REPUBLIC OF LITHUANIA                                     
                                                                                
                                                                                
                               Law                                              
                               On                                               
                 Commercial (Joint Stock) Banks                                 
                                                                                
                                                                                
                            Chapter 1                                           
                       General Provisions                                       
                                                                                
                                                                                
     Article 1. Objectives of the Law                                           
                                                                                
     This Law shall regulate the establishment, activities, reor-               
ganization and  liquidation of commercial banks. It shall also be               
applied to  state commercial  banks if  their bylaws, which shall               
be adopted  by the  Supreme Council upon submittal thereof by the               
Bank of Lithuania, do not provide otherwise.                                    
                                                                                
     Article 2.Commercial Bank                                                  
                                                                                
     1.  Commercial   bank  shall  be  credit  institution  whose               
activities are  based on  the  acceptance  of deposits  or  other               
borrowed funds  from legal and natural persons, as well as on the               
extension  of   credits  and  the   assumption   of   risks   and               
responsibility related thereto.                                                 
     2. Commercial  banks shall be legal persons having their own               
name and   seal  and shall  function in accordance with this Law,               
other laws of the Republic of Lithuania, and their own bylaws.                  
                                                                                
     Article 3.Names and Seals of Commercial Banks                              
                                                                                
     1. The  name of  a commercial  bank shall  include the words               
"bank" or  "commercial bank".  Only credit  institutions that are               
permitted under  this Law to engage in banking operations may use               
the words  "bank", "commercial  bank", and  other combinations of               
these words in their name or for advertising purposes.                          
     2. Either the complete or abbreviated name of the commercial               
bank must be on its seal.                                                       
                                                                                
     Article 4. Asset Liability and Independence of                             
                Commercial Banks                                                
                                                                                
     1.   Commercial banks  shall be liable for their obligations               
to the  extent of  all their available  assets. They shall not be               
liable for  the obligations  of their  founders and shareholders,               
although the  shareholders and  founders shall  be liable for the               
obligations of  the bank  to the  extent of total shares acquired               
(subscribed).                                                                   
     2.   Commercial banks  shall not  be  held  liable  for  the               
obligations of  the state, and the state shall not be held liable               
for the  obligations of  commercial banks,  with the exception of               
cases when the state undertakes this responsibility.                            
     3.  Commercial   banks  shall   act  independently   and  in               
conformity with  the  economic standards  established by the Bank               
of Lithuania on the basis of the Law on the Bank of Lithuania.                  
                                                                                
                                                                                
                            Chapter 2                                           
                 Activities of Commercial Banks                                 
                                                                                
     Article 5. Operations of Commercial Banks                                  
                                                                                
     Commercial banks  shall have the right:                                    
     1) to  accept time deposits  and demand deposits, as well as               
deposits to current and other accounts;                                         
     2) to render and take credits;                                             
     3) to  carry out    operations  with  payment  documents and               
securities (cheques, bills of exchange, shares, bonds, etc.);                   
     4)  to   issue  financial  pledges,  guarantees,  and  other               
security obligations;                                                           
     5) to  receive customers'  valuables for  safekeeping and to               
rent safe  deposit boxes  of the bank vaults to customers for the               
safekeeping of valuables and documents;                                         
     6) to render services and consultations on issues of banking               
activities, finances, and other issues;                                         
     7) with  permission of  the Bank  of Lithuania, to carry out               
operations in  foreign currency,  and to  buy and  sell  precious               
metals; and                                                                     
     8)  to   conduct  other   operations  consistent   with  the               
activities of credit institutions.                                              
                                                                                
     Article 6. Contracts between Commercial Banks and                          
                their Customers                                                 
                                                                                
     1. Relations  between commercial  banks and  their customers               
shall be based on contracts.                                                    
     2. In contracts, the following must be specified:                          
     1) the names of the parties to the contract;                               
     2) the obligations of the parties;                                         
     3) the terms for the fulfillment of  obligations;                          
     4) the place where obligations shall be fulfilled;                         
     5) interest and commission rates;                                          
     6) liability of the parties for breach of contract;                        
     7) conditions for contract termination; and                                
     8) loans obtained by the customer in other banks.                          
     3. The  contract may  include other  provisions that  do not               
contradict the existing legislation.                                            
                                                                                
     Article 7. Ensuring Credit Repayment                                       
                                                                                
     1. Banks  shall have the right to demand that credits issued               
to customers  be secured  against material assets. Credits may be               
secured  against  collaterals,  guarantees,  pledges,  and  other               
obligations. Banks  shall  have  the  right  to  issue  unsecured               
credits (blank credits).                                                        
     2. During the period, banks may demand that customers(credit               
recipients) submit information and  documents necessary to assess               
their economic and financial situation.                                         
     3. In  the event   that credit cannot be repaid in time, the               
bank shall  have the right to unilaterally terminate the contract               
either in  full or  in part,  or  to  require  additional  credit               
guarantees. The  further extension of credit by a bank to a legal               
or natural person engaged in economic activities may be connected               
with  the  requirement  that  the  customer    provide,  over  an               
established period  of time,  a plan  to improve their   economic               
performance that would be acceptable to the bank.                               
     4. In  the event  of a  breach of  contract by  the customer               
(credit recipient),  the bank  shall have  the  right  to  demand               
repayment of  credit, either  in part  or in  full, prior  to the               
established schedule for debt repayment.                                        
                                                                                
