2005-02-04
1. The Board of the Bank of Lithuania reviewed the results of the inspection of Joint Stock Company PAREX BANKAS performed from 29 November to 23 December, 2004 and instructed the Bank to remove the shortcomings in its operations indicated in the inspection report by 1 April 2005.
The inspection focused on the Bank’s management, internal control, management of individual risks (credit, liquidity, market and operating risks) and compliance with regulating legislation and the Bank’s internal regulations for the period form 1 November 2003 to 31 October 2004.
It was established that during the period under review PAREX BANKAS complied with all prudential requirements set by the Bank of Lithuania.
PAREX BANKAS was instructed to assess the shortcomings in relation to the rules on the classification of doubtful assets and the making of specific provisions indicated in the inspection report, make the necessary changes, review the classification of doubtful assets and the specific provision on such assets.The Bank was also instructed to ensure compliance with internal liquidity risk limits.It was also recommended to improve its operating risk management system.
2. The Board gave permission to the Joint Stock Company Ukio Bankas to include into tier two capital a subordinated loan of USD 1.5 million with the maturity of five years received from the company Samsung U.K. Limited registered in the United Kingdom.
Under the current arrangements, the Board of the BoL issues a permission to include a subordinated loan into a bank’s capital if such a loan is deemed not to have any negative influence on the bank’s financial standing and meets the set conditions.
According to Ukio Bankas, the inclusion of the subordinated loan into the capital base will help to streamline the maturity structure of the Bank’s assets and liabilities, while the use of the funds will generate additional income and will strengthen the Bank’s financial standing.
According to the data presented by Ukio Bankas, as on 31 December 2004 the adjusted capital of the Bank was LTL 107,2351 million, and its capital adequacy ratio was 9.26 per cent.
3. The Board was presented a review of the operations of domestic credit institutions and the activities of the Credit Institutions Supervision Department of the Bank of Lithuania in the fourth quarter of 2004.
According to the unaudited financial statements for 1 January, total assets of operating domestic commercial banks made up LTL 29.1 billion, increasing over the year by LTL 7.1 billion, i.e. 32.3 per cent.Total loans granted to clients amounted to LTL 16.9 billion, increasing in comparison with 1 January 2004 by LTL 4.8 billion, or 39.7 per cent.Deposits held with domestic banks totalled LTL 17.9 billion, increasing over the year by LTL 4.3 billion, or 31.6 per cent, of which deposits of individuals made up LTL 9.8 billion, up by LTL 1.9 billion, or 24.4 per cent, over the year.
According to the unaudited financial statements for 1 January 2005, all domestic commercial banks and foreign bank branches were profitable last year.The total profit of domestic banks amounted to LTL 296.9 million, of which commercial banks earned LTL 290.2 million and two foreign bank branches LTL 6.7 million.In 2003 the Lithuanian banking system posted a profit of LTL 233.7 million.