OREANDA-NEWS. December 30, 2009. 1. On the results of the inspection and supervisory review and assessment of UAB Medicinos Bankas
The Board of the Bank of Lithuania was presented information on the results of the inspection of UAB Medicinos Bankas. The inspection focused on the management, internal control, management of credit and liquidity risks and on certain issues of the bank’s internal capital adequacy assessment process (ICAAP).

Medicinos Bankas was instructed to remove its operational deficiencies indicated in the inspection report by 30 June 2010.

2 . On the results of the inspection and supervisory review and assessment of AB Ukio bankas

The Board of the Bank of Lithuania was presented information on the inspection results of AB Ukio bankas. The inspection focused on the management, internal control, management of individual risks (credit, liquidity, market and operational) at the bank, as well as on certain issues of the bank’s internal capital adequacy assessment process (ICAAP).

The Board approved decisions the implementation of which would strengthen the capital base of Ukio bankas. Also, certain additional requirements on the limitation of operational risk of this bank were set.

Ukio bankas was instructed to remove violations of legal acts and operational deficiencies indicated in the inspection report by 30 June 2010.

Head of the Ukio bankas administration was instructed to come to the Bank of Lithuania within a certain period of time and explain the ways to obviate liabilities set during the inspection and given by the Board of the Bank of Lithuania. With the maturity of the implementation term of these liabilities, Head of the Ukio bankas administration will have to explain the ways of their implementation.

3. On the inclusion of a subordinated loan into the capital of AB Ukio bankas

The Board of the Bank of Lithuania gave permission to AB Ukio bankas to include the subordinated 7-year loan of LTL 50 million received from Vladimir Romanov into Tier 2 capital of AB Ukio bankas.

The capital base is strengthened with regard to the fact that in the context of a complicated economic situation and a further deterioration of the loan portfolio, the capital requirement may increase. Also, the bank increases its capital base in order to assume additional risk of assets and to have more possibilities for crediting.

Having approved this Bank of Lithuania Board resolution, the capital base of Ukio bankas according to the data as of 1 December 2009 would amount to LTL 571 million.

4. On the permission to register changes to the Articles of Association of AB Finasta bank

The Board of the Bank of Lithuania gave permission to AB Finasta bank to register amendments to its Articles of Association related to the change of the number of shares and increase of the bank’s authorised capital to LTL 28 million, that was approved by the decision of the sole shareholder of AB Finasta imoniu finansai on 20 November 2009.

Meanwhile the registered authorised capital of AB Finasta bank amounts to LTL 20 million which has been divided into 2 million ordinary registered shares. The nominal value of one share is LTL 10.

All new issue shares were acquired by AB Finasta imoniu finansai ? the sole shareholder of AB Finasta bank.

5. On permissions issued by the Bank of Lithuania to payment institutions

With regard to European Union directives, the Law on Payment Institutions has been promulgated in Lithuania and activities (licensing, accounting, supervision) of new economic entities providing payment services ? payment institutions? has been regulated. The Bank of Lithuania will oversee said institutions. Therefore, the Board approved respective resolutions in this meeting.

It approved Payment Institutions’ Licensing Provisions, Rules for Requirements to Payment Institutions’ Top Management and Members of the Intermediary Management Bodies and for the Notification on the Payment Institution’s Top Management, Regulations for the Issue of Permit to Reorganise or Liquidate the Payment Institution.

6. On the amendments to Resolution of the Board of the Bank of Lithuania No. 58 of 6 May 2004 on General Rules for Presentation, Consideration of Applications for Permissions to Credit Institutions and Issuance of Permissions.

Regarding the fact that the Bank of Lithuania will issue licenses, permissions, agreements to payment institutions and will execute other actions in accordance with the provisions laid down in the Law on Payment Institutions, the Board of the Bank of Lithuania resolved that payment institutions would be subject to requirements laid down in General Rules for Presentation, Consideration of Applications for Permissions to Credit Institutions and Issuance of Permissions in the same way as credit institutions.

