2021-01-28
Increased focus on cybersecurity
The Bank of Lithuania dedicates much effort to the strengthening of cybersecurity. In order to further boost competition in this priority area, the Bank of Lithuania has set an objective to become an advanced institution in terms of cybersecurity maturity level. It will seek to reach this objective by 2024, taking into account the guidelines established by the European Central Bank (ECB).
The objective is included in the Cybersecurity Strategy adopted by the Board of the Bank of Lithuania. The strategy establishes cybersecurity vision and sets specific objectives and tasks of its implementation as well as directions of its development.
The implementation of this strategy will enhance the Bank of Lithuania’s cybersecurity and resilience, improve the prevention, response and investigation of cyber incidents, foster cybersecurity culture of the staff and encourage the growth of innovation.
The Bank will also seek to eliminate or reduce as much as possible the causes of emergence of significant risks to cybersecurity as well as the probability of their materialisation.
The advanced cybersecurity maturity level is defined in the Cyber Resilience Oversight Expectations (CROE) published by the ECB in 2018.
The strategy’s objective will be achieved by implementing all measures indicated in the CROE methodology in five functional cyber resilience areas: governance and organisational setup; management of information assets and identification of cyber threats and vulnerabilities; protection of the bank’s cyber space; detection of cyber attacks, response to them and recovery as well as testing of components of these areas, situational awareness, learning and evolving.
Results of the Supervisory Review and Evaluation of Revolut Bank discussed
Capitalisation level of Revolut Bank UAB is sufficient and there no grounds to conclude that in the next 12 months the bank will be unable to comply with the regulatory capital requirements.
Such conclusions were presented by the Bank of Lithuania in the Supervisory Review and Evaluation Process (SREP) report.
Revolut Bank UAB was granted a specialised bank licence on 6 December 2018.
SREP focused on the start of Revolut Bank UAB activities, with particular attention paid to the implementation of the bank’s strategy and to the functioning of the internal governance arrangements.
Based on Revolut Bank UAB SREP, the Board of the Bank of Lithuania established a SREP Pillar II capital requirement amounting to 3.2% of the total amount of risk-weighted exposures.
It also established that Pillar II capital requirement should be met with at least 56.25% of the Common Equity Tier 1 capital and at least 75% of Tier 1 capital.
Revolut Bank UAB was obligated to draw up a plan for the elimination of deficiencies and the implementation of recommendations identified during the SREP by 1 March 2021.
On the basis of the SREP results, the Bank of Lithuania assesses whether transactions concluded by banks and the rules, strategies, processes and systems applied by them ensure appropriate bank risk management and whether their capital and liquidity reserves are sufficient to cover the assumed (or operational) risk.
Taking into account the SREP results, the Bank of Lithuania may instruct banks to hold a certain additional capital amount or apply additional capital adequacy requirements.
Supervisory Review and Evaluation Process of Mano bankas completed
Capitalisation level of AB Mano bankas is currently sufficient and the bank should not have difficulties to ensure the required level of capital. However, in the future, the bank’s financial performance will be mainly dependent on the amount of provisions related to the impact of the COVID-19 pandemic and the dynamics of operating costs.
Such a conclusion was made by the Bank of Lithuania during the first Supervisory Review and Evaluation Process (SREP) of AB Mano bankas, which operates as a specialised bank.
The SREP mainly focused on the bank’s capability to adequately respond to the challenges related to the COVID-19 pandemic as well as its resilience and capability to timely absorb the potential negative impact.
Considering the fact that the bank complies with the minimum capital adequacy requirement with a reserve, has not paid dividends for the previous year’s results, the quarantine has not affected the bank’s performance and its capital base is growing, the bank’s capital level is currently sufficient and in the coming 12 months it should ensure compliance with the regulatory capital requirements.
After the presentation of AB Mano bankas SREP conclusions, the Board of the Bank of Lithuania established a SREP Pillar II capital requirement amounting to 2.1% of the total amount of risk-weighted exposures.
The bank was also obligated to draw up a plan for the elimination of deficiencies and the implementation of recommendations identified during the SREP, including the deadlines and the persons responsible for their completion, by 1 March 2021.
Bank of Lithuania issues new electronic money institution licence
The Board of the Bank of Lithuania granted an electronic money institution licence to PAYMONT, UAB, authorising it to issue electronic money and provide certain payment services set forth in the Republic of Lithuania Law on Payments (execution of credit transfers and payment transactions covered by a credit line, issuance of means of payment, acquiring of payment transactions and money remittance).
The direct shareholder of the institution (owning 100% of its shares) is RONDA HOLDING a.s. (Czech Republic). Since the institution’s shareholders are closely related to the Czech Republic and its payment market (by managing or owning licensed companies supervised by the Czech National Bank), they intend to initially start providing their services to the shareholders’ existing customers and later increase their number across the entire European Union.