     Article 8. Credit Security                                                 
                                                                                
     1. As  security for  credits, commercial  banks  may  accept               
pledges  of   goods  and   other  material  assets  not  used  as               
collaterals  in other banks, bills of exchange, securities, trade               
documents, currency  and other  valuables. Banks shall only issue               
credits against  goods and  other material  assets located abroad               
provided  that   they  are   properly  insured  according  to  an               
appropriate procedure by an insurance company.                                  
     2. Loans  against gold  cannot exceed  90%  of  their market               
price, loans  against  silver  and  government  securities cannot               
exceed  80%  of  their  market  price,  and  loans  against other               
securities and physical  assets cannot exceed 70% of their market               
price.                                                                          
     3. Commercial banks may discount bills of exchange and other               
trade bills for no longer than 12 months.                                       
     4.  Buildings,  structures,  equipment  and  other  property               
considered as  fixed assets  can be  used as collateral only when               
the customer  is liable for his obligations to the full extent of               
his property. This property must be insured.                                    
     5. When  the value  of collateral  falls so  that it  is  no               
longer sufficient  to repay  the debt,  the bank  shall have  the               
right to  require additional  guarantees from  the  borrower  or,               
prior  to  the  expiration  of  the  repayment  term,  to  demand               
repayment of the corresponding portion of the debt.                             
     6. Borrowers  who conceal,  sell or  destroy  collateralized               
property given  to them  for their  use or  protection  shall  be               
deemed liable under the laws of Lithuania.                                      
     7. Banks  may not  purchase collateral.  They also  may  not               
accept their own shares as security for  debt or guarantee.                     
     8. When  debtors fail  to repay  their debts  on time,   the               
collateral pledged  to the  bank shall be sold at the instruction               
of the bank without reference to court or arbitration.                          
     9. The  debtor shall  be notified  of the  date of  sale  of               
collateralized movable property in writing no later than ten days               
prior to the date of sale.                                                      
     10. The  bank shall deduct from  a part of the proceeds from               
the sale  of pledged property corresponding to the sum of debt as               
stated in the  contract, as well as interest and expenses related               
to the  sale of  pledged property; the balance remaining shall be               
returned to the debtor.                                                         
     11. Provided  that the  sale of  property at the exchange or               
auction yields a smaller sum than the amount due to the bank, the               
remaining part of the sum may be recovered from the debtor in the               
procedure established by law.                                                   
     12. Banks  shall have   the  right of  priority to  use  the               
debtor's money  which is  being kept  in their  bank in  order to               
discharge outstanding  debt. Banks   shall notify debtors of such               
actions  in   writing  no   later  than  10  days  prior  to  the               
satisfaction of  its claim  with  the debtor's funds deposited at               
the bank.                                                                       
                                                                                
     Article 9. Declaration of Debtors as Insolvent                             
                                                                                
     1. Banks  may declare  debtors who  fail to  repay loans  as               
insolvent in the press.                                                         
     2. Banks shall notify the main creditors, founders , as well               
as the  agency  that  registered  the  debtor's  entity,  of  the               
declaration of the debtor as insolvent.                                         
                                                                                
     Article 10. Sanctions Against Insolvent Debtors                            
                                                                                
     In regard to insolvent debtors, banks may:                                 
     1) refuse to issue new loans;                                              
     2) claim loans prior to the agreed term; and                               
     3) use  all of  the customer's income to recover outstanding               
debts.                                                                          
                                                                                
                            Chapter 3                                           
                Establishment of Commercial Banks                               
                                                                                
                                                                                
     Article 11. Ways of Establishing Commercial Banks                          
                                                                                
     Commercial bank may be established:                                        
     1) in an open manner:                                                      
     when  founders  obtain  a  part  of  shares,  and  a  public               
subscription for  shares is announced;                                          
     2) in a closed manner:                                                     
     when founders  obtain a  part of  shares and distribute them               
among other  individuals without announcing a public subscription               
for shares;                                                                     
     when shares are obtained only by the founders.                             
                                                                                
