Opinion of the European Central Bank of 19 August 2013 on credit unions (CON/2013/63)
Date: 2013-08-19
Institutions: European Central Bank
Subjects: Lithuania, banking supervision, credit union, financial stability, foreign-exchange reserves, national law, share capital

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 19 August 2013 

on credit unions 

(CON/2013/63) 

Introduction and legal basis 

On 26 July 2013, the European Central Bank (ECB) received a request from the Lithuanian Ministry of 

Finance  for  an  opinion  on  a  draft  law  on  an  amendment  and  a  supplement  to  the  law  on  credit  unions 

(hereinafter the ‘draft law’). On 30 July 2013 the ECB received an updated draft law, which forms the 

basis of this opinion. 

The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 

Functioning  of  the  European  Union  and  the  third  and  sixth  indents  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 provisions1, as the draft law relates to Lietuvos bankas and to rules applicable 

to  financial  institutions  insofar  as  they  materially  influence  the  stability  of  financial  institutions  and 

markets. In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the European 

Central Bank, the Governing Council has adopted this opinion. 

1.  

Purpose of the draft law 

1.1  The aim of the draft law is to ensure the sustainable growth of credit unions and to strengthen the 

regulatory  framework  for  credit  unions,  including  more  effective  governance,  risk  management, 

regulatory and resolution requirements. 

1.2  More particularly, the draft law provides for: (a) a streamlined licencing process for credit unions; 

(b) enhanced  capital requirements for credit unions, including the requirement to replenish capital 

if  it  falls  below  a  specified  threshold;  (c)  restrictions  on  risk-taking,  including  requirements  in 

respect of borrowing, lending, investment and risk management; (d) more robust governance rules 

for credit unions, including more stringent requirements for managers and more active involvement 

of  members  in  the  management  of  credit  unions;  (e)  an  expansion  of  credit  unions’  potential 

membership base and of the customer base for the financial services that may be provided by credit 

unions;  and  (f)  reinforced  supervision  of  credit  unions  by  Lietuvos  bankas,  including  a  new 

measure  allowing  Lietuvos  bankas  to  require,  in  the  event  of  distress,  the  transfer  of  a  credit 

union’s assets, rights and liabilities to another credit institution. 

1 

OJ L 189, 3.7.1998, p. 42. 

 
 
 
 
                                                 
ECB-PUBLIC 

2. 

General observations 

2.1  Credit  unions  currently  account  for  2.2%  of  the  total  assets  of  the  Lithuanian  national  financial 

system2, and their activities and asset volume have expanded very rapidly over the past few years. 

2.2  The ECB welcomes the substantial enhancement of the regulatory and supervisory framework for 

credit unions, which aims at improving the protection of credit union members and strengthening 
the safety net for the credit union system3. 

2.3  The ECB notes that the proposed amendments to the legislation on credit unions do not envisage 

the  possibility  of  a  credit  union  becoming  a  commercial  bank.  The  ECB  takes  the  view  that  the 

enactment  of  legal  provisions  designed  to  ensure  the  workability  of  such  conversion  may  help 

enhance the stability and integration of the national financial system. 

3.  Minimum reserve requirements 

3.1  The  draft  law  does  not  address  minimum  reserve  requirements  applicable  to  credit  unions,  since 

such requirements have been laid down by Lietuvos bankas in its Rules on reserve requirements for 
credit institutions4. 

3.2  The ECB notes that, although Member States that have not adopted the euro retain competence in 

the  field  of  monetary  policy,  it  is  nevertheless  beneficial  for  them  to  achieve  consistency  with 

Eurosystem standards so that credit institutions in those Member States can become familiar with 

the reserve requirements that will apply to them once the euro is introduced. 

3.3 

In  its  Opinions  CON/2005/8,  CON/2008/66  and  CON/2012/110  on  the  Lithuanian  minimum 

reserves  regime,  the  ECB  emphasised  the  need  for  further  harmonisation  of  the  Lithuanian 

minimum reserves regime with Eurosystem standards. In particular, it noted that Lithuanian credit 

unions, as monetary financial institutions, will be subject to Eurosystem reserve requirements when 
Lithuania adopts the euro5. Consequently, the comments made by the ECB on previous occasions 

concerning the Lithuanian minimum reserves regime remain valid. 

This opinion will be published on the ECB’s website.  

Done at Frankfurt am Main, 19 August 2013. 

[signed] 

The Vice-President of the ECB 
Vítor CONSTÂNCIO  

2 
3 
4 

5 

Lietuvos bankas’ Financial Stability Review for 2013, available on Lietuvos bankas’ website at www.lb.lt. 
See Opinion CON/2009/60, paragraph 7. All ECB opinions are published on the ECB’s website at www.ecb.europa.eu. 
Resolution No 38 of the Board of Lietuvos bankas of 14 March 2002 on the approval of rules on reserve requirements for 
credit institutions. Valstybės žinios, 2002, No 31-1201. 
See Opinion CON/2005/8, paragraph 14; Opinion CON/2008/66, paragraph 2.2; Opinion CON/2012/110, paragraph 2.  

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