trending Market Intelligence /marketintelligence/en/news-insights/trending/xpfr7dlmwfe2f11nof3igw2 content esgSubNav
In This List

ECB imposes temporary moratorium as Latvia's ABLV requests central bank loan

Blog

Banks’ Response to Rising Rates & Liquidity Concerns

Blog

Navigating Basel IV: Guidance and insight into complying with the new reforms for banks

Blog

Banking Essentials Newsletter: 23rd August edition

Blog

Banking Essentials Newsletter: 9th August Edition


ECB imposes temporary moratorium as Latvia's ABLV requests central bank loan

Latvia's financial regulator imposed a European Central Bank-mandated temporary moratorium on Latvian lender ABLV Bank AS's debit operations in all currencies, the ECB said Feb. 19.

"Temporarily, and until further notice, a prohibition of all payments by ABLV Bank on its financial liabilities has been imposed, and is now in effect," the ECB said, adding that "a moratorium was considered necessary given that the bank is working with the Latvian central bank and authorities to address the current situation."

The ECB cited the proposal by U.S. Treasury Department's Financial Crimes Enforcement Network, or FinCEN, to prohibit ABLV Bank from opening or maintaining a correspondent account in the U.S. after the regulator labeled the lender a foreign bank of primary money laundering concern. FinCEN accused the bank of facilitating transactions for parties connected to U.N.-designated entities, several of which are involved in North Korea's ballistic missile program.

Latvia's Financial and Capital Market Commission said the moratorium means that the bank must ensure that debit transactions are not carried out with effect from midnight Feb. 19. The regulator noted that a group authorized by it is now working at the bank "for monitoring and liaison purposes."

The regulator had said Feb. 16 that the accusations against the bank were "the aftermaths of historical legacy" and that it had required ABLV Bank to carry out almost €20 million of investment to tighten up its controls.

"One cannot deny that Latvia is still facing the [anti-money laundering]-related problems," commission Chairman Peters Putninš said then. "However, significant remedial work has been done in the bank by the FCMC over [the] last two years."

The regulator also had said ABLV's capital adequacy and liquidity remained "at very high levels," but Latvijas Banka, the country's central bank, told Bloomberg News that it granted a request from ABLV Bank to lend it €97.5 million against "safe, highly liquid securities." The Latvian lender has a portfolio of bonds worth €1.6 billion, according to the report.

The Nasdaq Riga exchange on Feb. 19 suspended the bank's membership and halted all active orders in its bonds, Bloomberg noted.

ABLV said it had asked the Latvian central bank for a loan of up to €480 million, saying it and the moratorium were steps designed to "give the bank sufficient time for stabilization of the existing situation and accumulating the funds necessary for ensuring normal operation."

On Feb. 17, Ilmars Rimsevics, central bank governor for Latvia, was reportedly questioned for eight hours by Latvia's anti-corruption agency. The central bank said in a Feb. 18 statement that it was continuing "business as usual" and that decisions would continue to be made by its council and board, with the deputy governor in charge during the governor's absence.

The anti-corruption agency said Feb. 19 that Rimsevics was being held on suspicion of demanding a bribe of at least €100,000 but that the accusation did not relate to the case against ABLV, Reuters reported. Rimsevics' lawyer said Feb. 18 that his detention was unlawful.

The central bank also said ABLV had yet to receive its requested loan funding, with details needing to be worked out, Reuters added.