2019.04.15 11:42

Lithuanian government to turn to prosecutors over banking regulation during financial crisis

BNS, LRT.lt2019.04.15 11:42

The Lithuanian government will ask the Prosecutor General's Office to evaluate the then financial watchdogs' actions during the financial crisis, Prime Minister Saulius Skvernelis said on Monday.

“We are turning to the Prosecutor General's Office over two issues,” he said.

Prosecutors will be asked to look into whether state institutions responsible for banking supervision in 2008 and 2009 “properly performed their functions”.

The second issue, according to Skvernelis, is the possibility that commercial banks overcharged on mortgage loans in 2009-2010.

The parliamentary Committee for Budget and Finance, chaired by MP Stasys Jakeliūnas, has been investigating the government's financial policies during the 2008-2010 financial crisis.

Jakeliūnas has accused the country's financial regulation institutions of failing to properly regulate commercial banks, that allegedly inflated interest rates on mortgage loans, and to cooperate with the parliamentary investigation.

All former financial supervision institutions which operated during the crisis have since been merged with the central Bank of Lithuania.

Vitas Vasiliauskas, the governor of the Bank of Lithuania, has rejected accusations, suggesting that Jakeliūnas acts out of personal spite.

The Committee's allegations concern the Vilnius Interbank Offered Rate, VILIBOR, which was used to determine interest rates on loans in the national currency, litas, at the time. According to Jakeliūnas, commercial banks manipulated the rate and, as a result, debtors paid unreasonably higher interest on litas loans than on euro loans.

The Bank of Lithuania has, in turn, said that Jakeliūnas is misleading the public with unfounded statements.

At the time, the government was led by the conservative Prime Minister Andrius Kubilius, now in the opposition. Kubilius has dismissed Jakeliūnas' investigation as political attacks against the opposition.

Proper supervision

Lithuania's financial watchdogs supervised the banking sector properly during the crisis, says Reinoldijus Šarkinas, the former long-standing board chairman of the central Bank of Lithuania, who led the bank during the 2008-2009 crisis.

“Proper supervision was ensured,” he told BNS Lithuania on Monday, stressing that he himself and the Bank of Lithuania's staff performed their duties properly.

Šarkinas also said that he did not mind the Prosecutor General's Office investigating the central bank's performance under his leadership.

“That's fine if they [the government] turned to them [prosecutors]. They will probably clear things out,” Šarkinas said.

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