In accordance with the decision adopted by the Saeima of the Republic of Latvia on 23 September 2021, Latvijas Banka takes over all functions related to the supervision and the promotion of the development of the financial and capital market as well as the functions of the resolution authority.
"I would like to thank my colleagues at the FKTK and Latvijas Banka, our partners at the Saeima, the Ministry of Finance and the European Central Bank as well as financial market participants for their active involvement and participation in the integration of Latvijas Banka and the FKTK... We will not stop at this point, and we will continue making Latvijas Banka better every day and with every decision," said Mārtiņš Kazāks, Governor of Latvijas Banka.
Santa Purgaile, Chairwoman of the FKTK becomes Deputy Governor of Latvijas Banka from January 1 and said: "In conjunction with Latvijas Banka and cooperation bodies, we have done extensive work to implement the Saeima's decision to merge both institutions. 1 January 2023 will mark the beginning of a new stage in the supervision of Latvia's financial sector, as the integration will provide opportunities to ensure the supervision and development of the financial market by combining knowledge and competence, infrastructure options and capacity as well as jointly establishing and implementing Latvijas Banka's strategic priorities. We will continue acting as a supervisor that, by engaging in an open dialogue with the financial sector, is able to find new solutions to ensure the sector's improvement and further development."
According to both institutions, the merger "will bring a number of gains, for instance, a better opportunity to foster financial stability, mitigate systemic risks and ensure a more coordinated financial sector development."
There are also personnel changes. On January 1, the number of Latvijas Banka employees will total 539. In late 2001, the number of employees reached a high of 732 at Latvijas Banka plus 95 at the FKTK.
"Before and during the FKTK integration, both institutions implemented measures to utilise staff resources more efficiently, including a reduced number of people in the management team. At the same time, a smaller number of employees is not an end in itself; the objective is a powerful and efficient institution able to perform all tasks entrusted to it in a quality manner," a release said.
The number of members of the Council of Latvijas Banka will decrease by two compared to the total number of the members of the Council of Latvijas Banka and the FKTK Board separately. Latvijas Banka's organisational structure has also been changed: nine Latvijas Banka's departments will perform the functions implemented previously by the FKTK (see the new structure).
It is expected that in the medium term the total operating expenses of the joint institution will also be lower than the total expenses of the two separate institutions.
Instead of four previously used buildings, both institutions will work in three buildings (during the energy crisis – temporarily in two buildings).
On January 1 2023, the new Law on Latvijas Banka will enter into force which establishes the principle of function separation, for instance, a separate committee for the supervision decisions and a separate committee for resolution; different information flows as well as an appropriate internal control system are envisaged. A two-tier decision-making procedure for supervision matters has been established. The Supervision Committee will be the primary decision maker in the financial market supervision. In supervision matters, the Council of Latvijas Banka will act as an institution where supervision decisions can be challenged, looking comprehensively, also from the point of view of other Latvijas Banka's areas of responsibility. The principle of separating the functions of monetary policy supervision and financial market supervision will also be fundamental.