     Article 12. Founders and Shareholders                                      
                                                                                
     1. Founders  of a  commercial bank,  with the  exception  of               
foreign banks  and banks  with joint  participation of  local and               
foreign founders,  shall be  the legal and natural persons of the               
Republic of  Lithuania  who  have  signed  an  agreement  on  the               
establishment of  a commercial  bank in the notarycertified form.               
This  agreement   shall  define   their  rights   and  duties  in               
establishing a  commercial bank, as well as liability for failure               
to perform  obligations. When a commercial bank is established in               
the closed  manner, the  founders may  withhold from  signing  an               
establishment agreement  and define  their rights and obligations               
in the bylaws of the commercial bank instead.                                   
     2. The minimum number of founders of a commercial bank shall               
be 10 people who are either citizens of the Republic of Lithuania               
or legal  persons registered  in the  Republic of Lithuania. Each               
founder of  a commercial  bank must also be a shareholder of that               
bank.                                                                           
     3. When  a commercial  bank is  established with  the  joint               
participation of  local and  foreign founders, the minimum number               
of founders  shall be two,  and at least one of the founders from               
each  country  must  be  a  banking  institution.  Permission  to               
establish foreign  banks, branch  offices of  foreign banks,  and               
joint banks  with foreign founders shall be issued by the Bank of               
Lithuania.                                                                      
     4. Observing this law, the founders shall draft and sign the               
bylaws  of   the  commercial  bank  and  shall  submit  them  for               
registration with the Bank of Lithuania.When a commercial bank is               
established by  a public  subscription for shares, the  founders,               
having registered  the  bank  bylaws,  shall  have the  right  to               
circulate the  shares in  public in  the procedure established by               
law.                                                                            
     5. Shareholder  of a  commercial  bank  shall  be  legal  or               
natural person  that has  acquired at  least  one  share  of  the               
commercial bank in the procedure established by  law.                           
     6. Shareholder  who has directly or indirectly acquired 1/10               
of the  fixed capital  of the bank or 1/ 10 of voting stock shall               
become owners of the block of shares.                                           
     7. The  rights and duties of founders and shareholders shall               
be established by the bylaws of the commercial bank.                            
     8. The  Bank of Lithuania must be given advance notification               
of the  acquisition   of the  block of  shares and  its  increase               
(reduction) of  up to 20%, 33% or 50% of the fixed capital of the               
bank for which purpose its permission is required.                              
     Criteria to  obtain this  permission are:  a good  financial               
state, faultless   performance in the past, and a good reputation               
in economic and financial activities.                                           
     9. The Bank of Lithuania shall have the right to suspend and               
revoke the  voting rights of a holder of a block of shares if the               
latter has  acquired the  block of shares without the  permission               
of the Bank of Lithuania.                                                       
     10. If  the Bank  of Lithuania suspends the voting rights of               
the   holder of  the block of shares, this block of shares cannot               
be included  in the list of voting stock which is to be submitted               
at the general meeting of shareholders.                                         
     11. At  the end  of the  annual report  meeting,  commercial               
banks must submit to the Bank of Lithuania information concerning               
their shareholders  who have  obtained 1/10 or more of the bank's               
capital and the value of the capital obtained.                                  
                                                                                
     Article 13. Shares                                                         
                                                                                
     1. The  types, classes,  and requisites  of    shares  of  a               
commercial bank,  as well  as the  conditions  and  procedure  of               
issuing, and  subscription and  circulation thereof,  shall be as               
established by  the Law  on Joint Stock Companies of the Republic               
of Lithuania, if   the Law on Commercial (Joint Stock) Banks does               
not provide otherwise.                                                          
     2. Banks founded as  private joint  stock companies  may not               
issue any shares to  their shareholders. If no shares are issued,               
the stock book and accounting documents of the bank shall specify               
the sum of the fixed capital owned by each shareholder.                         
     3. A  commercial bank  is prohibited  from  buying  its  own               
shares.                                                                         
                                                                                
     Article 14. Bylaws of a Commercial Bank                                    
                                                                                
     1. The  bylaws of  a commercial  bank shall  be   the  legal               
documents governing the activities of the bank.                                 
     2. The bylaws shall state:                                                 
     1) the name of the bank;                                                   
     2) the address of the bank headquarters and the addresses of               
its subsidiaries;                                                               
     3)  the  bank's operations  ;                                              
     4) the  procedure for  conveyancing of  registered shares to               
the ownership of other persons;                                                 
     5) the  amount of  fixed   and other capital of the bank, as               
well as the procedure for their formation and utilization;                      
     6) the  number of  shares, their  par value, and the  rights               
they give to the owner;                                                         
     7) the procedure for  payment for shares;                                  
     8) the  powers of  the general  meeting, the  procedure  for               
when and how to call a general meeting, as well as for voting;                  
     9) the  procedure for the  election, composition, functions,               
powers and  responsibilities of  the board, council, and auditing               
committee (auditor);                                                            
     10) the procedure for the distribution of profit;                          
     11) reimbursement  of founding  expenses,  remuneration  for               
founding activities, and privileges granted; and                                
     12) the procedure for the liquidation of a commercial bank.                
     3. The bylaws may include other provisions, provided they do               
not contradict the laws of the Republic of Lithuania.                           
     4. The rules for  the reimbursement  of  founding  expenses,               
remuneration for founding activities, and granting privileges can               
only be  amended or repealed when the founding expenses have been               
fully reimbursed,  the founding  remuneration has  been paid, and               
privileges have  been granted. Disputes of founders, shareholders               
and  third   parties  with  a  commercial   bank  concerning  the               
reimbursement of  founding  expenses,  remuneration  for founding               
activities,  and privileges shall be settled in court.                          
                                                                                
     Article 15. Registration of Bylaws                                         
                                                                                
     1. The  bylaws of a commercial bank shall be registered with               
the Bank of Lithuania upon submitting the respective application,               
the notarycertified  founding agreement,  and the consent  of the               
governing bodies  of founders  who are  legal persons  to  invest               
capital in the commercial bank.                                                 
     2. The founding contract must state:                                       
     1) the  headquarters of  all the  bank's founders  and their               
locations;                                                                      
     2) the  amount of shares acquired by every founder according               
to their class; and                                                             
     3) the term over which  the shares must be paid in full.                   
     3. Decisions  on the  bylaws and  amendments thereof must be               
made, and  applicants must  be notified,  within one month of the               
submissions of  documents listed  in the  first paragraph of this               
Article.                                                                        
     4. If  the bylaws  fail to be registered, the founders, upon               
elimination of   causes  obstructing registration, shall have the               
right to submit them for registration once  again.                              
     5. Commercial  banks must  submit all amendments and changes               
together with  the text of the amended bylaws for registration to               
the Bank  of Lithuania no later than 10 days from the date of the               
introduction of amendments.  Changes and amendments to the bylaws               
shall come  into effect  from the date of their registration with               
the Bank of Lithuania.                                                          
                                                                                
