Bank of Lithuania

1. Taking into account the results of the examination of HANSABANK that took place from 17 January 2000 until 11 February 2000, the Board of the BoL instructed HANSABANK to remove all shortcomings established during the examination by 1 May 2000 and report to the Credit Institutions Supervision Department of the BoL.

The examination looked into the main fields of the Bank’s operations, including management, asset quality, capital, liquidity and sensitivity to market risks as of 1 January 2000 and during the whole period after the establishment of the Bank.

At the time of the examination, HANSABANK complied with all prudential requirements set by the BoL. The examination report contained instructions to remove several minor shortcomings.

This was the first examination of HANSABANK. During the examination, the management of the Bank focused on the formation of the Bank’s structure and staff, formalisation of the main fields of activity and search for clients. Currently, the head office of the Bank employs 48 persons in three departments. The Bank has two branches.

2. The Board reviewed the results of the examination of foreign bank branches operating in Lithuania.

For the first time, on-site examination of the local branches of the Polish bank Kredyt Bank S.A. and the French bank SOCIETE GENERALE was carried out from 17 January 2000 through 4 February 2000.

The examination focused on the correctness of statements presented to the BoL as of 1 January 2000 and the analysis of income and expenditure structure.

It was established that the statements presented to the BoL contained certain misstatements in the case of both banks. The banks were instructed to ensure the correctness of the statements presented to the BoL.

3. The Board resolved to register amendments to the statute (by-laws) of Bank “Snoras” related to the increase of its share capital up to LTL 137 267 200.

4. The Board approved the regulation for establishing countries for which low risk level (A group), medium risk level (B group) and high risk level (C group) is applied.

Country risk is one of the major risks that should be taken into account according to the recommendations of the Basle Committee on Banking Supervision. Country risk is used in estimating bank asset, interest rate, credit and other risks. Until now country risk was only estimated in capital adequacy rules and the main criterion of country risk was its membership in the OECD and the EU.

Following the recommendations of the Basle Committee on Banking Supervision, the new regulations will include credit ratings set by international rating agencies in estimating country risk.

5. The Board amended the Rules for the Calculation of Capital Adequacy approved on October 1996.

The amendments are related to the changes in the principles for estimating country asset risk. As of now, the Rules will establish the principles for the division of countries into A, B and C risk groups instead of providing a list of countries with a low asset risk level.

6. The Board resolved to amend and supplement the Rules for the Classification of Doubtful Assets approved on 24 April 1997.

The resolution is in line with the provisions of EU directives and recommendations of the Basle Committee on Banking Supervision that country risk should be used as one of the main criteria in estimating the borrower.

7. The Board approved the rules for repurchase transactions between the BoL and the banks and established that as of the date of the resolution coming into force repurchase transactions will be concluded only with those banks that have signed a new agreement with the BoL on repurchase transactions.

8. The Board registered the new edition of Vilniaus Bank statute approved at the general shareholders meeting on 4 February related to the increase of the Bank’s share capital.

Given the Bank’s intentions to increase the number of operations, the Board changed the Bank’s license granted on 6 October 1992 into a license without restrictions allowing the Bank to carry out all banking operations provided by the Law of the Republic of Lithuania on Commercial Banks.

The Board also revoked the banking license issued to Bank HERMIS on 6 October 1992.