Resolutions of the Board of the Bank of Lithuania

The Supervision Service was authorized to solve independently certain financial market supervision issues

The Board of the Bank of Lithuania authorized the Supervision Service and its two departments to solve according to their competence certain financial institutions supervision issues. Such possibilities are provided by the Law on the Bank of Lithuania.

The Supervision Service of the Bank of Lithuania was authorized to apply enforcement measures provided by the laws, to issue instructions and obligations, to apply prohibitions and other measures to the supervised financial market participants, with the exception of banks, the Central Credit Union of Lithuania, insurance undertakings, branches of foreign banks and insurance undertakings established in the Republic of Lithuania.

The Supervision Service was also authorized to solve issues related to the issue of licences, permissions, consents, approvals, non-objections, suspension of their validity, cancellation of the suspension of their validity and their revocation (cancellation of validity), with the exception of some cases.

The Prudential Supervision Department of the Supervision Service of the Bank of Lithuania will be entitled to issue permissions to register amendments to the articles of association (regulations) of supervised financial market participants (to approve amendments to the articles of association, to coordinate them), with the exception of issuing permissions to register amendments to the articles of association concerning the size of the authorised capital. The Prudential Supervision Department will also issue permissions to elect or appoint the managers of supervised financial market participants (with the exception of banks, the Central Credit Union of Lithuania, insurance undertakings, branches of foreign banks and insurance undertakings). The Supervision Service will be entitled to cancel these permissions.

The Board of the Bank of Lithuania authorized the Financial Services and Markets Supervision Department of the Supervision Service to solve issues related to the issue of financial broker licences and their termination, including the decisions on suitability of a person’s qualification to perform the functions of a financial broker. The Department will also solve the issues related to the inclusion of natural persons in the list of insurance brokers or exclusion from this list, issue of insurance broker certificates and their temporary suspension, advance coordination of the content and form of advertisements of pension accumulation activity.

The resolution of the Board of the Bank of Lithuania will not be applicable when conducting the oversight of the operators of payment and securities settlement systems and performing other functions assigned to the Bank of Lithuania by the Law on Settlement Finality in Payment and Securities Settlement Systems.

Taking into consideration the authorizations granted to the Supervision Service, the resolutions of the Board of the Bank of Lithuania, which directly provided that certain issued related to the supervision of credit institutions and other entities should be solved only by the Board of the Bank of Lithuania, were amended accordingly.

According to today’s resolution, the Board of the Bank of Lithuania will continue to deal with the main issues related to the licensing of financial market participants, enforcement measures applicable to banks, the Central Credit Union of Lithuania, insurance undertakings, branches of foreign banks and insurance undertakings and other key issues related to the financial markets supervision. It was also established that the Board of the Bank of Lithuania will retain the right to solve any issue to be solved by structural units of the Bank of Lithuania.

A new unit of the Bank of Lithuania, the Supervision Service, which started its operation in the beginning of this year, supervises commercial banks and other credit and payment institutions, securities and insurance markets, and investigates disputes between consumers and financial institutions. Up to now, these functions were performed by the liquidated Securities Commission and Insurance Supervisory Commission, as well as the Credit Institutions Supervision Department of the Bank of Lithuania. The State Consumer Rights Protection Service and the Insurance Supervisory Commission were responsible for the investigation of the disputes between consumers and financial institutions.

Public lists of consumer credit lenders and borrowers amended

From the beginning of this year, the Bank of Lithuania performs the supervisory functions for the activity of consumer credit lenders and consumer credit intermediaries, including the administration of the public list of consumer credit lenders and consumer credit intermediaries.

The Board of the Bank of Lithuania decided today to include 175 new intermediaries of 4 consumer credit lenders BIGBANK AS branch, UAB ,,General Financing“, UAB ,,NORDEA FINANCE LITHUANIA“ and UAB Ūkio banko lizingas in the public list of consumer credit intermediaries. The supplemented list is published on the website of the Bank of Lithuania.

It was also decided to remove 2 intermediaries of consumer credit lender UAB ,,General Financing“ from the public list of consumer credit intermediaries.

In addition, the decision was made to remove the bankrupt company AB bankas SNORAS from the public list of consumer credit lenders.

Candidates to become ADB “ERGO Lietuva” board members and the head of administration approved

The Board of the Bank of Lithuania approved Kęstutis Bagdonavičius as a candidate to hold the position of the Chairman of the Board of ADB “ERGO Lietuva” and Deniss Sazonovs, Maarika Liivamagi and Saulius Jokubaitis as candidates to hold the positions of members of the Board of this company.

The Board of the Bank of Lithuania also approved Saulius Jokubaitis as a candidate to hold the position of the Head of Administration of ADB “ERGO Lietuva”.

These resolutions were made under the requests of UADB “ERGO Lietuva”.

UADBB “ERGO Lietuva” informed the Bank of Lithuania that this company’s shareholder ERGO International AG took the decision to reorganise UADBB “ERGO Lietuva” and re-elected the supervisory board. The supervisory board intends, by the end of the reorganisation, to re-elect the current board members to the board of the insurance company of the new legal form (joint stock insurance company), whereas the board of the insurance company of the new legal form intends to re-elect the current head of administration to the insurance company of the new legal form

The procedure for issuing permissions to apply the operational risk advanced measurement approach

Taking into consideration, the new requirements of the European Banking Authority, the Board of the Bank of Lithuania amended the Procedure for Issuing Permission to Apply Internal Rating-Based Credit Risk Assessment Approach and Operational Risk Advanced Measurement Approach. The procedure is applicable to the banks that have a license of the Bank of Lithuania and the Central Credit Union of Lithuania or the group of a parent bank belonging to a financial group that wish to apply the foundation or advanced internal rating-based credit risk assessment approach (IRB) and/or the operational risk advanced measurement approach (AMA) when calculating capital adequacy.

The document that was supplemented today provides that the banks applying or planning to apply the AMA approach that do not have parent banks in other EU Member States must prepare the AMA change policy, including the measurement of their reliability, proper documentation, distribution of responsibility and independent review of the AMA changes. The requirements were established how the bank should classify potential AMA changes by their importance to established categories, as well as potential criteria based on which the bank should perform such classification.

The banks that have parent banks in other EU Member States, upon receiving permission to apply the AMA approach in the financial group, will not prepare a separate AMA change policy, however, they will need to prove that they will be able to apply the financial group’s AMA change policy.

The document defines the potential actions of the Bank of Lithuania, depending on the importance of the planned AMA changes. In those cases when the bank plans to implement AMA extensions or significant changes, it is necessary to obtain permission of the Bank of Lithuania in advance. The bank may be additionally instructed to improve AMA changes or to perform a parallel calculation of the capital requirement, so that it is possible to assess the quantitative impact of AMA changes on the capital base. It is not necessary to obtain permission for the implementation of important AMA changes, however it is necessary to obtain the reply of the Bank of Lithuania that it does not object to the implementation of changes. Insignificant AMA changes may be implemented without advance permission or the reply of the Bank of Lithuania concerning non-objection to their implementation, and such changes should be notified to the Bank of Lithuania once per year.