Europe will not try to save Latvia's third largest bankStaff Writer | February 25, 2018
Latvia's ABLV Bank is failing or likely to fail and will be wound up as saving it is not in the public interest, the European Union's Single Resolution Board and the European Central Bank (ECB) said.
ABLV Bank The significant deterioration of its liquidity
Privately held ABLV, Latvia's third-biggest bank, has been in focus since U.S. authorities accused it of covering up money laundering, bribing officials and facilitating the breach of sanctions against North Korea.
"Due to the significant deterioration of its liquidity, the bank is likely unable to pay its debts or other liabilities as they fall due," the ECB, ABLV's supervisor, said.
"The bank did not have sufficient funds which are immediately available to withstand stressed outflows of deposits before the payout procedure of the Latvian deposit guarantee fund starts," the ECB added.
The Board of the Financial and Capital Market Commission (hereinafter – the FCMC) during an extraordinary meeting today 23 February 2018 adopted a decision on the occurrence of unavailability of deposits at ABLV Bank AS.
In view that the European Central Bank (ECB) has not instructed to revoke payment restrictions imposed on ABLV Bank on 18 February 2018 the FCMC Board decided on unavailability of deposits, in order to ensure starting pay-out of guaranteed deposits to ABLV Bank AS clients.
Unavailability of deposits occurs in case the FCMC has established that a deposit-taker (bank) is unable to pay out assets or deposits held in the accounts of clients to their clients, and the FCMC Board adopts a decision on the occurrence of unavailability of deposits.
For the purpose to protect legal rights of ABLV Bank AS depositors and avoid potential losses the FCMC had prohibited ABLV Bank AS credit transactions (incoming payments) in the accounts of clients – depositors on the date of adoption of this decision. Above restriction would apply also to the payments between the client accounts at ABLV Bank AS. ■