From the candidate to head the Bank of Lithuania – 4 operational priorities: worried about the concentration of the banking sector Business

President Gitanas Nausėda nominated candidates for the presidents of the central bank board for a period of five years.

If appointed, G. Šimkus would replace Vita Vasiliauskas, who had been in charge of the Bank of Lithuania for ten years.

“In the president’s opinion, G. Šimkus is an excellent economic and financial expert with many years of experience working at the Bank of Lithuania, based on effective institutional cooperation,” said Povilas Mačiulis, the president’s senior adviser on domestic policy, at the Seimas sitting.

“During his career, G. Šimkus also demonstrated good leadership skills, which he improved in various positions,” he added.

After presenting himself to the Seimas, G.Šimkus stated that the principles of his activity would continue to be related to the independence and apolitical character of the Bank of Lithuania, since it allows the best decisions necessary to carry out the functions of the institution and respond to public interests.

What type of central bank does the candidate envision?

“Yes in one sentence: advanced, modern and, most importantly, understand the needs of Lithuanian society and work for the benefit of Lithuanian society,” said the candidate, who has worked at the central bank for two decades.

System stability

G.Šimkus presented the Seimas with four priorities for his future activities, if appointed.

First, according to him, to strengthen the stability and security of the financial system.

“There is a saying that a chain is only as strong as each of its chains. The same can be said of the financial system, it is as strong as all the participants in the financial system, “said the candidate for the presidency of the central bank.

The financial system has shown stability, but the fight against the scourge is not yet complete.

According to him, the risks to financial stability today are many. The first is the impact of the COVID-19 pandemic.

“The financial system has shown stability, but the fight against the scourge is not over yet,” said G. Šimkus.

According to him, to ensure the stability of the financial system, it is important to strengthen progress in compliance risks and ensure cybersecurity.

Worrying concentration of banks

G.Šimkus also promised measures to increase competition and the availability of services in the financial sector.

According to him, during the last decade, there have been significant changes in the financial system: we have seen the growth of fintech companies, the number of market participants has increased, but despite this, the role of the banking sector in Lithuania it has increased. it remained strongly dominant.

“I hear these fears and I agree that the situation is worrying, so I would consider (…) reducing the concentration of the financial market as one of my most important objectives. I don’t think it is a simple task, on the contrary, I accept it as a great challenge, “said G. Šimkus.

According to him, increasing competition in the system requires overcoming the local capital market, since its availability to small and medium-sized companies would encourage alternatives to conventional commercial credit. This would create the conditions for faster growth of small financial market participants.

It is also time for the Bank of Lithuania to play a more active role in responding to the discontent of the population and businesses, especially small and medium-sized ones, with the availability and prices of some financial services.

Furthermore, according to the candidate, the cooperative banking sector with a broad regional network has untapped potential. He promised to take initiatives to make this type of bank a national actor.

“It is also time for the Bank of Lithuania to take a more active role in responding to the discontent of the population and businesses, especially small and medium-sized ones, with the availability and rates of some financial services,” said the candidate for President of board.

He said it will strengthen the focus on competitive conditions so that service users can choose and switch financial service providers more easily and quickly, and reduce restrictions created by interconnection of financial services.

G.Šimkus also promised measures to make it easier for small and medium-sized companies to obtain loans or access other sources of financing.

Modernity and dialogue

G.Šimkus names the currency of the Bank of Lithuania and openness to changes as the third objective of its activity.

According to him, modern digitization can reduce bureaucracy in the sector, enable the provision of modern services.

“It would be unforgivable not to take advantage of these opportunities,” said the candidate, who also spoke about the contribution of the Bank of Lithuania to the fight against climate change.

G.Šimkus indicated dialogue with the authorities and clear communication with the public as the fourth priority.

According to him, the Bank of Lithuania will only achieve its goals by constructively cooperating with legislators and other institutions and communicating with the population in an understandable way.

“I will endeavor to ensure that the knowledge and insights of the Bank of Lithuania employees are heard, used and therefore useful to analyze important economic policy issues for the whole country,” said G. Šimkus.

Questions

G.Šimkus received most of the questions from the Seimas members about the high concentration of banks in the financial market and the availability of financial services and their prices for the population.

Mykolas Majauskas, chairman of the Seimas Budget and Finance Commission, asked how more and more competition would be ensured in the sector.

The candidate said that the growth potential of local financial market participants in Lithuania is not sufficiently exploited. He mentioned again that the cooperative banking sector could make a breakthrough.

Responding to questions from the opposition leader Saulius Skvernelis, G. Šimkus stated that during the five-year term it is possible to solve the problems of availability of financial services, especially in the regions.

Meanwhile, the process of reducing the concentration of banks in the sector can begin during that period, he said.

“What is very important is to put the concentration reduction on the rails so that it does not fall and then increase again, but it would be a consistent process. It is on the right track and it has been my task for five years and I think it can be done, ”said the candidate for the Bank of Lithuania presidency.

Andrius Mazuronis, a spokesman for the Labor Party, criticized the situation in which commercial banks sometimes use the practice of blocking the accounts of individuals and companies for not providing information that people do not know about.

G.Šimkus explained that banks do this by preventing money laundering and terrorist financing, but this does not mean that the requirements for clients can be excessive or that safety cushions must exist at “the expense of the client”.

“If the Seimas had appointed me as chairman of the board of directors of the Bank of Lithuania, one of my priorities would be a thorough analysis of this issue, clarification of the extent to which the requirements are excessive and the provision of appropriate recommendations and measures. to respond to these problems. “

G.Šimkus LB started working in 2002 and during eighteen years of work at this institution he has steadily moved up the professional ladder. He has been a member of the Board of Directors of the Bank of Lithuania since September last year.