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Latvian central bank to lend nearly €300M to ABLV as ECB deadline approaches


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Latvian central bank to lend nearly €300M to ABLV as ECB deadline approaches

The Latvijas Banka agreed to provide ABLV Bank AS €297.2 million in emergency liquidity assistance, as the embattled Latvian lender prepares to present a survival plan to the ECB to meet a Feb. 23 deadline, Reuters reported the same day.

The emergency loan, which includes €97.5 million of funding provided earlier in the week, may help ABLV stabilize its operations, after depositors withdrew over €600 million from the bank amid allegations of money laundering and terrorism financing, noncompliance with regulations and international sanction violations. The U.S. Treasury Department's Financial Crimes Enforcement Network, or FinCEN, proposed to prohibit the bank from opening or maintaining a correspondent account in the U.S., with the ECB also imposing a temporary moratorium on the lender's debit operations in all currencies due to the U.S. regulator's decision.

ABLV, whose chief compliance officer resigned Feb. 22, was given until Feb. 23 by the ECB to provide details on how it plans to survive, if the payment moratorium is rescinded, or face the risk of closure. The Latvian bank, which asked for as much as €480 million in liquidity assistance, previously said it had sufficient liquidity and capital, and would not seek a government bailout.

Meanwhile, Latvian Finance Minister Dana Reizniece-Ozola told Reuters that the the government would not step in to rescue ABLV, as it is "not regarded as a systemic bank" and its exposure to the country's economy is low. Reizniece-Ozola also noted that Latvia is ready to tackle any potential "domino effects on (other) banks" that may arise from the current scandal.

Prime Minister Maris Kucinskis told the newswire before an EU summit in Belgium that Latvia plans to halve the share of bank deposits held by nonresidents, to be carried out in several stages, through strengthening supervision and setting new targets. Nonresident deposits make up 40% of the total in Latvia at present, Reuters noted.

Kucinskis also said the country's banking sector is stable, despite the situation surrounding ABLV.