Banks checked as ECB paves the way for Lithuania to join the euro
THE books of Lithuania's largest banks are being assessed as part of its entry in to the euro.
The European Central Bank (ECB) said the EU Council has formally approved the accession of the Baltic State on January 1. The euro conversion rate has been set at 3.45280 Lithuanian litas to €1.
The ECB will also take over direct supervision of the biggest Lithuanian banks as the country also joins the single supervisory mechanism, established after the financial crisis as part of a bid to stabilise the EU's banking system.
As part of an EU wide survey an assessment of the balance sheets of the country's banks is underway, at the request of Lithuania's central bank, Lietuvos.
This affects the three biggest credit institutions in terms of assets: SEB bankas, Swednamk and DNB.
"This comprehensive assessment is a thorough check of the balance sheets and resilience of the biggest institutions prior to the ECB taking on the supervisory tasks," the ECB said.
"The results for Lithuania will be announced as part of that disclosure of all banks in October 2014."
The EU Commission announced last month that the country met all the criteria for joining the euro.
In order to qualify, a country has to have government debt no higher than 60pc of gross domestic product (GDP), a budget deficit below 3pc of GDP, low inflation and interest rates and its own currency has to be stable. Few of the countries that already use the currency would meet those criteria, if they were trying to join for the first time now, including Ireland.