Meeting of the Board of the BoL
1. The Board discussed the results of the inspection of Kredyt Bank S.A. Vilnius Branch carried out from February 17 to February 27, 2004.
The Branch was requested to take into account the observations made during the inspection.
2. The Board gave permission to Sampo Bankas to register changes in its Articles of Association related to the increase of the share capital from LTL 88,040,000 to LTL 118,040,000.
3. The Board gave permission to the bank of the Federal Republic of Germany Norddeutsche Landesbank Girozentrale to transfer the funds to an account with the Bank of Lithuania for paying up the shares of a new issue of the bank NORD/LB Lietuva.
The decision followed the analysis of the documents on the origin of funds intended for paying up the share issue.
At present the share capital of NORD/LB Lietuva is LTL 176,585,430, while following the completion of the distribution of the new share issue it will be LTL 195,116,795.
4. The Board did not support the proposal from Vilniaus Bankas of introducing differentiated payment system LITAS service fees and reviewing the service fees at least one year after the start of the system’s operation.
The reason for the rejection of the proposal was that differentiated fees on the basis of the number of submitted payment instructions would give an advantage to the larger banks in comparison with the smaller ones.
The payment system LITAS developed by the Bank of Lithuania started its operation on 19 January 2004. It replaced the previous interbank funds transfer system TARPBANK. The key advantage of the LITAS system is that payment instructions can be executed in real time, i.e. immediately after the payment instruction is received. The LITAS system is maintained and operated by the Bank of Lithuania.
Further information on the system is available in the section “Payments” on the Bank of Lithuania web site (http://www.lb.lt/eng/payments/index.htm).
5. The Board approved the procedure for submitting information related to payment and securities settlement systems, their operators and participants to the Commission of the European Communities, authorised institutions of the European Union and EFTA countries and system operators.
The Procedure was approved in implementing the provision of the Republic of Lithuania Law on Settlement Finality in Payment and Securities Settlement Systems. The Law on Settlement Finality, implementing the provisions of corresponding European Parliament and Council directives, aims at securing the interests of participants of payment and securities settlement systems when the operations of one of the system participants are suspended or bankruptcy proceedings are initiated against it. The interests of system participants are secured by ensuring that transfer orders and/or payment instructions and their netting are valid and, even in the event of suspension of operations or bankruptcy proceedings against a participant, may not be disputed by third parties, if transfer orders and/or payment instructions were entered into the system before the suspension of operations of the system participant and/or the initiation of bankruptcy proceedings against it. For this reason it is essential for a system operator to be informed about the suspension of operations of a system participant or initiation of bankruptcy proceedings, as prior to the announcement of such a fact the participant’s payment instructions have to be executed, while, after such a fact has been announced, the system operator has to take measures not to include the payment instructions submitted by such a participant into the system.
The court or another authorised institution that takes a decision regarding the suspension of operations or initiation of bankruptcy proceedings against a system participant are obliged to notify the Bank of Lithuania immediately, which would notify the system operator.
Within the EU, Member States present information to the Commission with regard to their authorised institutions, contact persons and systems subject to directive requirements. If the operations of a system participant, registered in Lithuania and participating in the system of another Member State, are suspended or bankruptcy proceedings are initiated against it, the court or another authorised institutions has to notify the Bank of Lithuania thereof, which would in turn notify the authorised institution of that Member State. On the basis of this notification, the authorised institution of that Member State would further notify the operator of its payment system, which would take measures to exclude the payment instructions of the system participant from the system.
The resolution comes into effect as from 1 May 2004.
6. The Board approved the samples of the 50 litas commemorative coin and 1 litas circulation commemorative coin to mark the 425th anniversary of the Vilnius University.
The coins will be issued in the second half of April 2004.
7. The Board considered the report on the implementation of the Bank of Lithuania budget for 2003, approved the financial statements and allocated the profit of the Bank of Lithuania for 2003.
In 2003 the Bank of Lithuania earned an income of LTL 386.65 million and incurred LTL 253.41 million of expenses. Its profit amounted to LTL 133.23 million. The largest part of income came from foreign reserve management. Expenses consisted of interest on loans, deposits and open market operations, currency production and circulation expenses.
Pursuant to the Board’s decision, 50 per cent of the profit (LTL 66.61 million) was allocated to the reserve capital and 50 per cent (LTL 66.61 million) will be paid to the state budget.
8. The Board approved the rules for managing accounts with the Bank of Lithuania.
The Rules are aimed at simplifying the procedures for opening, closing and using the accounts of legal persons that have the right to have such accounts with the Bank of Lithuania.
According to the amended Rules, the relations between the Bank and a depositor do not have to be executed in writing, in contrast to earlier arrangements. Among the entities that will be able to hold accounts with the Bank of Lithuania are the European Central Bank, central banks of foreign states, the European Commission, the Bank for International Settlements, the International Monetary Fund, the European Bank for Reconstruction and Development, the World Bank and the Multilateral Investment Guarantee Agency.
The accounts will be opened in litas, the institutions will be provided the services of recording the funds in the accounts and transfer of funds from the accounts on the basis of their payment instructions, conversion of euro into litas and vice versa.
Corresponding amendments were made in the rules for managing depositor accounts with the Bank of Lithuania.
9. The Board approved amendments to the procedure for the design of litas and centas coins.
The amendments raised the prize for the design of graphic (artistic) projects of commemorative coins and royalties for making gypsum models and the author’s supervision.
This decision was taken in order to encourage authors’ participation in currency design work.