Cooperation is not an alternative, it is a choice to ensure the well-being of our communities and a proven standard to implement in developing countries.
This summarizes the message delivered to the Summit by Fortunatas Dirgincius, Chairman of the Board and CEO of Lithuanian Central Credit Union (LCCU) since 2011.
In this interview, the Summit also asks him what role the LCCU plays in the development of local businesses and how it contributes to the development of Lithuania.
Why do you suppose the Lithuanian Central Credit Union is the only Lithuanian-owned financial institution? Are there any historical or other explanations?
LCCU is solely owned by the majority of Lithuanian credit unions operating in Lithuania. Everyone considers credit unions in Lithuania as the only credit (banking) institutions that use national capital credit and the reason is simple. According to the Law on Credit Unions, a member of a credit union must be a citizen of Lithuania or a person with a permanent residence permit. However, it is just a law and credit unions in the country are mainly focused on the fulfillment of local communities' needs to better serve their members. LCCU plays a key role in the development of CU systems, which are mainly financed by local credit unions. We have a saying that no credit union can be bought by any foreign institution due to our unique cooperative management and the fact that they are member-owned.
What role does the LCCU play in the development of local businesses, and how does it contribute to the country’s development?
LCCU's main role is to manage CUs’ liquidity and ensure their solvency. However, we actively participate in various projects to ensure the development of local businesses, social projects and to help implement various cooperative initiatives. Here are a few examples: LCCU heads a consortium of 57 credit unions to finance small business start-ups. It is the only project for start-ups in Lithuania and also the only project of that nature in the European Union. The main difference is the strong emphasis on educating potential start-ups and the focus on 4 target groups: young people under 29, seniors over 50, the unemployed and the handicapped. Loans for start-ups of up to 25,000 euros may be guaranteed by the government and interest is 95% covered by the government. Another example is a project between CUs and local communities. It has been ongoing for over 5 years. This year’s theme will be financial education.
From a regulatory perspective, Lithuania is implementing legal frameworks to promote cooperatives. How far along are they in this process and what impacts are expected from these measures?
Credit unions are considered one of the most successful examples of cooperation in Lithuania. The LCCU, a second tier cooperative institution, makes the CU system even stronger. The development and growth of credit unions requires enhanced expertise and the adoption of a new regulatory perspective. The Lithuanian regulatory field is going through a major reform. There are plans to improve legal framework to strengthen the capital base of credit unions and promote financial education, transparency and member involvement and participation in credit union management. LCCU and the Association of Lithuanian Credit Unions actively participate in a working group formed in the Bank of Lithuania and, in partnership with the Ministry of Finance, they will prepare proposals for amendments to laws that will be passed by the Parliament of Lithuania. A systemic approach to safe and financially sound credit unions is key. There are ongoing discussions about sending a supervisory delegation to LCCU and requiring all credit unions to become members.
One of the goals of the International Summit of Cooperatives is to have participants adopt a common declaration. What is the one key point you would like to see included?
Cooperation is our future. It has no borders and no limits in any field of activity. It is not an alternative, it is a choice to ensure the well-being of our communities and a proven standard to implement in developing countries.
About Lithuanian Central Credit Union (LCCU)
LCCU, the only Lithuanian-owned financial institution in that country, is a second tier organization of Lithuanian financial cooperatives.
Founded by Lithuanian financial cooperatives and the Lithuanian government in 2002, LCCU provides financial and other services to financial cooperatives and their members and oversees 61 financial cooperatives across Lithuania.