Opinion of the European Central Bank of 14 August 2025 on the supervisory independence of Lietuvos bankas and the prevention of conflicts of interest of its members of staff and governance bodies (CON/2025/23)

OPINION OF THE EUROPEAN CENTRAL BANK of 14 August 2025 on the supervisory independence of Lietuvos bankas and the prevention of conflicts of interest of its members of staff and governance bodies (CON/2025/23) Introduction and legal basis

On 7 July 2025 the European Central Bank (ECB) received a request from the Minister of Finance of the Republic of Lithuania for an opinion on a draft law amending certain provisions of and supplementing the Law on Lietuvos bankas (hereinafter the ‘draft law’). The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union and Article 2(1), third indent, of Council Decision 98/415/EC , as the draft law relates to Lietuvos bankas and the specific tasks conferred upon the ECB concerning the prudential supervision of credit institutions pursuant to Article 127(6) of the Treaty. In accordance with Article 17.5, first sentence, of the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion.

1. Purpose of the draft law

1.1 The main purpose of the draft law is to transpose into Lithuanian law the amendments to Directive 2013/36/EU of the European Parliament and of the Council introduced by Directive (EU) 2024/1619 of the European Parliament and of the Council (hereinafter the ‘CRD6’) that relate to the supervisory independence of competent authorities and the prevention of conflicts of interest in relation to the officials and employees of such authorities. 1.2 With regard to the maximum term of office for members of the governing bodies of supervisory authorities (excluding Governors of national central banks (NCBs)) the consultation request accompanying the draft law states that under the Law on Lietuvos bankas as it currently stands, the Deputy Chairs and members of the Board of Lietuvos bankas may be appointed for no more than

2 Council Decision 98/415/EC of 29 June 1998 on the consultation of the European Central Bank by national authorities regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42, ELI: http://data.europa.eu/eli/dec/1998/415/oj).

4 Directive (EU) 2024/1619 of the European Parliament and of the Council of 31 May 2024 amending Directive 2013/36/EU as regards supervisory powers, sanctions, third-country branches, and environmental, social and governance risks (OJ L, 2024/1619, 19.6.2024, http://data.europa.eu/eli/dir/2024/1619/oj). two consecutive terms of office. The consultation request further notes that these provisions of the Law on Lietuvos bankas comply with the provision relating to the maximum term of office for members of the governing bodies of supervisory authorities (excluding Governors of NCBs) laid down in the CRD6. In addition, the consultation request states that the current provisions of the Law on Lietuvos bankas regulating the appointment and dismissal of members of the Board of Lietuvos bankas are consistent with the principles of the CRD6 and that the draft law only supplements them with new provisions concerning the public disclosure of grounds for dismissal. In this respect, the draft law provides that Lietuvos bankas must publish on its website the grounds for dismissal within five working days of dismissal of the Chair of the Board, a Deputy Chair, or a member of the Board of Lietuvos bankas. 1.3 The draft law adds to the categories of entities set out in the Law on the Coordination of Public and Private Interests of the Republic of Lithuania in relation to which a cooling-off period is applied to former staff and members of the governing bodies of Lietuvos bankas who take up employment or positions with such entities. The additional categories include not only supervised entities but also their direct and indirect parent undertakings, subsidiaries, undertakings in which the relevant supervised entity holds a participation interest, entities providing services to any of the abovementioned entities under outsourcing agreements, and entities engaged in lobbying or interest representation activities directed at Lietuvos bankas. 1.4 The draft law specifies the duration of the cooling-off period: a 12-month period is applicable to the Chair of the Board of Lietuvos bankas, as well as to his/her deputies, and to Board members; a 12month period also applies to staff of Lietuvos bankas who served as members or alternate members of bodies established by the Board that operate on a collegial basis and are tasked with performing certain functions ; a shorter period of six months is applicable to other staff of Lietuvos bankas. The draft law also provides that a shorter cooling-off period of no less than three months may be applied if a longer period would disproportionately restrict a former employee’s right to take up employment after leaving Lietuvos bankas and if such an exemption aligns with the interests of Lietuvos bankas. 1.5 The draft law provides that staff of Lietuvos bankas are entitled to receive compensation during the cooling-off period in accordance with procedures and conditions established by the Board of Lietuvos bankas. However, no compensation is to be paid if the employment contract with the employee of Lietuvos bankas was terminated due to gross misconduct or a second, identical, breach of work duties committed within the previous 12 months, or if the employee was dismissed from Lietuvos bankas on the grounds of being found guilty of committing a crime or criminal offence. 1.6 In addition, the draft law introduces amendments clarifying the rights of officials authorised by Lietuvos bankas to carry out inspections under the Law on Lietuvos bankas. In particular, the draft law establishes the right of such officials, when conducting inspections having obtained a court authorisation, to: (a) temporarily seize items and storage media of legal entities that may be used as