     Article 16. Report on the Establishment of Commercial Banks                
                                                                                
     1. Founders  of commercial  banks must draft a report on the               
establishment of  the bank  and must  submit it  to the  founding               
meeting of  shareholders together  with  the  conclusions  of  an               
auditor. When  a commercial  bank is  established  as  a  private               
joint stock company, the founding report shall not be drafted.                  
     2. The founding report shall specify:                                      
     1) founding expenses;                                                      
     2)   nonmonetary    (property)   contributions   and   their               
evaluation;                                                                     
     3) privileges  granted, founding  expenses  reimbursed,  and               
remuneration for founding activities; and                                       
     4)  transactions   whose  obligations   are  transferred  by               
founders and other persons to the commercial bank.                              
     3. If   only a part of shares has been subscribed for during               
the period  of share  subscription, the authorized capital of the               
bank may  be reduced to an established minimum. If only a part of               
shares has  been subscribed for during the period of subscription               
for shares  and the  authorized capital has not been reduced, the               
commercial bank  shall not  be registered.  In  such  cases,  all               
individuals who  have subscribed  for  shares  shall  have  their               
contributions returned  in full   within a period of 15 days. All               
founders as  a body  are liable  for the repayment of the initial               
contributions.                                                                  
                                                                                
     Article 17. The Founding Meeting                                           
                                                                                
     1. Founders  of a commercial bank  shall convene  a founding               
meeting of  shareholders within  60 days of subscription  for the               
last share. If such meeting fails to be convened within the given               
period, all  subscribers  for shares  shall be  relieved of their               
obligations and shall  have  the  right  to  require  that  their               
contributions for shares be  returned.   If a  commercial bank is               
established in the closed manner when shares  are  purchased only               
by   founders,  the  founding  meeting  of  shareholders  must be               
organized only in   cases  provided  by  the  Law  on Joint Stock               
Companies or by the founding agreement.                                         
     2. All  founders or  their proxies  must take  part  in  the               
founding meeting of shareholders.                                               
     3. The founding meeting of shareholders shall have the right               
to adopt resolutions if the attending shareholders have more than               
half of the total number of votes. If the meeting does not have a               
quorum, another  meeting shall be convened  within a period of 15               
days. The  second meeting  shall  have      the  right  to  adopt               
resolutions   regardless    of   the   number   of   shareholders               
participating.                                                                  
     4. The founding meeting of shareholders may:                               
     1) increase  the fixed  capital  if  the  number  of  shares               
subscribed for is larger than provided for in the bylaws;                       
     2) reduce  the  fixed  capital  in  cases  provided  for  in               
paragraph 3 of Article 16 of this Law; and                                      
     3) grant incentives to founders.                                           
     5. The founding meeting shall adopt or specify the bylaws of               
the commercial  bank drafted  by founders and registered with the               
Bank of  Lithuania, shall adopt the founding report and founders'               
transactions, shall  elect the board and council and the auditing               
service (auditor),  and shall  decide  other  issues  within  the               
powers of a general meeting.                                                    
                                                                                
     Article 18. Issue of Permits (Licences) for Commercial                     
                 Banking Activities                                             
                                                                                
