EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 24 March 2009  
at the request of Lietuvos bankas on behalf of the Ministry of Finance of Lithuania 
on a draft law amending the Law on Lietuvos banka s as regards the rules on the distribution of the 
profits of Lietuvos bankas 
(CON/2009/26) 
 
Introduction and legal basis  
On 13 March 2009 the European Central Bank (ECB) received a request from Lietuvos bankas on behalf 
of the Ministry of Finance of Lithuania for an opinion on a draft law amending the Law on Lietuvos bankas as regards the rules on distribution of the profits of Lietuvos bankas (hereinafter the ‘draft law’).  
The ECB’s competence to deliver an  opinion is based on Article 105(4) of the Treaty establishing the 
European Community and the third indent of Article 2(1) of Council Decision 98/415/EC of 29 June 1998 
on the consultation of the European Central Bank by  national authorities regarding draft legislative 
provisions
1, as the draft law relates to Lietuvos bankas.  In accordance with th e first sentence of 
Article 17.5 of the Rules of Procedure of the Eur opean Central Bank, the Governing Council has adopted 
this opinion. 
 1.  Purpose of the draft law 
1.1 The draft law provides that Lietuvos bankas should contribute, extraordinarily, 100 % of its profit 
for the financial year 2008 to the State budget, instead of 50 % of its profit as currently provided for in the Law on Lietuvos bankas. The contribution to the State budget is to be made only after making a deduction to cover any losses carried forward from previous financial years. 
1.2 According to Article 23(3) of the Law on Lietuvos  bankas, the profit for a financial year is to be 
allocated: first, to cover losses carried forward from previous financial years; second, to contribute 
to the State budget 50 % of the profit of Lietuvos bankas for the financial year, or a part thereof remaining after covering losses carried forward from previous financial years; and third, after the first and the second allocations, the part of the profit remaining is to be transferred to the authorised 
and/or reserve capital. If the amount required to enable the authorised capital to reach 
200 million litai (about EUR 58 million) is less th an the amount available, then the required 
                                                 
1  OJ L 189, 3.7.1998, p. 42.  
2 amount is allocated to the authorised capital, a nd the residual amount is allocated to the reserve 
capital. 
1.3 If the draft law is adopted, Lietuvos bankas will ha ve no funds to transfer to the authorised and/or 
reserve capital for 2008. 
 2. General observations  2.1 The national legislation of a Member State must  be fully compatible with the institutional and 
financial independence of Lietuvos bankas, t hus ensuring the proper performance of Lietuvos 
bankas’s tasks under the Treaty and the Statute of th e European System of Central Banks and of the 
European Central Bank (hereinafter the ‘Statute of  the ESCB’). In particular, the compatibility of 
the Law on Lietuvos bankas with the requirements of Article 108 of the Treaty and the provisions 
of the Statute of the ESCB concerning central ba nk independence is of utmost importance, as 
Lietuvos bankas’s primary objective of price stab ility is best served by a fully independent 
institution with a precisely defined mandate
2. The proposed amendment raises concerns with 
respect to the institutional and financ ial independence of Lietuvos bankas. 
2.2 The principle of institutional independence is e xpressly referred to in Article 108 of the Treaty and 
Article 7 of the Statute of the ESCB, which prohibit the national central banks (NCBs) and 
members of their decision-making bodies from seeking or taking instructions from Community institutions or bodies, from any government of a Memb er State or from any other body. In addition, 
these provisions prohibit Community institutions and bodies and the governments of the Member States from seeking to influence the members of the decision-making bodies of the NCBs in the 
performance of their tasks related to the European System of Central Banks (ESCB)
3. 
Therefore the rights of third parties to give in structions to NCBs, their decision-making bodies or 
their members are incompatible with the Treaty and the Statute of the ESCB as far as ESCB-related 
tasks are concerned.  
2.3 The concept of financial independence should be assessed from the perspective of whether any 
third party is able to exercise either direct or i ndirect influence not only over the tasks of an NCB, 
but also over its ability - understood bo th operationally in terms of manpower4, and financially in 
                                                 
