2017-02-01
Bank of Lithuania reviews quality of credit union assets with independent auditors
The Bank of Lithuania has informed all 73 credit unions operating in the country and the Lithuanian Central Credit Union about the actual value of their assets, recorded with independent auditors in the middle of last year. The quality of their assets has been reviewed in preparation for the reform of the 160,000-member credit union sector, which is necessary in order to achieve long-term and sustainable development of credit unions.
‘Over a short period of time, together with independent auditors, we did great work in evaluating whether credit union assets are reflected in accounting at the value they are actually worth. We needed this ‘X-ray’ to identify areas that need to be strengthened or vulnerabilities in the activities of the credit union sector, by addressing which its restructuring would be more fruitful. We will inform credit unions about the results of the evaluation and, after getting feedback, will publish a more detailed report,’ said Marius Jurgilas, Member of the Board of the Bank of Lithuania.
The Bank of Lithuania has sent to credit unions asset quality reviews. Bank of Lithuania specialists carried out the review jointly with auditors from UAB Deloitte Lietuva and UAB PricewaterhouseCoopers. Credit unions may submit their comments on the asset quality review carried out. It is planned to publish more comprehensive results in the second half of February.
Following the legal acts adopted in 2016, which opened the way for the reform in this sector, conditions were provided for the establishment of new central credit unions (five credit unions will be able to establish them upon agreement to do so; currently there is only one central credit union). It is planned that all credit unions will become members of central credit unions. Central credit unions will have clear and efficient rights and obligations to supervise the activities of their members. The intention of the restructuring is that central credit unions and their member credit unions be jointly and severally financially liable for each other; therefore, they would be interested in efficient self-regulation, aimed at safeguarding these financial institutions from bankruptcy.
The existing Law on Credit Unions provides for a possibility to also restructure credit unions into banks.