     1. Commercial  banks shall  become legal  persons and  shall               
obtain the  right to  execute banking operations from the date of               
the issue  of permit  (licence) for commercial banking activities               
and the registration thereof in the registration book of the Bank               
of Lithuania.                                                                   
     2. Commercial banks must  obtain their permit (licence) from               
the Bank  of Lithuania  within six  months of  the date  of their               
registration. If  during this  period a  bank fails  to  obtain a               
permit (licence) for its  activities, it shall then be deemed not               
established  and contributions  of individuals  thereto  must  be               
repaid in  full within 15 days of the registration deadline. If a               
bank is  established without  a public subscription for shares, a               
permit for activities of a commercial bank can be issued together               
with the registration of its bylaws.                                            
     3. A  permit  (licence)  to  engage  in  commercial  banking               
activities shall  be   issued upon  the submission to the Bank of               
Lithuania of:                                                                   
     1) protocol  of the shareholders' founding meeting, or, when               
the bank  is established  by purchase of shares by founders only,               
an application  of  the  founders  for  the  issue  of  a  permit               
(licence) for commercial banking activities,                                    
     2) documents  of the founding of the bank: a notarycertified               
form of the founding agreement of the commercial bank, the bylaws               
of the  bank, and  protocol of the shareholders' founding meeting               
on the  adoption of bank bylaws and on the election of the board,               
the council  and the  audit service  (auditor). When  a  bank  is               
established by  purchase of shares by founders only, the protocol               
shall be  signed by  all founders on the election of the managing               
bodies;                                                                         
     3) documents certifying that all shares have been subscribed               
and fully  paid for, or, if shares have not been issued, that the               
fixed capital  of the  bank  has  been  collected  from  founders               
(shareholders);                                                                 
     4) documents  certifying  that  the  board  can  dispose  of               
finances received for shares;                                                   
     5) the  full names  of the  members of  the  board  and  the               
council, the audit committee (auditor), and the chief accountant,               
as well  as information  on the  educational qualifications, work               
history, and  prior   places and  positions of  employment of the               
members of  the board and the chief accountant. A commercial bank               
must supply  information to  the Bank of Lithuania on new persons               
elected (appointed)  to these  positions and other changes in the               
managing bodies  of the  bank no  later than  ten days from their               
coming into force;                                                              
     6) description  of facilities used by the bank with emphasis               
on the  fact that  they must  be adapted  for  the  safeguard  of               
accumulated funds and customer services;                                        
     7) if  the main office of the bank is expected to be located               
in a  rented premises,  the rent  contract with  the owner of the               
building;                                                                       
     8) if  the bank  has failed  to set  up cash desk facilities               
within the  first six  months of  its  activities,  a  letter  of               
guarantee from  another bank  that the  latter  will  temporarily               
perform cash services for the customers of the new bank;                        
     9) economic bases of bank activities; and                                  
     10) bylaws  of the  founders of the bank and their financial               
statements  for  the  past  three  years  approved  by  an  audit               
organization.                                                                   
     4.  Founders   of  foreign  banks  and  banks  with  foreign               
participation shall also submit:                                                
     1) the  founder --  which  shall  be  a  foreign  bank,  the               
declared balance of their activities approved in the procedure as               
established abroad;  other legal  persons,  a document certifying               
to their  legal status;  natural persons,  recommendations of  no               
less than two solvent legal or natural persons.                                 
     2) permission  of a  controlling  body  of  the    founder's               
country to establish a bank in Lithuania.                                       
     5. Permits  (licences) for  commercial bank activities shall               
not be issued when:                                                             
     1) the  procedure for the establishment of a commercial bank               
has been violated;                                                              
     2) even  one of the terms established in paragraph 3 of this               
Article concerning  the issue of permits (licences) to commercial               
banks have failed to be implemented;                                            
     3) the  founding agreement  or  its  bylaws  contradict  the               
legislation of  the  Republic  of  Lithuania,  or  the  financial               
condition of  founders or  shareholders who have obtained 1/10 of               
the fixed capital is deemed unstable; or                                        
     4) the  founders of the bank are a group of related entities               
with a  common property, common directors, mutual guarantees, and               
direct commercial dependence.                                                   
     6. The  Bank of  Lithuania may  refuse  to  issue  a  permit               
(licence) for the activities of a commercial bank if it concludes               
that the  chairperson of  its  board  does  not  have  sufficient               
qualifications  and  banking  experience.  The  leadership  of  a               
commercial bank must have an honest reputation.                                 
     7. Refusal  to issue  a permit  (licence) may be appealed in               
court.                                                                          
     8. In  the event that the Bank of Lithuania refuses to issue               
a  permit   (licence)  for  commercial  banking  activities,  its               
founders or board, having eliminated obstacles for obtaining such               
a  permit  (licence),  shall  have  the  right  to  repeat  their               
application for  a permit (licence), which shall be considered in               
the general procedure.                                                          
     9. Decisions  on the  issue of  permits (licences)  shall be               
adopted  within  two  months  of  the  date  that  the  documents               
enumerated in this Article are submitted.                                       
     10.A fixed  fee for the registration and reregistration of a               
commercial bank  as specified  in the  Law on the Registration of               
Enterprises of  the Republic  of Lithuania  shall be  paid to the               
Bank of Lithuania.                                                              
     11. A  sum equaling  10  000  USD  shall  be  paid  for  the               
registration of  foreign banks  and banks  with foreign partners,               
and a  sum equaling   1000  USD shall  be  paid  for  registering               
changes in their bylaws.                                                        
                                                                                
     Article 19. Establishment and Registration of Subsidiaries                 
                                                                                
     1. Commercial  banks may  establish    subsidiaries,  branch               
offices,   and representations  both within  and outside  of  the               
territory of the Republic of Lithuania.                                         
     2. All  subsidiaries, branch offices  and representations of               
commercial banks  established in  the Republic of Lithuania shall               
be registered  with the  Bank of  Lithuania  in  the  established               
procedure. Subsidiaries,  branch offices  and representations  of               
commercial banks  may carry  out bank operations from the date of               
their registration with the Bank of Lithuania.                                  
                                                                                
                                                                                
                            Chapter 4                                           
                   Capital of Commercial Banks                                  
                                                                                
                                                                                
     Article 20. Composition of Capital                                         
                                                                                
     1. Commercial banks must have fixed and reserve capital.                   
     2. Commercial banks that accept deposits must form insurance               
capital  or  participate  in  the  collective  deposit  insurance               
system.                                                                         
     3. Banks  can form  other capital as well. The procedure for               
the formation  and use thereof shall be established by the bylaws               
of the bank.                                                                    
                                                                                
     Article 21. Fixed Capital of a Commercial Bank                             
                                                                                
     1. The fixed capital of a bank shall be made up of the funds               
of the  bank's founders  and   shareholders from  the purchase of               
shares. The  minimum amount of fixed capital of a commercial bank               
shall be  established by the Bank of Lithuania. The fixed capital               
of a  commercial bank  shall be  paid for  prior to  the founding               
meeting of the bank.                                                            
     The minimum capital for foreign banks and banks with foreign               
partners shall be the equivalent of 5 million ECUs.                             
     2.  Fixed   capital  cannot   be   formed   from   budgetary               
organisation funds, or from borrowed and collateralized funds.                  
                                                                                
     Article 22. Reserve Capital of a Commercial Bank                           
                                                                                
     1. Commercial banks shall form reserve capital to be used to               
cover potential losses.                                                         
     2. Reserve  capital shall  be formed  out of   annual profit               
deductions  and   shall  not   be  less  than  the  minimum  rate               
established by  the Bank of Lithuania. Deductions from the bank's               
profit shall  be made  until the amount of reserve capital equals               
the amount of fixed capital.                                                    
     3. New  deductions from  the bank's  profit  shall  be  made               
following the use of reserves to compensate for the bank's losses               
until the  amount of the reserve funds again equals the amount of               
fixed capital.                                                                  
                                                                                
