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Central credit unions and central credit union groups
- Own funds requirements:
- Common Equity Tier 1 capital ratio of 4.5%. This is the ratio between Tier 1 equity capital and risk weighted assets and off-balance sheet liabilities of the credit institution;
- Tier 1 capital ratio of 6%. This is the ratio between Tier 1 capital and risk weighted assets and off-balance sheet liabilities of the credit institution;
- total capital ratio of 8%. This is the ratio between the own funds and risk weighted assets and off-balance sheet liabilities of the credit institution;
- a leverage ratio of 3%. This is the ratio between Tier 1 capital and the total exposure measure of the credit institution.
- Additional capital buffer requirements:
- capital conservation buffer of 2.5%;
- institution’s special countercyclical capital buffer requirement. The supervisory authorities of Member States may, at their own discretion, set the amount of a specific countercyclical capital buffer for a particular institution or a group of institutions, thereby mitigating the risk of unsustainable growth and securing the banking sector and the economy against a credit boom. Detailed information on the countercyclical buffer rate in Lithuania can be found in the table "Decisions for setting the countercyclical capital buffer rate";
- sectoral systemic risk buffer of 2%, which is calculated on the amount of risk-weighted retail exposures, which are secured with residential real estate, with respect to natural persons resident in the Republic of Lithuania. The buffer is applicable to banks and central credit union groups established in Lithuania (at the highest consolidation level), whose housing loan portfolios are equal to or exceed €50 million. More on the sectoral systemic risk buffer;
- other systemically important institutions buffer requirement.
- Liquidity requirements:
- the value of the liquidity coverage ratio (LCR) must not be below 100%;
- the value of the net stable funding ratio (NSFR) should be no lower than 100%, i.e. the stable funding amount available for the credit institution should be no lower than the required stable funding amount over a one-year period.
- Large exposure requirement – the amount of loans to a single borrower, taking into account the impact of credit risk mitigation measures, must not exceed 25% of an institution's Tier 1 capital. When the client is an institution (bank or investment company) or when a group of connected clients includes one or several institutions, the ratio must not exceed 25% of the institution's eligible capital, or EUR 150 million, whichever the higher. An institution's exposure to a client or a group of connected clients shall be considered a large exposure where the value of the exposure is equal to or exceeds 10% of its Tier 1 capital.
The Bank of Lithuania may set other ratios without contradiction to the recommendations of the Basel Committee on Banking Supervision and European Union directives.
Credit unions
- Capital adequacy – the ratio of a credit union’s adjusted capital to the total sum of its capital requirement for covering credit, market, settlement, counterparty credit and operational risks:
- for credit unions – not below 10.5%
- for credit unions seeking restructuring – not below 14.5%
- Liquidity – the ratio of a credit union’s liquid assets to its net liquidity outflow (not below 100%)
- Maximum open position in foreign currency – the ratio of the overall open position to a credit union’s adjusted capital (must not exceed 25%), and the ratio of the open position in a single currency to a credit union’s adjusted capital (must not exceed 15% of the credit union’s adjusted capital)
- Maximum exposure to a single borrower – the amount of loans to a single borrower must not exceed 25% of a credit union’s adjusted capital.
Credit unions established until 1 January 2018 (subject to a transitional period)
- Capital adequacy ratio:
- credit unions that are members of central credit unions:
- from 1 January 2018 – not below 5.25%
- from 1 January 2019 – not below 5.78%
- from 1 January 2020 – not below 6.30%
- from 1 January 2021 – not below 6.83%
- from 1 January 2022 – not below 7.35%
- from 1 January 2023 – not below 7.88%
- from 1 January 2024 – not below 8.40%
- from 1 January 2025 – not below 8.93%
- from 1 January 2026 – not below 9.45%
- from 1 January 2027 – not below 9.98%
- from 1 January 2028 – not below 10.5%
- credit unions to be restructured:
- from 1 January 2018 – not below 7.30%
- from 1 January 2019 – not below 8.70%
- from 1 January 2020 – not below 10.20%
- from 1 January 2021 – not below 11.60%
- from 1 January 2022 – not below 13.10%
- credit unions that are members of central credit unions:
- Maximum exposure to a single borrower – until 31 December 2027, the amount of loans to a single borrower granted by credit unions (i) that are members of central credit unions and (ii) whose capital adequacy ratio is below 10.5% must not exceed the smaller of the two following values: 25% of the credit union’s adjusted capital, or EUR 150,000.
The Bank of Lithuania has the right to establish individual ratios for each credit union.
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Last update: 30-07-2024