The prime minister's spokeswoman, Evelina Lazdauskienė, has confirmed to BNS that a loan of up to 800 million litas is to be provided to the state-owned company.
She said that the loan carries an annual interest rate of 2.801 percent and is due for repayment by February 1, 2019.
"We have part of the money in the state treasury. We may need to borrow part of the funds and we are going to do so on the domestic market," Finance Minister Rimantas Šadžius told reporters after the Cabinet's meeting.
The minister did not say how much money will need to be raised on the domestic market.
On Tuesday, Šiaulių Bankas, a Lithuanian bank that is controlled by the European Bank for Reconstruction and Development (EBRD) and a group of local investors, started formal negotiations on a takeover of the "good" assets and liabilities of Ūkio Bankas.
Vitas Vasiliauskas, the central bank governor, has said that Indėlių ir Investicijų Draudimas may have to contribute around 800 million litas to cover a gap between Ūkio Bankas' insured deposits and its "good" assets.
Šiaulių Bankas last Friday applied to the Competition Council for regulatory clearance of its takeover of a part of Ūkio Bankas' assets and liabilities, as well as 100 percent of shares in its subsidiaries, including Ūkio Banko Lizingas (Ūkio Bank Leasing), the life insurance company Bonum Publicum, and Sporto Klubų Investicijos (Sports Clubs Investments).
Šiaulių Bankas is quoted on the blue-chip Main List of the NASDAQ OMX Vilnius stock exchange.