5 The Republic of Lithuania Law No VIII-371 on the Coordination of Public and Private Interests of the Republic of Lithuania. evidence of breaches; and (b) seal documents, notes on employees, and storage media for the period and to the extent necessary to carry out the inspection.

2. General observations

2.1 Article 130 of the Treaty and Article 7 of the Statute of the European System of Central Banks and the European Central Bank (hereinafter the ‘Statute of the ESCB’) address the independence of central banks in the European System of Central Banks (ESCB) , stipulating that when exercising the powers and carrying out the tasks and duties conferred upon them by the Treaties and the Statute of the ESCB, neither the ECB, nor an NCB, nor any member of their decision-making bodies, are to seek or take instructions from Union institutions, bodies, offices or agencies, from any government of a Member State or from any other body. This independence was thus entrusted to the ECB and Lietuvos bankas, as an NCB, by primary law. 2.2 Based on considerations of central bank independence, and in order to ensure the independence of NCBs such as Lietuvos bankas when exercising the powers and carrying out the tasks and duties conferred upon them by the Treaties and the Statute of the ESCB, the ECB has established an ethics framework. This includes the ECB’s Code of Conduct for high-level ECB officials (hereinafter the ‘Single Code’), which applies, among others, to the members of the Governing Council of the ECB when exercising their functions as members of a high-level ECB body, and Guideline (EU) [2021/2253] of the European Central Bank , which is addressed to the NCBs of the Eurosystem and establishes ethics requirements applicable to the members of the decision-making bodies and staff of the NCBs. 2.3 The NCBs, as an integral part of the ESCB, must act in accordance with the guidelines of the ECB . Hence, national legislation is without prejudice to the ethics framework which the ECB has established in order to ensure the independence of the ECB and the NCBs when exercising the powers and carrying out the tasks and duties conferred upon them by the Treaties and the Statute of the ESCB, as both frameworks have their own scope and legal basis. 2.4 Furthermore, Article 19 of Council Regulation (EU) No 1024/2013 (hereinafter the ‘Single Supervisory Mechanism (SSM) Regulation’) stipulates that when carrying out the tasks conferred on it by the SSM Regulation, the ECB and the national competent authorities acting within the SSM must act independently. The legal basis for this provision is Article 127(6) of the Treaty. Article 31(3) of the SSM Regulation furthermore requires the ECB, in cooperation with the national competent authorities, to: (a) establish and maintain comprehensive and formal procedures including ethics procedures and proportionate periods to assess in advance and prevent possible conflicts of interest

7 Regarding the doctrine of the ECB as to the independence and its ramifications, see the ECB Convergence Report 2025, Section 2.2. Available on the ECB’s website at www.ecb.europa.eu.

8 Code of Conduct for high-level ECB officials (OJ C 478, 16.12.2022, p. 3).

9 Guideline (EU) [2021/2253] of the European Central Bank of 2 November 2021 laying down the principles of the Eurosystem Ethics Framework (ECB/2021/49) (OJ L 454, 17.12.2021, p. 7, ELI: http://data.europa.eu/eli/guideline/2021/2253/oj).

