Vilnius Credit Union’s lending services temporarily banned   

In view of the Vilnius Credit Union’s non-compliance with prudential requirements, the Supervision Service of the Bank of Lithuania decided to temporarily ban its provision of the financial service of lending (including mortgage loans).  

The decision regarding this enforcement measure was taken because of non-compliance with the maximum exposure requirement, which establishes that the amount of a loan to a single borrower shall not exceed 25 per cent of a credit union’s recalculated capital, and the large exposure requirement, under which the total amount of large exposures shall not exceed 300 per cent of a credit union’s recalculated capital. Imposing the said enforcement measure, the Bank took into account that enforcement measures had been applied more than once to the Vilnius Credit Union for violations of legal acts regulating safe and sound operation of credit unions. 

In the Bank of Lithuania Supervision Service’s view, after application of this enforcement measure the Credit Union will have to revise substantially its loan portfolio concentration and, after assessing the risk assumed, to take action to ensure compliance with prudential requirements.   

At the same time it should be noted that the application of this enforcement measure is not likely to pose a negative impact either on the domestic system of credit unions or stability and credibility of the Credit Union itself; it will encourage the Vilnius Credit Union to comply with requirements of legal acts for the regulation of activities of credit unions in a more responsible manner.   

The Vilnius Credit Union was instructed to ensure compliance with prudential requirements by 31 December 2012 and to inform the Bank of Lithuania’s Supervision Service about it. If the Credit Union starts complying with prudential requirements earlier, it will be able to apply to the Bank of Lithuania asking not to apply the enforcement measure any more.   

Supplementing the regulations of the LORDS LB BALTIC FUND III closed type special real estate investment fund allowed

The Supervision Service of the Bank of Lithuania allowed to supplement the regulations of the LORDS LB BALTIC FUND III closed type  special real estate investment fund managed by UAB “Lords LB Asset Management” with a new provision on restricting investment beyond the Baltic States to 15 per cent of investor liabilities to invest in this Fund.