                            Chapter 5                                           
                 Management of a Commercial Bank                                
                                                                                
                                                                                
     Article 23. Managing Bodies                                                
                                                                                
     The managing  bodies of  a commercial bank shall include the               
general meeting  of shareholders,  the board,  and the council of               
the bank.                                                                       
                                                                                
     Article 24. The General Meeting of Shareholders                            
                                                                                
     1. The  general meeting of shareholders shall be the supreme               
managing institution  of a  bank. All of the shareholders  of the               
bank, regardless  of the  number and class of their shares, shall               
have the  right to  attend the  general meeting.  Members of  the               
board who  are not  shareholders may also attend the meeting with               
the right of an advisory vote.                                                  
     2. The general meeting shall have the right:                               
     1) to adopt and amend the bylaws of the bank;                              
     2) as necessary,to elect and recall before the expiration of               
their term members of the board,the council and the audit service               
(auditor), and from them,  the  chairperson  of  the  board,  the               
chairperson of the council, and the head of the audit service who               
are subordinated to the board;                                                  
     3) to  approve issues  on the founding of bank subsidiaries,               
branch offices and representations;                                             
     4) upon  submission by the council, to fix the salary of the               
members of  the council  and also  to  approve  salaries  of  the               
members of the board and the audit service (auditor) or extend to               
the board the powers to decide these issues;                                    
     5) to  approve the  annual  balance  and  estimate,  and  to               
establish the  procedure for  the distribution of profit and  the               
remuneration of losses;                                                         
     6) to approve the increase or reduction of fixed capital;                  
     7) to  liquidate or  reorganize the  commercial bank  and to               
solve issues  concerning its  merger with  another bank; to elect               
and recall  members of  the liquidation committee and approve the               
financial statements of this committee;                                         
     8) to  consider other  issues proposed  by  the  board,  the               
council and the audit service (auditor); and                                    
     9) to  consider proposals  by  shareholders  and  complaints               
regarding the activities of the board and the council.                          
3. The  procedures of  the   general meeting of shareholders  and               
the rules  of adopting  decisions therein shall be established by               
the Law  on Joint  Stock Companies  of the  Republic of Lithuania               
unless other provisions are made in the bank's bylaws.                          
                                                                                
     Article 25. Commercial Bank Councils                                       
                                                                                
     1. The  council of  a  commercial  bank  shall  monitor  and               
control the  activities of the board of the bank. The activities,               
powers and rights of the bank council shall be established by the               
bylaws of the commercial bank as well as by Article 24 of the Law               
on Joint  Stock Companies  of the Republic of Lithuania (with the               
exception of clauses 1 and 2 of paragraph 1 of this Article).                   
     2. Upon proposal by the board, the bank council shall:                     
     1) define  the duties, rights, responsibilities and salaries               
of the bank's employees;                                                        
     2) define the guidelines of bank activities;                               
     3) determine  the amount  and type  of credits  that can  be               
issued only with the approval of the council;                                   
     4)  solve   issues  concerning  the  establishment  of  bank               
subsidiaries, branch offices, agencies and representations;                     
     5) solve  issues concerning  the purchase  and sale  of real               
estate; and                                                                     
     6) define  the rules  of the  formation and  utilization  of               
other types of capital.                                                         
     3. The  number of  members of  the  bank  council  shall  be               
established in  the bylaws,  although the number must be odd, and               
must not be smaller than three.                                                 
     4. The bank council  shall be  elected from the shareholders               
for no longer than four years. Members of the bank council may be               
reelected for another term.                                                     
     5. The  term of  office of  the council of a commercial bank               
shall begin  with the  adjournment  of  the  general  meeting  of               
shareholders that has elected it.                                               
     6. Members  of the  bank council may only be legally capable               
natural persons possessing shares of a given bank.                              
     7. The  following persons  cannot be  members  of  the  bank               
council:                                                                        
     1) persons  who are members of the supervisory board or bank               
councils of  more than  two other  enterprises (commercial banks)               
registered in the Republic of Lithuania;                                        
     2) members of the board of that or another commercial bank;                
     3) persons  who have been deprived  of the right to perform                
these duties by law; and                                                        
     4) members of the Government, the State Controller,  members               
of the  board of the Bank  of Lithuania,  as well as  persons who               
have held the above positions less than a year ago.                             
     8. The bank council and its members shall not have the right               
to delegate  or transfer  their functions  to  other  persons  or               
managing institutions.                                                          
     9. The  general meeting  of shareholders may only remunerate               
members of the bank council  from the bank's profit.                            
                                                                                
