Important Banking-Related Issues Were Discussed at Bank of Lithuania
OREANDA-NEWS. On May 14, 2008 important banking issues in the context of the current macroeconomic situation, development prospects and related tasks were discussed at the meeting of heads of commercial banks and foreign bank branches operating in Lithuania and the Association of Lithuanian Banks with the members of the Board of the Bank of Lithuania, reported the press-centre of Bank of Lithuania.
At the meeting, the central bank of the Republic of Lithuania stated its position on the issues raised by commercial banks and the Association of Lithuanian Banks concerning required reserves of banks, the size of insurance contributions in the deposit insurance system and some other issues.
Members of the Board of the Bank of Lithuania, director of the Credit Institutions Supervision Department and heads of commercial banks realistically assessed the current international and Lithuania’s economic situation in their speeches, emphasized that it is necessary to properly prepare for the projected slowdown of the economic growth and potential shocks and to foresee liquidity maintenance scenarios and specific business continuity plans.
Mr. Reinoldijus Sarkinas, Chairman of the Board of the Bank of Lithuania, characterised the current capital base of Lithuania’s banking system as good and reminded that the capital adequacy ratio of the banking system made up 12.72 per cent on 1 April 2008.
Members of the Board of the Bank of Lithuania positively assessed the information provided by commercial bank managers about the plans to strengthen the capital base of credit institutions managed by them this year and their statements that the sufficiently high capital adequacy level will be maintained on approval of bank shareholders.
Chairman of the Board of the Bank of Lithuania stated that, taking into consideration the current situation, there is no topic in the agenda concerning the reduction of the required reserves of commercial banks this time, as requested by the Association of Lithuanian Banks. However, after making an assessment of the further development, the necessary decisions will be made. It was mentioned at the meeting that the request of commercial banks concerning the payment of the reimbursement for all required reserves to banks (only a part is paid at present) will be considered.
The request of commercial banks concerning the reduction of the size of insurance contributions in Lithuania’s deposit insurance system was discussed. Representatives of the Bank of Lithuania proposed to search for alternative means of ensuring and formalising the same insurance system level that is now and that should be achieved in the future. The Bank of Lithuania thinks that the reduction of the size of deposit insurance contributions is not acceptable, until such solutions are found.
Concern of bank representatives was expressed during the meeting about the information published in the media on the draft law on the bankruptcy of natural persons, which is currently under preparation. According to preliminary comments, representatives of the Bank of Lithuania and commercial banks think that at present such legal act would not be reasonable in terms of the ratio of the public costs to benefit.
9 commercial banks with a license of the Bank of Lithuania, 7 foreign bank branches and 5 foreign bank representative offices are operating in Lithuania at present.
The meeting at the Bank of Lithuania was organised on the initiative of the Association Lithuanian Banks.