Latvia on Feb. 26 called for an emergency meeting of financial authorities in a bid to mitigate the effects from the collapse of ABLV Bank AS, the Financial Times reported the same day.
Prime Minister Maris Kucinskis reportedly conceded over the weekend that Latvia had not done enough to monitor potential money laundering and other risky activities. His comments came after the Latvian banking sector was put under the spotlight by allegations that its third-largest bank was involved in money laundering and terrorism financing, which ultimately led to the ECB deeming it "failing or likely to fail." Central bank Governor Ilmars Rimsevics also faced allegations of bribery and corruption, claims that he has called ridiculous.
Authorities said the scandal would not hurt the financial system, with Kucinskis reiterating that the system remains stable and can regain its "reputation," the FT said. Finance Minister Dana Reizniece-Ozola, however, warned that over a dozen Latvian lenders that attract foreign deposits could be affected by the fallout.
The Latvian financial regulator, or FCMC, reportedly said deposits in ABLV are unavailable but that customers would receive guaranteed compensation of up to €100,000 by March 8. Reizniece-Ozola had earlier said the state would not step in to bail out the troubled bank as it is "not regarded as a systemic bank."