PM forms group to "restore reputation" of Latvia's banks

In a day of frenzied activity to address problems in Latvia's banking sector April 26, Prime Minister Māris Kučinskis issued a decree that he hopes will help "restore the international reputation of Latvia's banking sector," currently tarnished by a large amount of evidence the country has acted as a major money-laundering hub for years.

In the decree, Kučinskis announces the formation of a new working group consisting of various people and bodies involved in the sector.

"In order to facilitate cooperation in the process of transformation of the financial sector, restore the international reputation of the Latvian financial sector, and assess the effects of changes in the business environment, today I signed an order for the creation of a cooperation group," the PM wrote on Twitter, posting an image containing the text of the decree.

That shows membership of the group to consist of Kučinskis himself and representatives of the Finance Ministry and Association of Latvian Commercial Banks, plus two representatives each from the three main Scandinavian retail banks plus home-grown Citadele bank, which represent about 90% of the domestic retail banking market. 

However, the cooperation group does not directly include any representatives from the non-resident banks which have been the cause of the whole reputational problem over the last decade.

Notably, Rietumu bank is not included, despite being larger than Citadele in terms of assets (3.1 billion euros versus 2.6 billion in the fourth quarter of 2017) . Nor is it represented via the Association of Latvian Commercial Banks, because it withdrew is membership in March 2016.

"It is important that there is an efficient, immediate exchange of information between the government, the financial sector, entrepreneurs, as well as various institutions, working to change the financial sector in Latvia and restore its reputation," said Kučinskis in a press release.

Exactly the same quote was given on April 4 when the intention to form the group was announced.

Neither the regularity with which the group will meet nor the precise methods by which it will achieve its aims were specified, but the decree does say Kučinskis as head of the group will have the power to invite representatives from other domestic and international bodies (such as regulators and law enforcement agencies) to attend meetings.

The information released April 4 spoke of "regular exchanges", "unified communication both in Latvia and internationally" and being "a good platform for information exchange, operational situation analysis and resolution."

As previously reported by LSM, Kučinskis believes Latvia has just three months to demonstrate it is serious about cleaning up the banking sector or face serious consequences from the international community.

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