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Latvian financial watchdog approves voluntary liquidation of ABLV Bank

Publicity photo.
The Finance and Capital Market Commission has approved the ABLV Bank' plan for voluntary liquidation, the head of the Finance and Capital Market Commission, Peters Putnins, announced at a news conference on Tuesday.

The Latvian financial watchdog has also approved all four liquidators proposed by the bank - Arvids Kostomarovs, Andris Kovalcuks, Elvijs Vebers and Eva Berlaus. They are law and finance experts. Vebers is also an insolvency administrator.

The Finance and Capital Market Commission said it had satisfied itself as to objectivity of the proposed liquidators and absence of any conflict of interests.

Putnins said that it would take three to four months to develop a detailed voluntary liquidation plan. To get it approved would take another couple of months, and the actual liquidation process could begin at the end of this year and may last about five years.

The total amount of deposits to be returned to depositors is around EUR 1.5 billion, he said, adding that it was premature to speak about the amount of the creditor claims. Of all ABLV Bank's customers, 20,052 would get back their deposits in full as they did not exceed the amount of the guaranteed compensation, and 3,768 would get the guaranteed compensation but it would not cover the full amount of their deposits at the bank.

In the next few days the Finance and Capital Market Commission will prepare a draft resolution about annulling the banking license held by ABLV Bank and will submit it to the European Central Bank (ECB). Within three days after the annulment of the license the liquidators have to publish an announcement about voluntary liquidation in the official newspaper Latvijas Vestnesis, and the creditors will then have three months to declare their claims.

The Finance and Capital Market Commission said it will continue supervising the activities by the liquidators until the completion of the voluntary liquidation to ensure the lawfulness of the process and the interests of creditors. This will be done by means of control mechanisms created specifically to prevent money laundering.

"This is an unprecedented solution for winding up a bank in Latvia. We think that, out of all possible liquidation methods, the controlled voluntary liquidation will be the method to ensure further participation of the Finance and Capital Market Commission in the liquidation process. Should it become necessary, the Commission will be able to interfere with the process," Putnins said.

This method will also protect the bank's assets and prevent possible legalization of criminal proceeds. For this purpose, the Finance and Capital Market Commission will appoint a permanent team of trustees to work at the ABLV Bank. The names of the trustees will be announced once the detailed voluntary liquidation plan is approved.

Putnins denied any political pressure on the regulator, saying that he would not call regular meetings with the Cabinet of Ministers on the situation at ABLV Bank a pressure. What he did at those meetings was to explain and defend the watchdog's decisions, he said.

The head of the Finance and Capital Market Commission also said creating a new bank on the basis of ABLV Bank during the liquidation process was out of question, and the accusations by the U.S. Department of Treasury against the bank was one of the factors here.

As reported, the Latvian financial regulator, the Finance and Capital Market Commission, acting on the instructions from the European Central Bank (ECB), ordered ABLV Bank to stop all payments as of February 19, 2018, following a report by the Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of Treasury about ABLV Bank's involvement in international money laundering schemes and corruption.

The lawyers of ABLV Bank have urged FinCEN to recall its proposal, saying that the accusations against the bank were exaggerated and FinCEN had not provided evidence supporting the allegations of money laundering and bribery.

On February 26 the shareholders of ABLV Bank made a decision to start a voluntary liquidation process for maximum protection of the interests of its clients and creditors.

On May 3 ABLV Bank and its largest shareholders filed a complaint with the EU Court of Justice against the European Central Bank (ECB) and the Single Resolution Board (SRB) about several possible violations, including abuse of power, failure to observe proportionality and equal treatment, etc. The complaint lists a range of serious objections to the manner of how the decision about the bank being failing or likely to fail was taken.


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