Bank of Lithuania

1. The Board discussed the results of the inspections of Vilniaus Bankas and VB Mortgage Bank.

On the date of the inspection both banks complied with all prudential requirements. The banks were presented the conclusions of the inspection and comments to be taken into consideration.

2. The Board gave its consent to Vilniaus Bankas for repaying a subordinated loan of EUR 22 million to the International Financial Corporation before maturity and including in its eligible capital a subordinated loan of EUR 15 million received from Skandinaviska Enskilda Banken on 30 June 2002, following the terms of the subordinated loan agreement changed on 20 August 2003.

According to Vilniaus Bankas, the above loan restructuring actions are aimed at ensuring effective use of subordinated loans, reducing borrowing costs and optimising the capital adequacy ratio of the bank and the banking group.

The permission to repay the subordinated loan before maturity is granted in cases when it is considered that the repayment of a loan before maturity will not have a negative impact on the financial condition of a bank and its ability to comply with prudential requirements within a three-year period.

3. The Board reviewed the results of the inspection of the Lithuanian Central Credit Union (LCCU). On the date of the inspection the LCCU complied with all prudential requirements. The LCCU was instructed to remove all deficiencies noted in the inspection report by 30 September 2003.

4. The Board amended the General Provisions for the Accounting and Recording of Specific Provisions for Doubtful Assets in Financial Statements.

The amendments extend the period for writing off Category 5 assets from one control period (i.e. one quarter) to two control periods (two quarters). The reason for the amendment was that the legal proceedings in relation to the takeover of the collateral while writing off doubtful assets usually take longer than the previously set period for writing off doubtful assets.

In addition, the amendment streamlined the procedures for the accounting of specific provisions.

5. The Board discussed the Payment and Securities Settlements System Supervisory Policy. The Policy is to be approved at the next meeting of the Board.

6. The Board approved the procedures for the registration of payment and securities settlements systems, data management and their publication. It establishes the procedure for the registration of systems at the Bank of Lithuania, the procedure for drawing up an official list of systems, management of data in the list and their publication.