Bloomberg: Troubles with ABLV point to ECB's ability to supervise eurozone banks
Assessment by the U.S. that Latvian lender ABLV had laundered money and breached U.S. sanctions on North Korea resulted in the lender’s fall over a week’s time, but also raised questions about the responsibilities of the European Central Bank’s as chief supervisor for euro-zone banks, reported Bloomberg.
«The ECB could be embarrassed if it had gaps in its fit-and-proper assessment of ABLV executives. he ECB relies on input from national authorities to prepare, but they have to form their own opinion and the decision is down to the ECB,» Nicolas Veron, a senior fellow at the Peterson Institute for International Economics, evaluated as cited by American business news portal Bloomberg before the central bank announced the closure of the Latvian lender. Bloomberg wrote that the ECB is not responsible for the prevention of money laundering in banks; however, it is responsible for ensuring senior bankers are suited for the task of managing their firms.
The Frankfurt body has explained it can only act when national authorities point out money laundering at banks, therefore the issue demonstrates the challenge the ECB faces after it has taken over banking supervision from the euro area’s national authorities in 2014. The measure is aimed at aimed at restoring confidence in banks after the financial crisis.
Representatives of both the ABLV and the ECB refused to provide the their comments to Bloomberg.
ABLV Bank will be liquidated in accordance with Latvia’s laws, because preservation of this credit institution is not in the interest of the country’s society, announced the European Central Bank on Saturday, 24 February.
In the report, ECB concluded that ABLV Bank and its subsidiary ABLV Bank Luxembourg are expected to collapse in the near future. ECB has informed the board of European Single Resolution Mechanism of its decision. The latter concluded that no measures are needed to achieve full regulation of those banks, because it would not fit with society’s interests.
This is why liquidation of those banks will be performed in accordance with laws in Latvia and Luxembourg, as ECB mentioned in its announcement.