Opinion of the European Central Bank of 02 July 2026 on the designation of Lietuvos bankas as resolution authority for insurance and reinsurance undertakings (CON/2026/21)

OPINION OF THE EUROPEAN CENTRAL BANK of 02 July 2026 on the designation of Lietuvos bankas as resolution authority for insurance and reinsurance undertakings (CON/2026/21) Introduction and legal basis

On 3 June 2026 the European Central Bank (ECB) received a request from the Lithuanian Ministry of Finance for an opinion on a draft law amending Articles 8, 11, 21¹, 43 and 43³ and Annexes 2 and 3 of Republic of Lithuania Law No I-678 on Lietuvos bankas (hereinafter the ‘draft law on Lietuvos bankas’) and on a draft law on the recovery and resolution framework for insurance and reinsurance undertakings of the Republic of Lithuania (hereinafter the ‘draft law on insurance resolution’, together with the draft law on Lietuvos bankas, the ‘draft laws’). 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 and sixth indents, of Council Decision 98/415/EC , as the draft laws relate to Lietuvos bankas and rules applicable to financial institutions insofar as they materially influence the stability of financial institutions and markets. 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 laws

1.1 The draft laws form part of a package of draft legislation whose main purpose is to transpose Directive (EU) 2025/1 of the European Parliament and of the Council into Lithuanian law. 1.2 The draft laws implement the requirement under Directive (EU) 2025/1 that each Member State must designate, for insurance and reinsurance undertakings, one or more resolution authorities that are empowered to apply resolution tools and exercise resolution powers. The draft laws designate Lietuvos bankas for this purpose . 1.3 The draft laws set out the rules relating, inter alia, to: (a) the liability regime applicable to Lietuvos bankas in the exercise of its functions as the resolution authority for insurance sector undertakings; (b) the

financing of the activities of Lietuvos bankas in its capacity as the resolution authority for insurance sector undertakings; and (c) the financing of resolution actions and the resolution fund. 1.4 The draft law on insurance resolution provides that the relevant provisions of the Law on Lietuvos bankas apply mutatis mutandis both to compensation for damage resulting from unlawful actions of the resolution authority or its employees in connection with the implementation of resolution actions or the performance of other functions assigned under that law, and to the reimbursement of costs incurred in connection with proceedings or claims brought against employees of the resolution authority . Pursuant to the Law on Lietuvos bankas, damage resulting from unlawful actions of Lietuvos bankas or its staff members in connection with the performance of financial market supervision is compensated only where the person that has suffered damage proves that the damage was caused intentionally or by gross negligence on the part of Lietuvos bankas or its staff members . 1.5 The draft law on Lietuvos bankas provides that the provisions governing the financing of the activities of the resolution authority for financial sector entities apply mutatis mutandis to the resolution authority for insurance sector entities . Consequently, the model under which the activities of the resolution authority for financial sector entities are financed through contributions paid by financial market participants would also apply in respect of insurance sector entities. The basis for calculating the contribution, together with the maximum contribution rate, of each market participant is set out in the draft law on Lietuvos bankas . The annual contribution level is to be established by Lietuvos bankas . For insurance sector entities, contributions are to be calculated by reference to insurance and reinsurance premiums under contracts concluded in Lithuania and are subject to a maximum rate of 0,065 % . 1.6 Under the draft law on insurance resolution, resolution actions are to be financed from the cash and/or other liquid assets of the entity subject to resolution . The resolution fund that is to be established for the purpose of financing resolution actions will be financed through contributions by insurance and reinsurance undertakings, in addition to loans and default interest paid by insurance and reinsurance undertakings .

2. Liability of Lietuvos bankas as a resolution authority for insurance and reinsurance undertakings

2.1 The ECB understands that, by applying the relevant provisions of the Law on Lietuvos bankas mutatis mutandis to the performance of resolution functions under the draft law on insurance resolution, the draft laws establish a limited liability regime for Lietuvos bankas when acting as resolution authority for insurance and reinsurance undertakings. Accordingly, Lietuvos bankas is liable for damage resulting from unlawful actions only in cases of intent or gross negligence.

