2012-08-17
To improve the supervision of credit unions, the Bank of Lithuania has established tighter requirements for credit union executives. Credit union executives whose qualifications raise doubts or candidates to take the position, who do not meet the minimum requirements will have to take a special examination.
“Almost half a hundred of enforcement measures have been imposed on domestic credit unions in the last few years for breaching prudential and other requirements. This shows an obvious lack of competence among some executives of credit unions. For credit union heads to be experts in this field of activity, we have raised the bar on their qualifications and experience. By this we expect to ensure more responsible management of credit unions as they hold and use depositor money,” Vytautas Valvonis, director of the Supervision Service of the Bank of Lithuania, said.
The amended Rules for Granting the Authorisation to Become a Credit Union Executive provide for tighter qualification and experience requirements. For example, according to the rules, the board chairperson in a credit union and at least one member of the board must hold a university diploma and have at least 2 years (over the last 5 year-period) of management experience in a legal entity or its branch. By now, there had to be at least one board member in a credit union with a higher education degree in law, management and business administration or economics with at least one year (over the past 5 years) work experience as an inspector, auditor, auditor’s assistant, lawyer, accountant, book-keeper, head of a legal entity or its branch, etc.
If an individual applying for the position of an executive in a financial market participant does not meet the specified requirements, he may take a special examination. Credit union heads, whose competence may raise doubts to the Bank of Lithuania, will be requested to take the said examination too for the revaluation of their qualifications and experience.
The examination procedure and evaluation criteria have been set in the Rules for the Examination of an Executive of a Financial Market Participant which is under the Supervision by the Bank of Lithuania. The latter were approved today by the Bank of Lithuania.
The rules also provide for a standing examination commission to be formed in the Bank of Lithuania. The examination will be performed in the form of a test made up of 50 questions. It will take no longer than 90 minutes. In order to pass the test, correct answers are to be provided for at least 80% questions. In case of a failure, an examinee will be allowed to take the examination repeatedly, but no earlier than after six months.
Tighter requirements for executives of credit unions and examination rules are to come into force on 1 November 2012.
In the meaning of the Law on Credit Unions, the term credit union executives is applied to members of a credit union’s supervisory council, its board, head of the administration, internal audit division, head of the loan committee, and chairperson of the Audit Committee.
Currently, there are 76 credit unions and the Central Credit Union of Lithuania operating in Lithuania, which have 138 thousand members.