue, to make use of the pre-emption right to acquire shares as if it were an option. If, in the period of subscription for the second share issue, the market price of a bank share is above the share issue price, it will be useful for shareholders to acquire cheaper shares of the new issue. And if the market price goes down, the shareholders will be able not to buy the new shares, but to acquire them in the market at a lower price instead.

In the opinion of the Board, the argument that after the first share issue the price of the shares on the stock exchange will drop proportionately to the new issue, is not essential because, if only one joint share issue were made without withdrawal of the pre-emption right, the Board would suggest to make a big issue (in the scope equal to the aggregate scope of both the issues). Then the market price on the stock exchange would drop proportionately more.

2. Basis for the issue price of the shares planned to be issued.

The last share issue that was successfully subscribed for in return for additional contributions was issued on 29 March 2007 by a decision of the General Meeting of Shareholders. On the date a relevant decision was taken, the market price of the share was LTL 4.27. The issue price for the new issue was fixed at LTL 2.30 per share. The share issue was subscribed for, the Charter of the bank with the increased authorized capital were registered on 21 December 2007.

The Extraordinary General Meeting of Shareholders held on 11 November 2008 took a decision to issue 20 million shares for the issue price which had to be no more than 15 percent lower than the arithmetic weighted average of market prices taken from the last 20 sessions before the start of the offering. But it could not be less than LTL 1 (due to the statutory provision requiring that new issues cannot be subscribed for below their par value). On the date a relevant decision was taken, the market price of the share was LTL 1.05. Later, as the stock markets went down, the price of the bank share dropped and was below the par value for more than 9 months. In this situation, the new shares were not subscribed for.

Currently, the market price of a bank share fluctuates at about LTL 1.1. It is apparent that the issue price of LTL 1.04 is not unusual as it is lower than the market price only by about 5.5 percent.

3. Persons to whom the right to acquire the bank shares of the new issue is suggested to be given.

Name	Number of the shares planned to be
	acquired (in units)
European Bank for Reconstruction and Development	17,000,000
Algirdas Butkus	2,500,000
Gintaras Kateiva	2,150,000
Arvydas Salda	1,250,000
Sigitas Baguckas	500,000
Kastytis Jonas Vyšniauskas	500,000
Vigintas Butkus	350,000
Vytautas Junevičius	250,000
Total	24,500,000