     Article 26. The Bank Board                                                 
                                                                                
     1. The  board of  a commercial  bank shall  direct the bank,               
manage its activities, represent the bank, and bear liability for               
the bank's  transactions. The  number of  board  members  (which,               
however, must  be at  least three),  the activities,  powers, and               
rights   of the  board and  its members, as well as the procedure               
for adopting  resolutions, shall  be defined by the bylaws of the               
commercial bank.                                                                
     2. Members of the board and its chairperson shall be elected               
for a  term not  exceeding four  years by  the general meeting of               
shareholders. Board  members may  serve an  unlimited  number  of               
terms.                                                                          
     3. Only legally capable natural person may be elected member               
of the board. The following persons may not be elected members of               
the board:                                                                      
     1) council members of the same commercial bank;                            
     2) members of the Government, the State Controller,  members               
of the  board of  the Bank  of Lithuania,  as well as persons who               
held these positions less than a year ago;                                      
     3) board  members  of  any  other  bank  registered  in  the               
Republic of Lithuania; and                                                      
     4) persons who have been deprived of this right by law.                    
     4. Members  who are  spouses, direct  relatives  or  adopted               
children  may not serve on the board simultaneously.                            
     5. The  bylaws may  establish  additional  requirements  for               
members of the board.                                                           
     6. Members  of the  board may  resign from their post at any               
time by submitting a written application. Resignations shall come               
into force   from the date  that the application is filed, unless               
another date is specified in the application.                                   
     7. The  members of  the board and its chairperson shall work               
in the bank and receive a fixed salary established by the general               
meeting of  shareholders or  the bank  council, if the latter has               
been instructed by the general meeting to decide these issues.                  
     8. Members of the board shall not have the right to delegate               
their duties  to other persons. Board members who are temporarily               
unable to  work shall be replaced by a member of the council, who               
shall be  appointed by  the council of the commercial bank. While               
performing the  functions of board member, members of the council               
shall not simultaneously work at the council.                                   
                                                                                
     Article 27. The Audit Service (Auditor) of Commercial Banks                
                                                                                
     1. Commercial  banks shall  each have  at least  one auditor               
elected by  the  general  meeting  of  shareholders  for  a  term               
specified by  the bylaws but not exceeding four years. The number               
of terms shall not be limited. The post of auditor may be held by               
a legally  capable person  possessing a  diploma which  certifies               
that he or she is properly qualified.                                           
     2. The  post of  auditor may  not be held by a member of the               
council, the board, or its chief accountant.                                    
     3. The audit service (auditor) must:                                       
     1)  inspect  the  implementation  of  bank's  estimate,  the               
activities of  the bank  and the  bank's adherence to legislation               
and bank bylaws;                                                                
     2) inspect  the annual balance and other financial books and               
documents   which serve  as the  basis for the general meeting to               
adopt resolutions;and                                                           
     3) report  all established  violations to  the next  general               
meeting of shareholders or sitting of the council;                              
     4. The audit service (auditor) shall have the right to carry               
out any  inspection   on the  instructions of the general meeting               
of shareholders, the board or the council.                                      
                                                                                
     Article 28. Liability for Losses Incurred by the Bank                      
                                                                                
     Liability for  losses incurred  by the  bank at the fault of               
activities  of  members  of  the  council,  the  board,  or  bank               
employees shall  be established  by the  laws of  the Republic of               
Lithuania as well as by the bylaws of the bank.                                 
                                                                                
                                                                                
                            Chapter 6                                           
                Finances and  Profit Distribution                               
                                                                                
                                                                                
     Article 29. The Fiscal Year                                                
                                                                                
     The fiscal  year of commercial banks shall coincide with the               
calendar year.                                                                  
                                                                                
     Article 30. Profit Distribution                                            
                                                                                
     1. The profit of  a bank  shall consist  of the  funds which               
remain after the calculation of bank expenses and losses from the               
income generated during the fiscal year of the bank.                            
     2. The profit shall be distributed by the general meeting of               
shareholders within three months  of the  end of the fiscal year;               
before that, the annual balance shall be approved. The resolution               
for the distribution of profit must state:                                      
     1) the net profit;                                                         
     2) taxes;                                                                  
     3) deductions for reserve capital;                                         
     4) deductions for other funds of the bank;                                 
     5) dividends;                                                              
     6) annual  payments to members of the board and the council;               
and                                                                             
     7) residual profit.                                                        
     3. Dividends  shall be  paid to  shareholders from  the  net               
profit after  taxes and  funds for the reserve and other capitals               
of the bank have been deducted.                                                 
                                                                                
     Article 31. Accounting, Accountability, and Control                        
                 of Commercial Banks                                            
                                                                                
     1. The  accounting, accountability and control of commercial               
banks shall  be regulated by the Law on the Bank of Lithuania and               
other laws of the Republic of Lithuania.                                        
     2. Commercial  banks must,  in the  official press,  publish               
their     annual  financial   statements,  balance   sheets,  and               
conclusions by independent auditors by the first of May.                        
                                                                                
                                                                                
                            Chapter 7                                           
                Protection of Customers Interests                               
                                                                                
                                                                                
     Article 32. Confidentiality of Commercial Banks                            
                                                                                
     1. Banks  and their  employees shall  deem confidential  all               
information concerning  accounts, deposits  of bank customers and               
correspondents, and  operations of the bank. Bank employees shall               
pledge to maintain confidentiality upon assuming their job.                     
     2.  Courts   of   law,   interrogation   bodies,   financial               
institutions, and  the State  Control Department  shall be  given               
information on accounts and operations of customers of commercial               
banks in the procedure established by law.                                      
     3.  Commercial   banks  shall   submit  all   documents  and               
information concerning  their operations to the Bank of Lithuania               
upon the latter's request.                                                      
     4. Information  concerning the  accounts and  deposits  of a               
deceased owner  shall be  given only to individuals identified in               
the owner of the account or deposit's will  as well, as to notary               
offices during the discussion of issues of inheritance.                         
                                                                                
     Article 33. Seizure of and Claims for Funds and Valuables                  
                 Held in Commercial Banks                                       
                                                                                
