Finance Minister: ABLV scandal and Rimšēvičs affair threaten Latvia's reputation

Latvia's Finance Minister, Dana Reizniece-Ozola, said February 18 that the stinging criticism of ABLV bank by the U.S. authorities and the detention of central bank governor Ilmārs Rimšēvičs by anti-corruption officers threatens the reputation of the country's entire financial sector. 

"We are facing a crisis of the international reputation of the Latvian financial system", which was "caused by the situation with ABLV Bank," the minister told reporters at an unusual Sunday afternoon press conference. 

The minister pointed out that "US colleagues have made serious criticisms of the bank" and had taken steps that will affect the operation of this bank.

Hundreds of account holders have found that their Visa cards no longer work and if the U.S. carries out its promises, ABLV will be frozen out of the world dollar economy entirely - a move that would pose serious questions as to its viability. 

The minister stressed that "the Latvian government will not tolerate the use of the Latvian financial sector for money laundering or other criminal activities in violation of international sanctions," and said the situation with ABLV "sends a clear signal to other banks that this is no joke."

However she also did her best to stress that people do not have to worry about their deposits or other day-to-day transactions, though ABLV's client base is highly reliant on non-resident deposits.

"I can assure you that the financial system in Latvia is stable. Banks generally have no liquidity problems. As a result, depositors can feel completely safe," commented the minister.

As previously reported by LSM, Reizniece-Ozola suggested central bank governor Rimšēvics should step down, at least while the case involving him - about which there are few details yet - continues.

Sitting alongside Reiznice-Ozola was Gunta Razāne, deputy head of the financial sector watchdog the Financial and Capital Markets Commission (FKTK) who said: "We are analyzing possible scenarios for ABLV Bank together with the ECB, which is the directly supervisory body of ABLV Bank. The ECB can delegate some powers to us and this has been done... At the moment, we are analyzing current information."

Nevertheless it was confirmed by the person sitting on Reizniece-Ozola's other side at the press conference, Edvards Kušners, member of the Board of the Bank of Latvia, that the central bank has already been buying up ABLV securities in order to provide liquidity.

"The Bank of Latvia has taken steps to provide ABLV Bank with financial resources in the framework of monetary policy and provide liquidity assistance. These are standard actions that are provided for in such situations," said Kušners, though he declined to say how much had been bought so far.

Meanwhile, ABLV itself upped the ante by claiming it was the victim of a campaign of deliberate defamation.

A statement sent to LSM quoted ABLV co-owner and chairman Ernests Bernis as saying: 

"I would like to emphasize once again that there is not and has never been any bribery regarding state authorities. Probably, this is one of the reasons of this deliberate defamation campaign against us. As we stated earlier, we demand that the appropriate institutions investigate whether Latvian or foreign organisations have been misled by any high rank state official of a central financial institution regarding certain participants of the industry, including ABLV."

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