2.2 The ECB understands that this limited liability regime differs from the general rule on public liability under Lithuanian civil law. Under the Civil Code, damage caused by unlawful acts of public authorities must be compensated by the State from the State budget irrespective of fault . Under this general rule, public liability arises where three conditions are met: there is an unlawful act of a public authority, damage occurs, and there is a causal link between the unlawful act and the damage . By contrast, under the limited liability regime established by the draft law on insurance resolution, a person that has suffered damage would be required to prove not only unlawfulness, damage and causation, but also intent or gross negligence. 2.3 The ECB understands that Lithuanian case-law has not always been entirely consistent as regards the relationship between the limited liability regime under the relevant provisions of the Law on Lietuvos 20 21 bankas and the general public liability regime under the Civil Code . In certain cases, the courts have taken the view that the general no-fault public liability regime under the Civil Code should prevail in respect of Lietuvos bankas . However, the most recent case-law has taken a different approach, recognising the limited liability applicable to Lietuvos bankas as a lex specialis in relation to the no-fault public liability regime where damage is alleged to have been caused by Lietuvos bankas or its staff 23 24 members . Also, in 2025, the constitutionality of the relevant provisions of the Law on Lietuvos bankas was again raised before the Court, but this issue was not addressed in its judgment . Against this background, the ECB understands that the current case-law supports the application of the limited liability regime laid down in the relevant provisions of the Law on Lietuvos bankas in the context of the draft law on insurance resolution.

3. Specific observations

3.1 In accordance with Article 14.4 of the Statute of the European System of Central Banks and of the European Central Bank, the national central banks (NCBs) may perform functions other than those specified in that Statute, unless the Governing Council finds that those functions interfere with the objectives and tasks of the European System of Central Banks. Where a Member State assigns such a function to its NCB, that NCB is responsible and liable for its performance. Nevertheless, when defining the responsibility and liability of an NCB in relation to that function, Member States are required to comply with their obligations deriving from Union law and, in particular, Article 123(1) of the Treaty . 3.2 Article 123(1) of the Treaty prohibits the NCBs from granting overdraft facilities or any other type of credit facility to public authorities and bodies of the Member States. Article 1(1), point (b), of Council Regulation No 3603/93 defines the term ‘other type of credit facility’ for the purposes of Article 123 of the Treaty

as, inter alia, any financing of the public sector’s obligations vis-à-vis third parties. Accordingly, the NCB concerned must not assume obligations vis-à-vis third parties that could potentially be incumbent on the public sector. Consequently, the NCB concerned must not finance pre-existing obligations vis-à-vis third parties that are incumbent on other public authorities or bodies and the effective financing of the obligations vis-à-vis third parties by the NCB concerned must not result directly from the measures adopted by, or from the policy choices made by, other public authorities or bodies . 3.3 The ECB notes that while the draft laws do not impose any financing obligations on Lietuvos bankas, the designation of Lietuvos bankas as resolution authority for insurance and reinsurance undertakings requires that the conditions under which Lietuvos bankas is to exercise this function are in line with the above limitations deriving from Article 123(1) of the Treaty. In particular, the liability of Lietuvos bankas when exercising the function of resolution authority for insurance and reinsurance undertakings must be limited to infringements of a serious nature of the rules imposed on Lietuvos bankas in that context . The ECB understands that the specific liability regime under the Law on Lietuvos bankas applies in this regard. That regime provides for liability resulting from unlawful actions of Lietuvos bankas or its staff members only where the person that has suffered damage proves that the damage was caused intentionally or by gross negligence on the part of Lietuvos bankas or its staff members. The ECB notes that the existence of gross negligence must be assessed taking into account the specific circumstances of resolution of insurance and reinsurance undertakings, including the urgency faced by Lietuvos bankas or its staff members and the complexity of the specific case at hand . These limitations address the requirement that the liability of Lietuvos bankas when exercising the function of resolution authority for insurance and reinsurance undertakings must be limited to infringements of a serious nature.

This opinion will be published on EUR-Lex.

Done at Frankfurt am Main, 2 July 2026.

[signed]

The President of the ECB

Christine LAGARDE