2  See ECB Opinion CON/2007/14 of 24 May 2007 at the request of the Hungarian Ministry of Finance on a draft law 
amending the Law on the Magyar Nemz eti Bank. All ECB opinions are av ailable on the ECB’s website at 
www.ecb.europa.eu. 
3  See the ECB’s Convergence Report May 2008, p. 18. 
4 
 See ECB Opinion CON/2008/9 of 21 February 2008 at the requ est of the German Ministry of Finance on a draft law 
amending the Law on the Deutsche Bundesbank; ECB Opinio n CON/2008/10 of 21 February 2008 at the request of the 
Italian Ministry of Economic Affairs and Finance on some provisions of the Law on the State annual and pluriannual 
budget (2008 Budget law); ECB Opinion CON/2008/34 of 4 Augus t 2008 at the request of the Swedish Ministry of 
Finance on a report concerning the financial independ ence of Sveriges Riksbank; ECB Opinion CON/2008/82 of 
2 December 2008 at the request of the Spanish State Secr etary for Economic Affairs on a draft royal decree on the 
arrangements for paying the Banco de Es paña’s profits to the Treasury; ECB Opinion CON/2009/4 of 16 January 2009 at 
the request of the Belgian Minister for Finance on a draf t law amending the financial provisions of the Law of 
22 February 1998 establishing the Organic Statute of the Na tionale Bank van België/Banque Nationale de Belgique.  
3 terms of appropriate financial res ources - to fulfil its mandate. The NCBs must also, at all times, 
have sufficient financial means to carry out thei r other functions, i.e. to perform their national 
tasks, to meet their international obligations and properly cover their admi nistrative and operational 
expenses. With regard to profit allocation, an NCB’s statutes may prescribe how profits are to be 
allocated. In the absence of such provisions, the d ecision on allocation of profits should be taken by 
the NCB’s decision-making bodies on professional grounds, and should not be subject to the 
discretion of third parties unless there is an expr ess safeguard clause stating that this is without 
prejudice to the financial means necessary fo r carrying out the NCB’s ESCB-related tasks5. 
2.4 In addition, the draft law must comply with the monetary financing prohibition laid down in 
Article 101(1) of the Treaty and Council Re gulation (EC) No 3603/93 of 13 December 1993 
specifying definitions for the application of the prohibitions referred to in Articles 104 and 104b(1) [now Articles 101 and 103(1)] of the Treaty 
6. As referred to in previous ECB opinions7, in order to 
comply with the monetary financing prohibition, it is of crucial importance that the distribution of 
profits by instalments, or in full, does not impl y advances on future or provisional profits but is 
rather the result only of profits that are fully r ealised, accounted for and audited, which in turn 
requires due calculation of profits and losses. 
 3. Specific comments  3.1 The draft law raises concerns regarding its co mpatibility with the institu tional independence of 
Lietuvos bankas to the extent that it can be cons trued as an instruction to Lietuvos bankas in the 
specific context of this legislative initiative. Ind eed, the rules on the allocation of Lietuvos bankas’s 
profits are being modified on a temporary basis. In substance, this amounts to an instruction by the 
Lithuanian Parliament to deviate from the established rules on profit distribution in order to transfer 
100 % of the profits to the State.  
3.2 The draft law modifies the rules on the alloca tion of Lietuvos bankas’s profits in the current 
financial turmoil. The financial turmoil or any other exceptional circumstance cannot justify 
infringing Article 108 of the Treaty or Article 7 of the Statute of the ESCB. Notwithstanding the aim of the draft law, as specified by the cons ulting authority, of enhancing the stability and 
credibility of the Lithuanian fina ncial system, it is in any circumstances particularly important to 
ensure and strengthen the independence of Lietuvos ba nkas, and even more so in periods of crisis. 
Moreover, overcoming the current financial turmoil depends on the ability of central banks to carry 
out their functions independently.  
3.3 The draft law also raises concerns about the fi nancial independence of Lietuvos bankas, as all its 
profit is to be contributed to the State budget. Fi rst, the draft law would deprive Lietuvos bankas of 
                                                 
5  See the ECB’s Convergence Report May 2008, p. 21. 
6  OJ L 332, 31.12.1993, p. 1. 
7  See e.g. Opinion CON/2008/82. 
4 the possibility of allocating part of the profit to its  authorised and/or reserve capital. According to 
the principle of financial independence, as stress ed by the ECB in all its convergence reports as 
regards financial provisions or buffers, includi ng the Convergence Report of May 2006 regarding 
Lithuania, an NCB must be free independently to create financial provisions to safeguard the real 
value of its capital and assets. Second, the dr aft law could also deprive Lietuvos bankas of 
sufficient financial means to carry out its mandate  and could impair its i ndependent functioning.  
3.4 Finally, the provisions in an NCB’s statutes on how profits are to be allocated are aimed both at 
serving central bank independence and giving th e shareholders legal certainty. Even though 
amendments to such rules are possible, it is importa nt to protect the rules related to the distribution 
of profit from third-party interests and to ensure a legal framework that provides a stable and long-
term basis for the central bank’s functioning8. An ad hoc  change to the rules on the distribution of 
profits, which reflects a particular financial need of the main shareholder and which takes all the 
profits from the central bank, is a cause of particul ar concern and is not compatible with the Treaty 
or the Statute of the ESCB. 
 This opinion will be published on the ECB’s website.   Done at Frankfurt am Main, 24 March 2009. 
 
[signed] 
 
The President of the ECB 
Jean-Claude TRICHET 
                                                 
8  See Opinion CON/2007/14.