Already last year Deutsche Bank narrowed its operations in Latvia and suspended cooperation with several Latvian banks who serve foreign customers. Now Deutsche Bank has decided to fully suspend cooperation with all banks in Latvia.
Latvia's financial regulator, the Financial and Capital Markets Commission, issued a statement saying the move was no surprise.
"Deutsche Bank 's decision to stop US dollar payments from Latvian commercial banks is not a surprise to financial market participants, nor to the Financial and Capital Market Commission. The Decision is based on the bank's business strategy change in the interbank market in a number of countries around the world, and it is not associated with an assessment of the Latvian banking sector," FKTK said.
However, it did admit there were likely to be increased costs in future for those moving dollars around their accounts.
"Latvian residents basically settle in euros, so their daily routine will not change. However, foreign clients who prefer to make US dollar transfers via Latvian commercial banks may see increased prices for the service or increases in payment execution time (each bank will determine its own price list of services)."
Deutsche Bank declined to comment to LETA on its future plans in Latvia, if any, while representatives of the Latvian Association of Commercial Banks said that the decision of the German bank will not affect operations of Latvian banks, and this decision might be related with changes in Deutsche Bank's own business strategy.
SEB Banka head Ieva Tetere said Deutsche Bank’s decision to stop cooperation with Latvian banks in a way is an assessment of the Latvian financial sector in general, its sustainability and compliance with the industry’s business standards.
"The events of the recent years in Latvia have distorted the country’s reputation. At the same time, the bank’s decision to cut off access to dollar-clearing facilities for all Latvian banks, most likely, is related with Deutsche Bank’s own development plans," she said.
Tetere said that SEB Banka has been using services of several correspondent banks, therefore the German bank’s decision will not affect its operations.
Rietumu Banka’s spokeswoman Eleonora Gailisa explained that Deutsche Bank is currently changing its strategy and has suspended cooperation with many countries, including Latvia that so far has been a significant partner. She said that Rietumu Banka is constantly working on improvement of the quality of correspondent relations, therefore this decision will not affect its customers.
Rietumu Banka has informed its customers that starting from June of this year there will be changes in the list of corresponding banks used for payments in US dollars, euros and some other currencies.
Citadele bank’s spokeswoman Baiba Abelniece refused to comment on the bank’s relations with Deutsche Bank, just saying that Citadele has correspondent relations with more than 20 banks outside Latvia. She also said that the share of US dollar transactions among the bank’s services was very small.
Deutsche Bank last year posted €1.4 billion in loss, the second consecutive year the bank sustained loss. Recently also large fines had been slapped on the bank, for example, in January New York’s and British authorities imposed a $630 million (€593 million) fine on the bank for its inability to prevent money laundering from Russia.
In the past years several international banks, such as JPMorgan and Commerzbank, former partners in US dollar transactions, have also left the Latvian market.