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Latvia’s third-biggest bank fails two weeks after U.S. sanctions

Latvia’s third-biggest bank fails two weeks after U.S. sanctions

Posted February. 26, 2018 07:57,   

Updated February. 26, 2018 07:57


Latvia’s third biggest bank, ABLV, is failing two weeks after U.S. authorities imposed sanctions for covering up money laundering of a business related to North Korea. “Due to the significant deterioration of its liquidity, the bank is likely unable to pay its debts or other liabilities as they fall due,” the European Central Bank (ECB) said. “The bank did not have sufficient funds, which are immediately available to withstand stressed outflows of deposits before the payout procedure of the Latvian deposit guarantee fund starts.” The ECB said the bank is failing or likely to fail.

ABLV had a rapid run on its deposits after the U.S. Treasury Department severed ties with it on February 13. Some 600 million euros (around 796 billion Korean won) had been withdrawn from the bank after the U.S. authorities announced the decision. The ECB put Monday a moratorium on ABLV that was reeling from a financial outflow.

ABLV reportedly sought a bailout of 480 million euros, but Latvian Prime Minister Maris Kucinskis said that the government would not provide tax money to prevent bankruptcy of ABLV. Latvia’s financial supervisory authority will hold Monday a special meeting to discuss ABLV’s future. Depositor protection up to 100,000 euros will be provided under the country’s law.

Jung-Min Dong ditto@donga.com