Latvia’s banking sector rocked by U.S. probe, central bank chief’s detention
RIGA, (Reuters) - Latvia’s ABLV Bank sought emergency support yesterday after U.S. officials accused it of helping breach North Korean sanctions while the country’s central bank chief faced bribery allegations, turning up the spotlight on its financial system.
The Baltic country, which is a member of the euro zone and shares a border with Russia, has come under increasing scrutiny recently as a conduit for illicit financial activities.
Last year, two Latvian banks were fined more than 2.8 million euros ($3.26 million) for allowing clients to violate sanctions imposed by the European Union and United Nations on North Korea. Three others received smaller fines.
ABLV said it had sought temporary liquidity support from the central bank after depositors withdrew 600 million euros, about 22 percent of total deposits, following a warning by the United States that it was seeking to impose sanctions on the bank. Latvia’s third-biggest lender denied wrongdoing. “We don’t participate in any illegal activities,” ABLV Bank Deputy CEO Vadims Reinfelds told a news conference. “There are no violations of sanctions.”
The bank said it would not look for a bailout from the government and that it had adequate liquidity and capital.
The European Central Bank had earlier stopped all payments by ABLV, citing the sharp deterioration in its financial position in recent days and saying a moratorium was needed to allow the bank and Latvian authorities to address the situation.
A source close to the matter said the moratorium would be short, giving ABLV just a few days to assess its situation.