OREANDA-NEWS. November 06, 2008.
1. The inclusion of the profit for the current year in the capital of AB DnB NORD Bankas and the financial group of AB DnB NORD Bankas, reported the press-centre of Bank of Lithuania.

The Board of the Bank of Lithuania gave permission to AB DnB NORD Bankas to include 90 per cent of the retained profit for the first half of the current year in Tier I capital of the bank and the financial group. The validity of the amount of this profit was confirmed by an independent audit company that performed the audit of the bank.

As shown by the analysis, the inclusion of the audited profit for the current year will strengthen the capital of AB DnB NORD Bankas. It will allow the bank to implement the activity plan and the bank and the financial group to retain the higher than established capital adequacy ratio.

After the inclusion of 90 per cent of the retained profit for the first half of the current year (LTL 62 million for the bank and LTL 63 million for the financial group) into the capital, according to the data of 1 October 2008, the capital adequacy ratio of AB DnB NORD Bankas will make up 11.58 per cent and that of the financial group will comprise 11.31 per cent.

2. Amendment to the accounting policy
The Board of the Bank of Lithuania gave permission to credit institutions to amend the accounting policy in order to implement Commission Regulation (EC) No 1004/2008 of 15 October 2008 amending Regulation (EC) No 1725/2003 adopting certain international accounting standards in accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council as regards International Accounting Standard (IAS) 39 and International Financial Reporting Standard (IFRS) 7. The said standards regulate the reclassification of financial assets and disclosure of information concerning such reclassification.

The amendments to the said standards give a possibility to reclassify certain financial assets out of “held-for-trading” and “available-for-sale” categories to the category of loans and receivables (or assets held until maturity), if the market trade in these assets is not intended in the near term, in rare circumstances.

The fair value of the financial asset on the date of reclassification becomes its new cost or amortised cost, as applicable. Any gain or loss resulting from the change of the fair value already recognised in profit or loss should not be reversed. Reclassification shall be applied retrospectively according to the data of 1 July 2008.

The current financial crisis is considered to be a rare circumstance, when the panic aspect in markets has a considerable impact on the value of financial assets, i.e. the fair value of financial assets is too depreciated. The permission to reclassify these assets is meant to avoid unjustified profit (loss) fluctuations, while the actual decline in value will be established at the end of financial year by using a depreciation test. In addition, the decision to change the said standards was taken also to create level playing-field for economic entities globally, since the Generally Accepted Accounting Principles in the United States (US GAAP) allowed such reclassification for a long while ago.

3. Information on the operations of credit institutions and the activities of the Credit Institutions Supervision Department in the third quarter of 2008

The Board was presented a review of the operations of domestic credit institutions and the activities of the Credit Institutions Supervision Department of the Bank of Lithuania in the third quarter of 2008.

The latest review of the operations of commercial banks, the Central Credit Union of Lithuania and credit unions is available on the website of the Bank of Lithuania.

4. Approval of the sample commemorative coin dedicated to Lithuanian nature

The Board of the Bank of Lithuania approved the 50 litas sample commemorative coin dedicated to the nature of Lithuania.

The graphic design of this coin was created by Vladas Orzekauskas and the plaster model was made by Alfonsas Vaura. The sample was minted by UAB “Lietuvos monetu kalykla” (Lithuanian Mint).

The issue of this coin into circulation is planned for December 2008.

5. Amendment to the Rules on Reserve Requirements for Credit Institutions

The Board of the Bank of Lithuania reduced the required reserve ratio applied to commercial banks established in Lithuania and foreign bank branches (hereinafter - banks) from 6 per cent to 4 per cent.

Taking into consideration the slowdown of the domestic economy, the Bank of Lithuania releases a part of bank resources and creates more flexible liquidity management conditions for banks.

6. Amendment to the Rules for Concluding and Effecting Repurchase Agreements between the Bank of Lithuania and the banks of Lithuania

Taking into consideration the modern central bank practice to expand the base of assets eligible as collateral for credit operations, the Board of the Bank of Lithuania established a more flexible procedure for the definition of securities eligible for repurchase agreements between the Bank of Lithuania and banks.