2014-04-30
The operating license of the credit union Naftininkų investicijos has been revoked
Taking account the significant lack of money and other violations identified during an inspection of the credit union Naftininkų investicijos, and that its assets are less than its liabilities, and that the credit union could not provide actual solvency-restoring decisions, the Board of the Bank of Lithuania recognised this credit union as being insolvent and revoked its operating license.
According to the balance sheet statement provided by the credit union to the Bank of Lithuania, the assets of credit union amount to LTL 10.87 million, while its liabilities amount to LTL 12.3 million, i.e. the credit union’s capital is negative LTL –1.43 million. Having assessed the loan impairment losses identified during the inspection, the real capital deficiency would be even greater.
During the inspection it was also identified that the credit union’s management did not ensure efficient internal control, it assumed unreasonably high risk that led to significant losses that exceeded the credit union’s equity capital. In addition, credit union did not sufficiently asses the financial status of borrowers, did not create the necessary special provisions to mitigate risk, therefore the credit union is in violation of the Law on Credit Unions, the Law on Financial Institutions and the requirements provided in other legislation.
Having identified the financial violations and seeking to halt the risk growth, the Bank of Lithuania already of 9 April, until the end of inspections, prohibited credit union from accepting deposits and providing loans and also removed the heads.
Taking into account the violations identified during the inspection and the fact that according to the financial statement data the credit union did not perform all of its, except for liquidity, prudential requirements, as well as the fact that its assets were less than its liabilities, while the credit union could not provide actual solvency-restoring decisions, the Board of the Bank of Lithuania recognised this credit union as being insolvent and permanently revoked its operating license. Having its license revoked, credit union does not have the right to provide financial services.
In the nearest future, Klaipėda District Court will be requested to open bankruptcy proceedings for credit union. UAB Insolvensa has been proposed as administrator of the credit union.
Temporarily, the Board of the Bank of Lithuania, until Klaipėda District Court makes the decision to initiate bankruptcy proceedings, limited NI’s right to use the funds and dispose of the securities in the accounts of credit institutions. The Board of the Bank of Lithuania also permanently removed duties the Head of the Administration and Chair of the Board of NI, Lilijana Laškova, as well the Chairman of the Loans Committee, Semion Laškov.
This credit union is not a member of the Lithuanian Central Credit Union and, in terms of its assets, at the end of last year took up 0.6 per cent of the whole credit union market.
According to the Law on Insurance of Deposits and Liabilities to Investors, enforcement measures applied due to insolvency is an insured event; therefore the credit union’s depositors will be paid deposit interest compensations. Preliminary data shows that 220 depositors, entitled to insurance claims, will be compensated about LTL 11.8 million.
The insurance claims will be paid and calculated according to the procedures approved by the public company Deposit and Investment Insurance (Indėlių ir investicijų draudimas). According to it, in the case of an insured event, 100 per cent of the deposit amount is compensated, if it does not exceed EUR 100,000 (LTL 345,280). The claim is paid out to the customer within 20 days after the date of the insured event — 30 April 2014. The Board of Deposit and Investment Insurance can extend the claim payment period, but no longer than 10 business days.
The most up-to-date information on the credit union Naftininkų investicija, relevant to customers, is provided by phone in Klaipėda (8 46) 210 878 or on the website http://www.naftininkuinvesticijos.lt). Information of the decisions of the Bank of Lithuania can be found via the Bank of Lithuania’s special phone-line (8 5) 268 0068 or on the website (http://www.lb.lt). More information on deposit insurance can be found on the website of the public company Deposit and Investment Insurance (http://www.iidraudimas.lt) or by phone: (8 5) 213 5657.