Bank of Lithuania clamps down on credit unions
The board of the Bank of Lithuania unveiled on August 20 tougher prudential requirements for credit unions that will see an end of rules related to the calculation of 'large exposure' ratios.
As of January 1, 2012, all credit unions will have to include funds in credit institutions such as banks and credit units into the calculation for ‘maximum exposure' amount, limiting the funds credit unions can risk from other sources.
In addition, the maximum exposure ratio will be extended to apply to all credit unions. Previously, credit unions with adjusted capital of less than 2 million litas ($715,000) were exempt.
The purpose of these measures is to encourage the unions to invest funds cautiously, and in doing so safeguard the depositors' interests.
The central bank also imposed greater experience requirements on the managers of the unions, and has formulated a special exam for those who do not meet them.
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