7. On Rules for the Calculation of Own Funds of Payment Institutions

The Board of the Bank of Lithuania approved Rules for the Calculation of Own Funds of Payment Institutions. They establish provisions for the calculation of the amount of own funds of payment institutions obtaining the license of the payment institution and how these rules are to be applied.

The structure of the payment institution’s minimum level of own funds and the amount of the minimum level of own capital depending on the type of payment services envisaged to be provided, are set in Article 13 of the Law on Payment Institutions (from EUR 20 thousand to EUR 125 thousand). Own funds of payment institutions are subject to requirements laid down in Directive 2006/48/EC of the European Parliament and of the Council of 14 June 2006 relating to the taking up and pursuit of the business of credit institutions.

The Rules establish the structure of own funds (Tier I and Tier II capital) of the payment institution, capital limitations, deductions from capital, regulate three approaches of the calculation of the own funds requirement (A, B and C). When applying Approach A, the own funds requirement of the payment institution is calculated according to fixed overheads the payment institution had within the previous financial year. Only this approach can be used to calculate the payment institution’s own funds requirement based on the fixed overheads amount set in the business plan of the payment institution if on the own funds requirement calculation date the payment institution has not yet provided payment services for the whole year or has just been established. When applying Approach B, the payment institution’s own funds requirement is calculated in accordance with the monthly average of the payment services turnover of the previous financial year, and when applying Approach C, these funds are calculated according to the sum of interest income, interest expenditure, commissions and other taxes as well as other business income of the previous financial year multiplied by specific multipliers.

The Rules determine that the payment institution can apply one of the three own funds requirement calculation approaches only if the Bank of Lithuania is not against this application.

Part One of Article 14 of the Law on Payment Institutions establishes that the payment institution’s own funds must always be not less than the bigger amount of these amounts ? the minimum level of own funds or the own funds requirement calculated on the basis of the chosen approach.

8. On Approval of Procedure for Reporting to the Bank of Lithuania Statistical Information and Data Necessary for the Compilation of the Balance of Payments and International Investment of the Republic of Lithuania

The Board of the Bank of Lithuania approved the Procedure for Reporting to the Bank of Lithuania Statistical Information and Data Necessary for the Compilation of the Balance of Payments and International Investment of the Republic of Lithuania.

The new Procedure has been elaborated with regard to statistical information sources that have emerged and have already been started to be used, after specifying the contents and format of information provided by used sources by aiming at the same time to ensure the Bank of Lithuania needs in preparing the external sector statistics. Moreover, the volume of statistical information provided to international organisations has increased and its structure has changed. After the approval of new international statistical standards (the new IMF Balance of Payments Manual, recommendations of Direct Foreign Investment Guidelines of OECD), requirements for external sector statistics have become more stringent.

By the approved decision of the Board, requirements for former data sources have been tightened, 16 new data sources have been included and 3 used data sources have been refused. These changes are expected to improve the quality of payments and investment balances (to reduce the amount of errors and omissions), the quality of the information on current transfers of the Current Account and investment portfolio of the Financial Account in particular.

It has been established that statistical information and data necessary for the compilation of the Balance of Payments and the International Investment Position are prepared and submitted to the Bank of Lithuania in accordance with the Bank of Lithuania’s established coverage, structure and terms by public institutions and other entities of the domestic economy laid down in the Procedure for Reporting to the Bank of Lithuania Statistical Information and Data Necessary for the Compilation of the Balance of Payments and International Investment of the Republic of Lithuania, approved by this resolution.

Also, data of the Balance of Payments and of the International Investment Position are published on the website of the Bank of Lithuania according to the Advance Release Calendar. Based on established terms, Balance of Payments and International Investment Balance data are presented to the European Central Bank, Statistical Office of the European Communities (Eurostat) and the International Monetary Fund, are published in the Bank of Lithuania publications and electronic devices, provided to media for publication and to other national and foreign institutions (on their request).