2012-02-23
Optimizing its operations the Bank of Lithuania will concentrate its key functions within specialised services, and will reform its network of vaults
The Bank of Lithuania is undertaking structural reform to achieve higher operating efficiency at a lower cost. Implementing the concept of a new structure approved by the Bank of Lithuania it is projected to concentrate performance of key functions within four specialised services as early as this year. It is also intended to reform the Bank’s network of vaults by the end of this year.
“We really have reserves and possibilities to raise the operating efficiency bar higher – we ascertained it was so after analysing the Bank’s functions, structure and costs, also examining the experience of other central banks”, Vitas Vasiliauskas, Chairman of the Board of the Bank of Lithuania, said.
According to him, to optimize its operations, the Bank has not only tightened control over its essential expenditure but is looking for new structural solutions to enable reducing operating expenses. Therefore it has been decided to concentrate the Bank’s operations in several large organisational units. Thus, according to Vasiliauskas, “not only the main activities will be crystallized out but the functions unrepresentative of a bank will be renounced”.
Through merging and reforming the Bank’s units it is projected to establish the Economic and Financial Stability, Banking, and Cash Handling Services. The Supervision Service has already been functioning since the beginning of this year. Support functions will be pooled within the Organization Service and several individual units.
The chosen model will help reduce the administrative body and expenses being allotted to it as the reform will diminish the number of different level leading and other positions currently existing at the Bank. The structure of new units and of those under reform, as well as the number of staff will become known in March to October this year.
The geography of vaults managed by the Bank of Lithuania is being revised in accordance with the concept of new structure too. In search of efficiency and lower cost it has been decided to concentrate the cash handling function within two branches – in Vilnius and Kaunas, renouncing the branch in Klaipėda.
Such a decision was taken to optimize the geographically wide network of vaults. Because of the necessity to service them, over more than ten years we have appeared in a situation when every second member of staff of the Bank of Lithuania performs cash handling, its security, and general services provision functions. The Klaipėda branch processes the least (17%) of the entire cash flow in the country with 1 only vault operating here out of the 8 vaults of the Bank of Lithuania. Analysis has revealed that if the cash flow accounting for the vault in Klaipėda, which uses just half of its capacity, would be directed to other Bank of Lithuania units, these would be able to do the same work without increasing their staff. Thus this move will enable to save.
The overall expenditure of the Klaipėda branch makes up nearly LTL 4 million annually. Only 11 out of the Branch’s 44 staff, or just one-fourth, are involved in cash handling operations. The other three-fourths carry out the administration, security, and general services provision functions mentioned above.
After discontinuing the operation of the Klaipėda branch the population of Klaipėda region is not likely to feel any inconvenience as a result of such a decision. The issue of the distribution of collector (commemorative) coins and of banknote acceptance for expertise (actually, in very rare cases) will be addressed in search of the most effective and user convenient way.
Discontinuing the operation of the Branch will take a toll on commercial banks which use the services of the Klaipėda branch and cash-in-transit companies hired by them. After closing this vault down, however, cash handling in Klaipėda region will be organized in the same way as in other cities without Bank of Lithuania vaults available, thus the said economic entities are likely to adapt themselves to the changed situation, moreover that there will be sufficient time to prepare for that. The operation of the Klaipėda branch is projected to be discontinued by the end of this year.
The property of the Klaipėda branch will be transferred by the Bank of Lithuania to the State Property Fund. The residual value of this property is LTL 18.6 million.
Having discontinued the operation of the Klaipėda branch, the staff of the Bank of Lithuania will shrink by 5.5% with total operating expenses shrinking to the same extent.