10 See Article 14.3 of the Statute of the ESCB.

11 Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions (OJ L 287, 29.10.2013, p. 63, ELI: http://data.europa.eu/eli/reg/2013/1024/oj). resulting from subsequent employment within two years of members of the Supervisory Board; and (b) provide for appropriate disclosures. Those procedures are without prejudice to the application of stricter national rules. 2.5 In view of this independence and these requirements of the SSM Regulation, the ECB has established an ethics framework to ensure the independence of national competent authorities, such as Lietuvos bankas, when assisting the ECB in carrying out the tasks conferred on it by the SSM Regulation. This ethics framework includes the Single Code, which applies, among others, to the members of the Supervisory Board of the ECB when exercising their functions as members of a highlevel ECB body, and Guideline (EU) 2021/2256 of the European Central Bank , which is addressed to the national competent authorities of the SSM and establishes ethics requirements applicable to the members of their bodies and the members of staff of the national competent authorities. In view of the responsibility of the ECB for the effective and consistent functioning of the SSM , the national competent authorities must comply with Guideline (EU) 2021/2256. 2.6 In contrast to the ethics framework ultimately based on Article 127(6) of the Treaty, the CRD6, including its provision on supervisory independence of competent authorities , is based on Article 53(1) of the Treaty. A legal act based on this provision cannot alter the rights and obligations of the ECB and the national competent authorities when carrying out the tasks conferred on them by the SSM Regulation based on Article 127(6) of the Treaty. It follows from settled case-law of the Court of Justice of the European Union that the different legal bases, namely Article 53(1) and Article 127(6) of the Treaty, cannot be combined as the legal basis for a legal act, in view of the different procedures involved. In particular, the measures adopted under Article 53(1) of the Treaty are adopted by the European Parliament and the Council, acting in accordance with the ordinary legislative procedure, and after consulting the Economic and Social Committee (and, if relevant, the ECB in accordance with Articles 127(4) and 282(5) of the Treaty). By contrast, the regulations adopted under Article 127(6) of the Treaty are adopted by the Council alone, in a special legislative procedure in which the Council acts unanimously, after consulting the European Parliament and the ECB . 2.7 Hence, the amendments made by the CRD6 are without prejudice to the ethics framework which the ECB has established to ensure the independence of the national competent authorities in the context of the SSM, as both frameworks have their own scope and legal basis. The Union legislator acknowledged this through the CRD6’s amendments to Directive 2013/36/EU, which provide that Article 4a(2) of Directive 2013/36/EU is without prejudice to the rights and obligations of the national competent authorities pursuant to the SSM established by the SSM Regulation . Such provisions may serve as guidance for establishing safeguards for the independence of the ECB and the national competent authorities when carrying out the tasks conferred on them by the SSM Regulation .

3. Specific observations

3.1 The consultation request states that the Law on Lietuvos bankas already complies with the provisions of the CRD6 on the maximum term of office for members of the governance bodies of competent authorities – excluding Governors of NCBs – which provide that Member States must ensure that no member of a competent authority’s governance body who is appointed after 11 January 2026 remains in office for more than 14 years . The ECB understands, therefore, that it is not necessary for the draft law to include any provisions in this respect. Under the Law on Lietuvos bankas the Chair of the Board is appointed for a term of five years and may be appointed to his or her position for an unlimited number of terms of office, while the Deputy Chairs and members of the Board are appointed for a term of six years and may be appointed to their respective positions for no more than two consecutive terms . In this context, the ECB highlights that in accordance with Article 14.2 of the Statute of the ESCB, statutes of national central banks must provide for a minimum term of office of five years for a Governor. This does not preclude longer terms of office. Applying the rules regarding the term of office of Governors to other members of the decision-making bodies of NCBs involved in the performance of ESCB-related tasks will also safeguard the personal independence of those persons. Article 130 of the Treaty and Article 7 of the Statute of the ESCB, which address the independence of central banks in the ESCB, refer to ‘members of the decision-making bodies’ of NCBs, rather than to Governors specifically. The application of the same rules regarding term of office to both Governors and members of decision-making bodies is particularly pertinent where a Governor is ‘first among equals’ alongside other members who have equivalent voting rights, or where other members are involved in the performance of ESCB-related tasks , as is the case in Lietuvos bankas. The ECB considers that the relevant provisions of the Law on Lietuvos bankas are consistent with the requirements of Article 14.2 of the Statute of the ESCB . 3.2 As noted in the consultation request and in paragraph 1.2, the provisions of the Law on Lietuvos bankas as they currently stand that regulate the appointment and dismissal of members of the Board of Lietuvos bankas are consistent with the principles of the CRD6 and the draft law only supplements them with new provisions concerning the public disclosure of grounds for dismissal. The CRD6 provides in this respect that Member States must ensure that members of a competent authority’s governance body are appointed on the basis of published criteria that are objective and transparent and that those members can be dismissed if they no longer meet the criteria of appointment or have

17 See the fourth subparagraph of Article 4a(2) of Directive 2013/36/EU, as inserted by the CRD6. This acknowledgement refers directly to the dismissal requirements included in Article 4(2), second subparagraph, of the CRD6.

