Lithuania Develops a New Long-Term Financing Instrument Offering More Opportunities for Business

Date

2018 07 26

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The Ministry of Finance presented for public consultation the draft Law on Securitisation and Covered Bonds creating increased opportunities for financial institutions to attract funds and to finance undertakings, thus contributing to the promotion of long-term national economic growth.

This law is the outcome of the project implemented by the Ministry of Finance together with the European Bank for Reconstruction and Development (EBRD) aimed at embedding the regulation of securitisation of loans or other financial assets and covered bonds in Lithuania.

“This project will lay down clear legal foundations for the issue of new long-term financing instruments open to institutional investors. Financial institutions, which will issue these instruments, will have a possibility of releasing their capital and increasing business financing options, including small and medium-sized enterprises, also natural persons, by the funds received. This will contribute to long-term national economic growth and our financial autonomy”, says Vice-Minister of Finance Loreta Maskaliovienė.

This project is one of priority tasks of the Government Programme Implementation Plan to promote capital market development in Lithuania by expanding the range of alternative financing sources.

The draft Law on Securitisation and Covered Bonds is available here. The Ministry of Finance invites all interested parties to submit observations regarding the draft law.

The adoption of the draft law is planned during the Seimas Spring Session of 2019.

Additional information:

Securitisation is a process when the issuer (credit, financial institution) merges several types of financial assets and, on their basis, issues securities. Thus, emerge new securities offered to investors, whereas the issuer from the new funds received may maximize financing of business of the country. This financing instrument was mostly used in mortgage market, however, eventually, it has taken off in other areas, e.g. credit cards, car loans and etc.