2012-09-27
The credit union ”Laikinosios sostinės kreditas” was applied a strict measure of enforcement.
Having assessed the inspection results of the credit union ”Laikinosios sostinės kreditas”, the Bank of Lithuania Supervision Service decided to limit interest rates of deposits accepted by the credit union and the amount of lending transactions with the credit union members – natural persons. Also it decided to remove the administration head and the board chairman of the credit union from these positions.
It was decided to apply such enforcement measures after the assurance in the course of the inspection that the credit union head when fulfilling his duties as the administration head and chairman of the board failed to ensure the implementation of written instructions given by the Bank of Lithuania and the compliance of the credit union activities with requirements of legal acts. Additionally, by accepting deposits from unprofessional market participants with higher then the average time- deposit annual interest rates, the credit union attempted to attract as many as possible funds which were afterwards invested into risky assets without a proper assessment of the assumed credit risk and having no sufficient capital to cover possible losses.
”A strict measure of enforcement has been applied with the intention that this action will force the credit union to stop the development of over-risky activities, to reduce with responsibility the scope of risky assets and to implement instructions given by the Bank of Lithuania, ”, was the comment given by Vytautas Valvonis, head of the Supervision Service, on the decision. According to him ”...the aim of such a decision was to ensure a safe and sound business of the union. Also regard was given to the fact that the credit union ”Laikinosios sostinės kreditas” had been earlier given clear written instructions, Unfortunately, ”persuasion” measures given earlier did not result in a proper impact.”
Vytautas Valvonis accents that the application of enforcement measures aiming at ensuring the compliance of requirements set in legal acts for the regulation of credit union activities should not make a negative effect either on the stability of the said credit union or, the more so, to the credibility of the domestic system of credit unions.