Bloomberg: Troubles with ABLV point to ECB's abil­ity to su­per­vise eu­ro­zone banks

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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.


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