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Latvian lender files arbitration request over 'unfair' treatment by authorities


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Latvian lender files arbitration request over 'unfair' treatment by authorities

Latvia-based JSC Norvik Banka said it and its controlling shareholders filed a request for arbitration with the International Centre for the Settlement of Investment Disputes over its treatment by Latvian authorities.

The bank noted that U.K. businessman Grigory Guselnikov acquired a majority stake in 2013 and has since invested over €100 million in Latvia. It also said the motion to the ICSID was filed because of the "unfair, arbitrary, improperly motivated and unreasonable regulatory treatment" afforded it by Latvian authorities, "contrary to Latvia's obligations under international law."

The filing of the arbitration request follows negotiations between the bank and the government "wherein multiple options were proposed by the bank for mutual agreement not requiring financial outlays." It said the bank and its shareholders remain hopeful that a compromise can be reached but that they filed the arbitration request to "protect and enforce their legal rights."

Norvik Banka noted that any decision by the ICSID would be binding and final. It added: "The dispute is of an investment nature and will not have any impact to the day-to-day operations of the bank."

The bank did not further describe the nature of the dispute in its Dec. 14 release, although on July 19 the Latvian Financial and Capital Market Commission fined it €1.3 million for failings in its money laundering controls that enabled violations of international sanctions in North Korea. Fellow Latvian lender JSC Rietumu Banka was fined €1.6 million for the same failings, having earlier been fined €80 million by a French court over its role in a money laundering and tax evasion ring.

Norvik Banka was part of a consortium that agreed in March to purchase Ukraine-based PJSC Sberbank from PAO Sberbank of Russia, but the bid was eventually blocked by Ukrainian authorities, who had reportedly been concerned about the Russian background of the prospective buyers, including Guselnikov.