Bank of Lithuania

1. The Board discussed the results of the inspection of WEREINS-UND WESTBANK AG Vilnius Branch carried out from October 6 to October 15, 2003.

The inspection focused on the classification of doubtful assets, assessed the credit risk management policy and procedures and performed the analysis of the liquid assets and current liabilities, liquidity indicators, the trends in income and expenses, etc.

2. The Board discussed the participation of BoL representatives in the work of the committees of the European System of Central Banks (ESCB).

ESCB committees act as advisory bodies to the Governing Council of the European Central Bank within the fields of their competence and are accountable to it through the Executive Board. ESCB committees consist of representatives of the national central banks of the Eurosystem. Experts of the Bank of Lithuania have participated in the work of ESCB committees as observers from the date of the conclusion of the EU Accession Treaty.

At present the ESCB has twelve committees: Monetary Policy, Payment and Settlement Systems, Banknote, Banking Supervision, Market Operations, Statistics, International Relations, Accounting and Monetary Income, Information Technology, Legal, Internal Auditors and External Communications.

3. The Board established that the Bank of Lithuania would provide information on permissions granted to credit institutions and other related information to the credit institution supervisory authorities and other institutions of the EU Member States.

The decision was taken on the basis of the Directive of the European Parliament and the European Council on the establishment of credit institutions, under which the above information has to be provided and exchanged.

4. 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 73,040,000 to LTL 88,040,000.

5. The Board gave permission to Siaulių Bankas to register changes in its Articles of Association related to the increase of the share capital from LTL 43,343,940 to LTL 48,343,940.

6. The Board gave permission to register amendments in the regulations of branches of NORD/LB Lietuva.

The amendments take into account certain amendments in the provisions of the legal acts regulating financial accounting.

7. The Board took the decisions on the basis of which the entry into effect of the General Provisions for the Assessment and Classification of Doubtful Assets and Making Specific Provisions is postponed for half a year.

The Provisions approved on 20 March 2003 set the minimum requirements for operating banks in assessing and classifying doubtful assets and making general and specific provisions. The Provisions aim at creating a flexible and effective mechanism for establishing the net value of bank assets and off-balance sheet liabilities. The date of entry into effect of these Provisions was set for 31 December 2003.

The decision on postponing that date until 1 July 2004 was adopted on the grounds that the rules drafted by most banks, including the largest ones, did not fully meet the requirements set in the Provisions and did not follow sufficiently the conservative principle.

8. The Board introduced amendments in the General Provisions on the Organisation of Internal Audit in Banks.

The amendments specify that each bank subsidiary will have to have its own internal audit service. This decision took into account the fact that with the expansion of commercial bank investment activities and the increasing number of financial services provided by subsidiaries, each subsidiary needs to ensure adequate internal audit. Moreover, this is provided in the new Law on Financial Institutions.

The provision that was effective before was that the internal audit in subsidiary companies whose statements were subject to consolidation could in certain cases be performed by the internal audit of the parent bank.

9. The Board approved the results of the design competition for the 50 litas commemorative coin dedicated to the Pazaislis Monastery of Camaldolese Monks (series “Monuments of Lithuanian History and Architecture”). The design by Marius Zavadskas was nominated as the winner.

10. The Board decided to approve the results of the graphic design competition for the 50 litas commemorative coin to mark the 425th Anniversary of the Vilnius University. The design by Rytas Jonas Belevičius was nominated as the winner.