"FKTK had requested that the ECB take over supervision for the Bank in the light of a case at the International Centre for Settlement of Investment Disputes (ICSID) filed by PNB Banka against Latvia and of the need for effective supervision the Bank," a statement said.
FKTK chairman Pēters Putniņš tried to play down the signifcance of the move saying "This is just a matter of work organisation that has now been resolved" but it is still a significant move against a background of Latvia trying to clean up its banking sector and its reputation in the wake of a series of massive money laundering scandals.
Putniņš was also at pains to suggest the initiative came from the Latvian side, saying: "The ECB listened to our arguments for taking over the Bank's supervision and decided that such work organisation would be optimal in future, taking into account the background of the international proceedings involving the Latvian State and Latvian commercial bank. Under the direct supervision of the ECB, the necessary supervision will be ensured for the Bank in line with the current situation" which could "avoid any misunderstanding and possible reproaches to our country and the FKTK".
In future, the ECB will supervise three Latvian banks within the European Banking Union Single Supervisory Mechanism (SSM). In Latvia two banks are already being supervised by the ECB: Swedbank and SEB banka. ABLV Bank was also under ECB supervision until it collapsed a year ago.
The ECB by taking over direct supervision of AS "PNB Banka" has classified it as "significant" to the banking sector as a whole, despite the fact that it is only the 7th largest bank with just 2.5% of total assets according to FKTK data.
As reported by LSM at the time, Norvik changed its name to PNB last November. It is majority owned by Russian-born British citizen Grigory Guselnikov. Norvik and Guselnikov have been linked to several controversies in recent years, most notably a war of words with central bank governor Ilmārs Rimsēvičs.
It is also involved in taking Latvia to international arbitration claiming that "The Bank and its controlling shareholders have requested arbitration as a result of unfair, arbitrary, improperly motivated and unreasonable regulatory treatment accorded to the Bank by the Latvian authorities, contrary to Latviaʼs obligations under international law."
In July 2017 Norvik was fined more than a million euros by the financial regulator after being named by the Federal Bureau of Investigation as one of the Latvian banks used to channel funds to North Korea.
The bank features former NATO Secretary General Anders Fogh Rasmussen on its advisory council and claims to have around 100,000 customers, around two thirds of them pensioners.