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Bookmakers predicts close of at least one more bank in Latvia

Latvia’s Prime Minister Māris Kučinskis does not exclude the possibility of another bank closing in Latvia after the government’s attempts to shake off the image of a money laundering land. Betsafe bookmakers allow for the possibility of another bank closing down, giving it the probability of 70%.

Bookmakers say the report from US Department of Treasury about ABLV Bank, which led to the bank’s liquidation, caused a major shock in Latvia and the world. Consequences of this report, however, may be long-lasting.

«USA proved it can cause the collapse of a capable and stable bank within a couple of days. This demonstrated to its opponents that it is not advised to bargain with USA even through proxies. This whole affair was followed up by a visit of US officials to Latvia, making it clear that USA will no longer look the other way when it comes to risky banking business,» bookmakers say.

Betsafe also notes that ever since the crisis surrounding ABLV Bank, the government has made steps towards cleaning the bank of suspicious money. The government has adopted restrictions for deals with so-called shell companies. Such companies are serviced in Latvia by banks that specialize in non-residents. ABLV Bank was the largest player, but not the only one in Latvia.

«More than a dozen banks now have to rethink their business models. Over the course of the last two months, the volume of deposits in banks have declined from EUR 20 billion to EUR 18 billion, according to data from the Finance and Capital Market Commission. Following the ban on transactions with shell companies, this volume may decline even more. In the end, there may not be any room for all banks in the diminishing financial sector,» Betsafe bookmakers say.

It should be mentioned that chairman of Finance and Capital and Market Commission Pēters Putniņš has announced that so far all banks working in Latvia have confirmed their desire to continue working in the country. It is possible some banks may try to save their business through optimization or looking for new niches. Not all will succeed, Betsafe says. Some banks will try to reorganize or even merge. Nevertheless, bookmakers expect at least one more bank to close down.


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