18 See paragraph 2.1.4 of Opinion CON/2025/19.

19 See Article 4a(2), second paragraph, first sentence, of the CRD6.

21 See ECB Convergence Report, June 2025, p. 26.

22 See ECB Convergence Report, May 2006, p. 75 and ECB Convergence Report, May 2008, p. 238. been convicted of a serious criminal offence. The reasons for dismissal are to be made public unless the member of the competent authority’s governance body concerned objects to the publication . The ECB understands, therefore, that it is not necessary for the draft law to include any provisions in this respect. Under the Law on Lietuvos bankas, the Chair of the Board, Deputy Chairs and members of the Board can only be dismissed prior to the expiration of their term of office if they do not fulfil the conditions required for the performance of their duties or they have been found guilty of serious misconduct . In this context, the ECB highlights that, pursuant to Article 14.2, second paragraph, first sentence, of the Statute of the ESCB, ‘a Governor may be relieved from office only if he no longer fulfils the conditions required for the performance of his duties or if he has been guilty of serious misconduct’. Applying the same rules regarding the grounds for relieving Governors from office to other members of the decision-making bodies of NCBs involved in the performance of ESCB-related tasks will also safeguard the personal independence of those persons. As noted in paragraph 3.1, Article 130 of the Treaty and Article 7 of the Statute of the ESCB refer to ‘members of the decision-making bodies’ of NCBs, rather than to Governors specifically. The application of the same rules regarding appointment and dismissal to both Governors and members of decisionmaking bodies is particularly pertinent where a Governor is ‘first among equals’ with other members who have equivalent voting rights, or where other members are involved in the performance of ESCBrelated tasks , as is the case in Lietuvos bankas. The ECB considers that the relevant provisions of the Law on Lietuvos bankas are consistent with the requirements of Article 14.2 of the Statute of the ESCB . 3.3 The maximum 12-month cooling-off period applicable to the Chair of the Board, Deputy Chairs and members of the Board of Lietuvos bankas under the draft law is less restrictive than the requirements of the Single Code. The ECB highlights that the draft law should be without prejudice to the Single Code, as it may be amended from time to time, and must not prevent the possibility of imposing and extending a cooling-off period of a maximum of two years when such an extended period is applied based on the Single Code . 3.4 In addition, the Single Code sets limits on the establishment of post-employment relationships, not only directly with significant or less significant credit institutions, but also with ‘other financial institutions’ or ‘any entity engaged in lobbying in relation to the ECB, or consultancy and/or advocacy for the ECB or for any [supervised] institution’ . In contrast, under the draft law the categories of entities in respect of which a cooling-off period is applied – in cases where staff or members of the governing bodies of Lietuvos bankas take up employment after termination of their employment with Lietuvos bankas – extend only to financial institutions other than supervised credit institutions. Furthermore, while both the Single Code and the draft law include limitations with respect to categories of entities such as supervised credit institutions and entities involved in lobbying or advocacy, their definitions of these categories differ. As regards supervised credit institutions, the

23 See Article 4a(2), second paragraph, second and third sentences, of the CRD6.

25 See ECB Convergence Report, June 2025, p. 26.

26 See ECB Convergence Report, May 2006, p. 75, and ECB Convergence Report, May 2008, p. 238.

27 See Article 17.3, point (b), of the Single Code; see also paragraph 2.2.3 of Opinion CON/2025/19.

28 See Articles 17.1 and 17.2 of the Single Code. draft law refers to entities ‘with respect to which, during the last 12 months of their employment at Lietuvos bankas, the Chair of the Board of Lietuvos bankas, the Deputy Chairs, and the Board members directly prepared, considered, or adopted decisions related to [their] supervision or control’ . In relation to lobbying or advocacy, the draft law refers to entities engaged in activities ‘directed toward Lietuvos bankas’ on ‘matters for which the Chair of the Board of Lietuvos bankas, the Deputy Chairs, and the Board members were responsible during their tenure’ . From this perspective, the cooling-off regime under the draft law appears to introduce less restrictive provisions than those contained in the Single Code. The ECB notes further that the draft law must be interpreted without prejudice to the Single Code, as it may be amended from time to time. This opinion will be published on EUR-Lex. Done at Frankfurt am Main, 14 August 2025. [signed] The President of the ECB Christine LAGARDE