     1. Seizure  of funds  and valuables of legal persons held in               
banks may  be imposed  and canceled only upon the decision of the               
court and bodies of interrogation and arbitration. These funds or               
other valuables  can be claimed only by the decision of the court               
or arbitration  bodies, and  in cases  established by the laws of               
the Republic  of Lithuania, as well as by the demand of financial               
organizations and institutions.                                                 
     2. Seizure  of funds  and other  valuables of foreign states               
and international  organizations held  in banks  may be  imposed,               
canceled or  claimed only upon a respective decision by the court               
or arbitration body.                                                            
     3. Seizure  of funds and other valuables of residents may be               
imposed:                                                                        
     1)   by the  decision of  interrogation bodies or the court,               
when criminal  cases under consideration may produce civil claims               
to compensate for damages inflicted; and                                        
     2) by the decision of the court when considering civil cases               
on the  payment of  alimony or  the division of joint property of               
spouses.                                                                        
     4. Funds  and other  valuables held in a bank can be claimed               
only upon a respective valid court verdict or decision.                         
                                                                                
     Article 34. Deposits of Residents                                          
                                                                                
     The types  of deposits  of residents  and the terms of their               
keeping shall be determined by the commercial bank.                             
                                                                                
     Article 35. Control of Larger Payments                                     
                                                                                
     When opening  accounts to  their customers  and transferring               
sums exceeding  15 000  ECUs, commercial banks must require proof               
of identity.  The  bank's  chiefs  shall  inform  respective  law               
enforcement bodies of all possible cases of money laundering.                   
                                                                                
                                                                                
                            Chapter 8                                           
               Sanctions Against Commercial Banks                               
                                                                                
                                                                                
     Article 36. Types of Sanctions                                             
                                                                                
     1. The  Bank of  Lithuania may apply the following sanctions               
against commercial  banks that have violated this Law, other laws               
of the  Republic of  Lithuania, as  well as their own bylaws, and               
have failed  to follow  the instructions of the Bank of Lithuania               
on the elimination of violations:                                               
     1) the  prohibition of  carrying out one or several types of               
transactions;                                                                   
     2) the  demand  that  the  general  meeting  of shareholders               
suspend the activities or remove the leadership of the commercial               
bank;                                                                           
     3) the  demand that  the  general  meeting  of  shareholders               
appoint an administrator to the commercial bank;                                
     4)  the  revoker  of  the   permit  for  activities  of  the               
commercial bank.                                                                
                                                                                
                                                                                
                            Chapter 9                                           
                 Liquidation of Commercial Banks                                
                                                                                
     Article 37. Adoption of Decisions to Liquidate Commercial                  
                 Banks                                                          
                                                                                
     1. Commercial  banks shall  be dissolved  when the permit on               
commercial banking  activities has  been revoked in the procedure               
established by  law, or  when the  fixed capital  of the bank has               
become smaller  than the  minimum  established  by  the  Bank  of               
Lithuania and has not been duly replenished.                                    
     2.  The  general  meeting  of  shareholders  may  decide  to               
dissolve a bank even in the absence of the above conditions.                    
     3. A bank shall be liquidated by the decision of the general               
meeting of  shareholders;   when such decision is not adopted, it               
shall be liquidated upon the order of the Bank of Lithuania.                    
     4. Such  decisions shall  be adopted within one month of the               
emergence of the cause to liquidate the bank.                                   
     5. The decision to liquidate a bank or the order of the Bank               
of Lithuania thereon shall be published in the press.                           
                                                                                
     Article 38. Bank Liquidation Committees                                    
                                                                                
     1. Having resolved to dissolve a bank or having received the               
respective order  from the Bank of Lithuania, the general meeting               
of shareholders shall elect a liquidation committee. The board of               
the bank  shall terminate  its  activities  as  soon  as  such  a               
committee is elected.                                                           
     2. The  liquidation committee  shall  complete  the  current               
matters of  the bank,  shall represent  the  bank  in  court  and               
arbitration bodies,  shall make and receive payments on behalf of               
the bank, and shall sell the property of the bank.                              
     3. The  liquidation  committee  may  sell  the  bank's  real               
property  only  with  the  consent  of  the  general  meeting  of               
shareholders.                                                                   
     4. During  the liquidation  of a  commercial bank,  priority               
shall be  given to  settlements with  bank depositors  and  other               
creditors.                                                                      
     5.  The   remaining  funds   shall  be   divided  among  the               
shareholders in proportion to their shares of stock.                            
     6.  Activities   of  the   liquidation  committee  shall  be               
supervised by the council of the bank.                                          
     7. Upon   completion  of its work, the liquidation committee               
shall submit  for approval to the general meeting of shareholders               
the liquidation account approved by the council of the bank.                    
     8. The  liquidation committee  shall submit  to the  Bank of               
Lithuania the  approved bank  liquidation account  and the annual               
balance sheet of the bank under liquidation for the current year.               
The liquidation  committee shall  also publish  the balance sheet               
and the liquidation account in the press.                                       
                                                                                
     Article 39. Merger of Banks under Liquidation                              
                 with Other Banks                                               
                                                                                
     If the  general meeting of shareholders of a commercial bank               
under liquidation  addresses the Bank of Lithuania with a request               
to permit  its merger  with another  bank or  to  set  up  a  new               
commercial bank by way of merging two or more banks, this request               
shall be considered in the procedure established in Article 16 of               
the Law on the Bank of Lithuania.                                               
                                                                                
                                                                                
                                                                                
                                             Vytautas Landsbergis               
                                                        President               
                                                  Supreme Council               
                                            Republic of Lithuania               
                                                                                
Vilnius                                                                         
2 July 1992                                                                     
No.I-2715