Bank of Lithuania and the Chair of the Supervisory Board of the ECB discuss the situation in the banking sector
Andrea Enria, Chair of the Supervisory Board of the ECB, is visiting Lithuania. With the heads and experts of the Bank of Lithuania he discussed the issues of banking supervision and the impact of russia’s war against Ukraine on the financial sector.
“We are currently facing a unique situation that the euro area has never dealt in. The banking sector successfully withstood the shocks caused by the pandemic and the war, and exceptionally high profitability indicators are recorded against the backdrop of high inflation and slowing economy,” says Simonas Krėpšta, Member of the Board of the Bank of Lithuania and the Supervisory Board of the ECB.
“The resilience of our banking sector during this challenging period shows that the continuous efforts of supervisors across Europe, including our colleagues at Lietuvos bankas, are paying off,” said Chair Enria. “We look forward to maintaining our close collaboration to keep banks safe and sound, both in Lithuania and across Europe.”
Topicalities of the banking sector, market concentration, resilience to operational and cyber risks, as well as asset quality, profitability and liquidity were discussed during the meetings.
The meetings also covered the priorities of banking supervision for 2023 in response to geopolitical shocks and challenges posed by digitalisation and climate change.
The current situation in the banking sector is largely determined by russia’s war against Ukraine and the response of central banks. The risk of inflation has a negative impact on the banks’ asset quality outlook, but on the other hand, interest rates that have risen rapidly in the context of excessive liquidity, give a tremendous boost to the profitability of banks operating in Lithuania. The Bank of Lithuania calls on commercial banks to take into account the peculiarities of this period and to shape the pricing of financial services in a socially responsible manner. In addition, the bank has submitted other proposals.
During his visit, Andrea Enria will also meet with the representatives of Lithuanian commercial banks directly supervised by the ECB and the Lithuanian Banking Association.
In close cooperation with the Bank of Lithuania, the ECB directly supervises the three major commercial banks in Lithuania: Swedbank, AB, AB SEB bankas and Šiaulių bankas.
The first official visit of the Chair of the Supervisory Board of the ECB to Lithuania took place in early 2015, when the country became a member of the banking union and was involved in the new European banking supervision system – Single Supervisory Mechanism.