Bank of Lithuania
2005-01-27
1. The Board of the Bank of Lithuania reviewed the results of the inspection of Joint Stock Company Bank Hansabankas performed from 25 October to 10 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 management, internal control, management of individual risks (credit, liquidity, market and operating risks) and compliance with regulating legislation and the Bank’s internal regulations.

The inspection noted that, at the time of inspection, Hansabankas complied with all prudential requirements of the Bank of Lithuania.

It was proposed that Hansabankas should improve the rules on the assessment of doubtful assets, their classification and making of specific provisions and related documentation and ensure compliance with their provisions. The Bank was instructed to ensure that the data to the loan risk database is submitted in accordance with the rules approved by the Board of the Bank of Lithuania. In addition, it was recommended that the measures of physical security of the Bank’s property and employees should be strengthened and that appropriate control over the third party entrusted with the Bank’s security and collection activities should be ensured.

2. The Board was presented the payment system Litas assessment report by the Department of Payment Systems of the Bank of Lithuania.

The system Litas received a favourable assessment based on the ten basic principles set by the Bank for International Settlements for systemically important payment systems, which are also used by other European Union central banks in assessing their payment systems.

The payment system LITAS operated by the Bank of Lithuania went live on 19 January 2004 and replaced the payment system TARPBANK that had been operating since 1993. The system LITAS is designed to execute payment orders in real time and at designated time. The security and reliability measures implemented in the new system are based on national and international standards.

At the end of last year, the participants of the system LITAS were the Bank of Lithuania, 9 domestic banks, 2 foreign bank branches and the Central Credit Union. 11 securities market participants (the Central Securities Depository of Lithuania and financial brokerage companies supervised by the Securities Commission) also used the system for securities settlements.

Last year the system LITAS processed 15.8 million payment instructions the value of which amounted to LTL 193.9 billion. The largest volume of payment operations (114,186) was performed on 30 December. The largest value of payment operations (ca. LTL 1,356 million) was recorded on 31 December.

This year and the next will be used for preparing to link the system LITAS to the payment system TARGET of the European System of Central Banks.