Statement by the Government of Latvia regarding development in the banking sector in Latvia
Latvia’s financial system is stable and necessary steps have been taken to ensure that the international financial commitments and interests of the people of Latvia are fully respected.
The Bank of Latvia has a capable board and council, and it works in its usual effective manner. Latvia’s Corruption Prevention and Combatting Bureau (KNAB) investigation against the President of the Bank of Latvia are not related to any of currently in Latvia operating credit institutions, including AB.LV bank.
According to the recommendation of the European Central Bank, limitations have been imposed on the operation of AB.LV bank: it is possible for the bank to receive all types of payments, while outgoing payments are limited. In addition, there are no limitations on disposing the securities, thereby accumulating funds required for liquidity. The ECB took this decision in order to stop the rapid outflow of funds from AB.LV bank and give time to prove that the AB.LV bank has both a long-term business plan and a possibility to accumulate necessary funds for short-term liquidity. AB.LV bank is currently drafting such a plan and plans to submit it to the Financial and Capital Market Commission (FCMC) by 22.02.2018.
Latvia’s law-enforcement institutions are independent, they operate in accordance with relevant Latvian and international regulation. They enjoy full support and confidence of the Government of Latvia.
Credit rating agency S&P Global re-affirms Latvia’s credit rating and outlines that no material negative effect on the core of the Latvian banking system - financial institutions focusing on serving resident deposits - is expected.
On Friday 23 February, addressing the EU Heads of State and Government, Prime Minister Māris Kučinskis pointed out that the current situation is not straightforward - the government of Latvia and law enforcement institutions have to deal simultaneously with a number of unrelated cases in the Latvian financial sector, and this creates favourable grounds for various speculations in the media space.
On Friday 23 February The Board of the Financial and Capital Market Commission (FCMC) during an extraordinary meeting 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. Deposit guarantee scheme provides for guaranteed compensation up to EUR 100 000 per each ABLV Bank AS client. Guaranteed compensation of up to EUR 100 000 has been paid out both to natural and legal persons for all types of deposits in any currency. NB In this case of guaranteed compensation pay-out Latvia's Deposit Guarantee Fund (DGF) assets will not be used, as ABLV Bank AS has sufficient amount of liquid assets.
Head of the Communication Department