2006-06-29
1. The Board of the Bank of Lithuania was presented a report on the development and implementation of the integrated risk management process in the Bank of Lithuania.
The report contained the analysis and formal description of the bank’s operational procedures, links between them, as well as detailed examination of the functions and responsibilities of each bank structural unit; it also presented the evaluation of the operational efficiency and the targeted operational indicators. Attempts were also made to identify and measure the risks for each process separately, to analyse risk probability, ways to control it and the efficiency of risk preventing efforts. The authors of the report defined the acceptable risk level for the bank and the ways to maintain it.
The Bank of Lithuania now has the risk management division the major task of which is to guarantee an uninterrupted risk management process in the Bank of Lithuania on the basis of existing risk management methods and respective documents.
Experts from the UAB Ernst & Young Baltic contributed to the implementation of the project.
2. The Board of the Bank of Lithuania allowed AB SEB Vilniaus bankas to include the subordinated ten-year loan of EUR 20 million into Tier II capital; according to the data for 1 June 2006, the capital base (recalculated bank capital) of SEB Vilniaus bankas would be LTL 1.299 billion.
According to SEB Vilniaus bankas, the higher bank’s capital base will provide an opportunity to expand banking operations and ensure compliance with prudential requirements. Moreover, the subordinated loan will have a positive effect on the bank’s liquidity ratio.
3. The Board of the Bank of Lithuania gave permission to liquidate AB SEB VB busto bankas.
The banking licence issued to AB SEB VB busto bankas by the Board of the Bank of Lithuania on 25 April 2002 was cancelled (with the effect from the moment the general meeting of shareholders takes the decision to liquidate AB SEB VB busto bankas and appoint the receiver). AB SEB VB busto bankas was instructed to return the banking licence following the existing procedures.
The data submitted to the Bank of Lithuania showed AB SEB VB busto bankas was able to settle the creditor claims.
AB SEB Vilniaus bankas is one and only stockholder of AB SEB VB busto bankas.
4. The Board of the Bank of Lithuania gave permission to the joint stock company Ukio bankas to register statute amendments related with the increase of the bank’s authorised capital up to LTL 176.708 million as approved by the extraordinary general meeting of the shareholders on 23 December 2005.
At present, the bank’s authorised capital amounts to LTL 126.708 million.
The latest data submitted by Ukio bankas showed the underwriting of the 50 million of ordinary registered share (with par value of 1 litas) issue came to an end on 19 May 2006. All the shares have already been paid.
5. The Board of the Bank of Lithuania made some amendments to the rules on the LITAS payment system, according to which ordinary payments shall be effected at 9 am in addition to 12 am, 3 pm and 4 pm. as it used to be until now. The said decision will come into effect on 10 July.
The request to revise the current procedure for the time of payment came from the Lithuanian Banking Association, the major argument of which was that the early execution of ordinary payment orders would allow banks to send and receive ordinary payment orders on weekends, holidays, at night time and in the evening of a previous working day.
The LITAS payment system has been in use since 19 January 2004 showing a gradual increase of the number of processed payment orders. In 2004, the number of payment orders processed by the system reached as many as 15.3 million of which 14.9 million accounted for ordinary payments. In 2005, the number grew to 18.5 million (18.2 million of ordinary payments). The latest data showed this trend has remained unchanged until today.
6. Resolution No. 2 of the Board of the Bank of Lithuania “On the production and issue of the numismatic sets of circulation coins of the year 2006” dated 12 January 2006 was declared void.
The date of the issue of the new numismatic coin sets had to be postponed for some time because of the failure to sell the numismatic coin sets of 2003 as well as for some other reasons.
7. The Board of the Bank of Lithuania also approved the standard of the 5 litas commemorative coin dedicated to the Uprising of 1831 in Lithuania and the 200th birth anniversary of its heroine Emilija Pliateryte. The coin should be issued in Q3 this year.
The author of the coin is the artists Giedrius Paulauskis.
8. The Board of the Bank of Lithuania decided to order 60 million units of 20 litas banknotes of 2007 issue and 20 million units of 20 litas banknotes of 1997 issue as the Bank of Lithuania wants to replenish banknote stocks.
The only issue of 200 litas denomination banknotes was produced in 1997; it appeared in circulation on 27 November of the same year. The growing amount of currency in circulation made 200 litas banknotes most popular very soon. According to the data of 31 May this year, they accounted for 34.6 percent of all the currency circulating in Lithuania. The demand for them was growing further. The banknotes of the said denomination are often used in ATMs.
The 20 litas denomination issues of different designs and gradually increasing security level were issued in 1991, 1993, 1997, and 2001. According to the data as of 31 May this year, 20 litas banknotes accounted for 2.7 per cent of all the currency circulating in Lithuania. Counterfeiting of Lithuanian banknotes has remained relatively low; however the 20 litas denomination banknote can be called most popular among the counterfeiters over the three recent years. Therefore, the plans are considered to improve the security level of these banknotes further (with no changes in the design) when replenishing banknote stocks.
9. The Board of the Bank of Lithuania also was presented the Financial Stability Review for 2005 prepared by the Economics Department of the Bank of Lithuania.
The key objective of the financial stability analysis is to trace both domestic and external threats for the country’s financial system and assess the system’s capability to face domestic and external shocks.
The very first Financial Stability Review prepared by the Bank of Lithuania is primarily meant for the analysis of the country’s financial system with the focus laid on the situation in the domestic banking sector and its borrowers (households and non-financial enterprises).
“We hope regular financial stability reviews in the future will help to identify better potential risks for Lithuania’s financial system as well as prompt a discussion on financial stability among the financial market participants, economic experts and all those interested in financial markets,” said Reinoldijus Sarkinas, Chairman of the Board of the Bank of Lithuania.
The Financial Stability Review 2005 will soon be published on the website of the Bank of Lithuania.