ECB Warns Latvian Bank May Fail amid Laundering Claims
The European Central Bank warned Saturday that Latvia's third-largest lender ABLV was at risk of failing, after freezing payments following money laundering allegations from Washington.
"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 ECB said in a statement.
The ECB this week announced it was freezing payments to ABLV, providing another shock to Latvia's financial sector after its central bank governor Ilmars Rimsevics was barred from carrying out his duties amid claims of bribery.
"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 statement said.
Last week the US Treasury Departmentnamed ABLV "an institution of primary money laundering concern" and accused it of connections to North Korea's weapons development programme.
Latvian police announced Friday they had begun probing the money laundering claims.
In a statement, ABLV defended itself, insisting that it had gathered 1.36 billion euros ($1.67 billion) to strengthen its liquidity.
It said this "was absolutely sufficient for the bank to resume executing payments and meet all obligations towards its clients, yet due to political considerations the bank was not given a chance to do it".