The European Central Bank's decision to wind down ABLV Bank AS could be "credit negative" for other Latvian banks, Reuters reported, citing a report by rating agency Moody's.
"Although the developments are credit negative for all banks, those that rely more heavily on non-resident deposits to fund their operations are the most vulnerable, including ABLV, JSC Rietumu Banka, and JSC Norvik Banka," the rating agency said in its report.
The ECB declared ABLV Bank and unit ABLV Bank Luxembourg "failing or likely to fail," since "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."
Its shareholders subsequently launched a voluntary liquidation procedure for the lender.
In February, the U.S. Treasury Department's Financial Crimes Enforcement Network labeled ABLV a foreign bank of primary money laundering concern.
