Legal Banking Relationships

Definition of a bank. Banking licence. Stages in the authorisation process. Pre-application stage. Banking licence fee. Key requirements for a bank being established or authorised. Withdrawal of a licence. European Central Bank. Main tasks of the ESCB. References.

"Bank" is a credit institution established in the Republic of Lithuania which is licensed to engage in and receive deposits and other repayable funds from non-professional market participants and to assume the relevant risks and responsibilities. For the purposes of this Act, the term "bank" shall include the term "specialized bank". (Republic of Lithuania Law on Banks)

The Bank of Lithuania, knowing that the legal acts regulating the authorisation process may not always be clear for both newcomers to the financial sector and experienced specialists, encourages applicant entities to contact the Bank of Lithuania at an early stage. The Bank will provide more detailed information about the authorisation process and the requirements for prospective (existing) banks. The number of pre-application meetings is subject to the applicant’s experience and knowledge; however, usually a minimum of two pre-application meetings with firms are organised: 1) to get acquainted with and answer the questions that arose in the early stage; and 2) to review the list of documents to be submitted. The attendees to such meetings typically include at least two specialists from the Supervision Service of the Bank of Lithuania (who typically answer questions about the authorisation process and capital adequacy); however, any technical specialists may be required to attend as well. (Bank of Lithuania)

According Bank of Lithuania, when assessing the critical aspects that may determine banking authorisation, the following basic elements can be singled out:

A bank does not meet the requirements set for the issuance of a licence;

Hold and manage the official foreign currency reserves of the Member States;

The ECB implements ESCB tasks on its own or together with national central banks. Decision-making bodies include: (according to Bank of Lithuania)