ABLV bank wants European court ruling on legality of shutdown

ABLV bank, which is currently in the process of liquidating itself, has submitted an application to the European Court of Justice (ECJ) over the manner in which it was forced out of business, LSM's Latvian-language service reported May 7.

Citing lawyers representing the bank, the report says the purpose of the application is not to stop the liquidation process but to get a ruling on whether bodies such as the European Central Bank and the Latvian Central Bank acted completely properly in their public pronouncements and actions in reaction to a damning report from United States law enforcement on the track record of the bank in money laundering and sanctions-busting.

ABLV's lawyers argue that the reactions of such bodies and individuals, including Latvian central bank governor and ECB council member Ilmārs Rimšēvičs, were prejudicial to the bank, and damaged its reputation at a time when it was still in the process of drafting a response to the U.S. allegations.

"One of the issues... was that the ECB did not promptly and adequately respond when the governor of Latvijas Banka - a member of the ECB's Governing Council claimed that no one (not even the Latvian central bank) was allowed to transact with ABLV following the publication of the FinCEN Draft Measures. Nobody disputes that this statement was grossly incorrect. The chairman of the FCMC has commented emphatically at a hearing in the European Parliament that the FinCEN Draft Measure was "never meant to kill a bank". And yet the ECB failed to respond adequately and in a timely manner to this grossly misleading statement by a member of its own Governing Council. This led to temporary delays in settling ABLV's transactions," ABLV said in an explanation of its reasons for going to court.

The bank stressed that the decision on liquidation is not suspended by the applications, but bringing the claims is "important for the reputation of the bank, its employees and partners, as well as for claiming potential losses if the court decides in favour of the bank and its shareholders."

Beyond the fate of the bank itself, any rulings could potentially have important consequences for the whole European banking sector in delineating exactly where responsibility and oversight lie in trans-Atlantic transactions.

"The questions raised by this case include whether the SRB and the ECB can decide that a bank is to be liquidated under its national law... both the Latvian Financial and Capital Market Commission (FCMC) and the Latvian Ministry of Finance have acknowledged that a liquidation would have been only one of the options," said ABLV.

In total four applications have been submitted by attorneys from the German office of DLA Piper on behalf of ABLV Bank and its two largest shareholders: two against the European Central Bank and two against the Single Resolution Board being an institution of the European Union that decides on the possible resolution in such situations with regard to credit institutions. The applications specify several possible violations of powers, proportionality and equal treatment and other possible violations.


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