2008-05-15
1. The Board of the Bank of Lithuania was presented information of the Credit Institutions Supervision Department on the recent inspection of AB Bankas Hansabankas. The inspection focused on the bank’s management and internal control and the management of credit, liquidity, operational and market risks.
It was noted during the presentation of the inspection report that AB Bankas Hansabankas remains the second largest bank of the country in terms of the asset size. It increased its volume of operations rapidly. Due to a shortage of local financing sources for the financing of the bank’s development, an increasingly larger portion of funds was attracted from Swedbank, main shareholder of the Hansabank group.
Taking into consideration the changes in the market, the bank monitored and assessed the level of risk assumed more closely. A conclusion was made during the inspection that from the second half of 2007 the decisions taken by the bank in the area of credit risk management reflect a more conservative attitude towards development and the risk assumed. Actions for the reduction of the impact of potential negative market developments on the bank’s crediting activity in the future were taken. The bank paid much attention not only to business development, but also to the increase of business efficiency and the improvement of various risk management systems.
The inspection report presented several remarks regarding the improvement of certain areas of activity of AB Bankas Hansabankas, which should be implemented by 1 October 2008. An action plan should be prepared and submitted to the Bank of Lithuania for this purpose.
2. Permission for AB SEB bankas to repay a subordinated loan before maturity
The Board of the Bank of Lithuania issued permission for AB SEB bankas to repay before maturity a subordinated loan of EUR 15,000,000 (LTL 51,792,000) received from Skandinaviska Enskilda BankenAB, North European financial group, according to the subordinated loan agreement of 30 June 2000.
According to the agreement, this loan matures on 30 June 2013. AB SEB bankas expressed its wish to take advantage of the possibility of an advance termination of the agreement and to repay the loan on 30 June 2008. It would allow reducing the resource borrowing costs of the bank.
According to the current General Provisions of Subordinated Loans and Their Inclusion in Bank's Capital, the Board of the Bank of Lithuania issues permission to repay a subordinated loan before maturity, if it does not have a negative impact on the bank’s solvency and compliance with prudential requirements.
3. Issue of a banking licence to AB bankas FINASTA
The Board of the Bank of Lithuania decided to issue a banking licence to AB bankas FINASTA that grants a right to provide the licensed financial services listed in Paragraph 6 of Article 2 of the Law of the Republic of Lithuania on Banks, with the exception of the trade in precious metals.
After starting its activity, the bank will be able to provide the following financial services: acceptance of deposits and other repayable funds from non-professional market participants; money transfer; issue and administration of electronic money; other financial services, with the exception of the trade in precious metals.
AB bankas FINASTA completed all bank establishment procedures provided for by legal acts: a consent of the Bank of Lithuania to the acquisition by AB “Finasta įmonių finansai” of the qualifying holding of the authorised capital and/or voting rights of AB bankas FINASTA and a permission of the Bank of Lithuania for AB “Finasta įmonių finansai” to establish AB bankas FINASTA were obtained. All shares of AB bankas FINASTA are held by AB “Finasta įmonių finansai”.
AB bankas FINASTA was registered in the Register of Legal Entities on 2 January 2008.
4. Instructions to credit institutions aimed at the prevention of money laundering and/or terrorist financing
The Board of the Bank of Lithuania adopted the new Instructions to credit institutions aimed at the prevention of money laundering and/or terrorist financing. These instructions are dedicated to banks and other credit institutions that have a licence issued by the Bank of Lithuania and foreign bank branches operating in the Republic of Lithuania.
This document reflects the provisions of the Law of the Republic of Lithuania on the Prevention of Money Laundering and Terrorist Financing that came into effect on 24 January 2008. The said provisions regulate the prevention of not only money laundering, but also terrorist financing, implementation of the risk-based method, procedure for the simplified and stricter verification of customer’s identity; special attention is paid to suspicious, unusual and complex monetary transactions and operations.
During the preparation of the Instructions to credit institutions, 40 recommendations and 9 special recommendations of the Financial Action Task Force (FATF) and the recommendations indicated in the report for the 3rd stage of assessment of the implementation of money laundering prevention measures in the Republic of Lithuania prepared by Money Laundering Prevention Experts Committee of the Council of Europe were taken into account.
The instructions emphasize the cases when credit institutions must take measures and identify and verify the identity of a customer or a beneficiary, including: before performing one-off or several interrelated monetary operations or concluding transactions that exceed the amount of EUR 15,000 or an equivalent amount in foreign currency, irrespective of the performance of the transaction in one or several interrelated operations; before exchanging cash, if the amount of the cash exchanged exceeds EUR 6,000 or an equivalent amount in foreign currency.
Credit institutions must classify customers to risk groups according to the criteria and procedures for the classification of customers into risk groups established in their internal documents. According to the instructions, the creation of a comprehensive “portrait” of a customer is one of the main elements ensuring efficient management of the risk of money laundering and/or terrorist financing.
Credit institutions are required, among other things, to verify whether their customer is not included in the consolidated list of persons, their groups and enterprises and institutions to which financial sanctions of the European Union are imposed (the updated consolidated list is published on the official website of the European Commission).
Credit institutions are prohibited to start and continue correspondent banking or other relationships with fictitious banks (characteristics of such banks are listed on the website).
It is established in which cases credit institutions must suspend suspicious and unusual monetary operations and inform about it the Financial Crime Investigation Service under the Ministry of the Interior.
The Bank of Lithuania presented the first methodical recommendations to credit institutions on the money laundering prevention in 1999.
After adopting the new Instructions to credit institutions aimed at the prevention of money laundering and/or terrorist financing, the Resolution the Board of the Bank of Lithuania of 25 November 2004 on the same issues was declared invalid.
5. Declaring legal tender and issue into circulation of the 50 litas commemorative coin dedicated to the Kaunas Castle (from the Series “Historical and Architectural Monuments of Lithuania”)
The Board of the Bank of Lithuania decided to declare the 50 litas commemorative coin dedicated to the Kaunas Castle as legal tender and issue it into circulation on 23 May 2008.
The graphic design and the plaster model of this coin were created by Giedrius Paulauskis.
The mintage of silver commemorative coins dedicated to the Kaunas Castle is 10 thousand pcs. They were minted by UAB “Lietuvos monetų kalykla” (Lithuanian Mint).
It will be the seventh commemorative coin in the series “Historical and Architectural Monuments of Lithuania”. This series was started in 2002.