Bank asks politicians to reassess nationalization of 'Moscow House'

In a letter to the Saeima, the commercial bank “Rietumu Banka” has invited the parliament to reassess the nationalization plans of the 'Moscow House' in Rīga, Marijas Street 7, warning about the consequences for Latvian merchants whose assets are located in Russia. The Commission responsible could assess this aspect, but not delay the takeover of the Moscow House, Latvian Radio reported on January 2.

At a meeting shortly before Christmas, the Saeima backed the urgency of a bill to take the so-called “Moscow House” into the ownership of the country. The National Security Committee of the Saeima has indicated that after February 24, 2022, when Russia launched a full-scale invasion of Ukraine, activities have taken place at the premises indicating support for Russia's aggressive policy. Therefore, Latvia must take action against the existence of a support location for such activities in the center of the capital city. The Saeima approved this draft law at the first reading and it is about to be adopted at the final reading.

At the same time, Jeļena Buraja, head of Rietumu Banka, addressed the Saeima with a letter in December. This bank already decided to leave the Russian and Belarusian markets a few years before the Russian invasion of Ukraine, however, the bank has previously entered into commitments in these countries. Bringing them to an end is difficult because Russia has responded to sanctions imposed by European countries with sanctions tit for tat, for example by freezing the existing assets of various merchants.

The head of the bank fears that the takeover of Moscow House may give the aggressor state grounds to take identical action against Latvian merchants, including the Rietumu Banka, namely, their Russian frozen assets could be nationalized by the neighboring state.

It could be about significant sums. The Rietumu Banka review for 2022 shows that the bank's risk position against Russia is EUR 129 million at the end of 2022 and EUR 18 million against Belarus. The main exposure amounts are loans to customers and receivables. The termination of these commitments has been thwarted as Russia has restricted transfers of funds from Russia to a Rietumu Banka account from one debtor to around €85,000 a month.

Rietumu Banka refrains from making more detailed comments. In the letter, the Chairwoman of the Bank's Board of Directors also said she fully understood the takeover of the so-called “Moscow House” in Riga into state ownership as symbolic and solidarity with Ukraine and its fight against the aggressor.

The abovementioned “Rietumu Bank” considerations could be evaluated in the Saeima, but the progress and adoption of the draft law should not be delayed. Saeima Defense, Internal Affairs and Corruption Prevention Committee Secretary Jānis Skrastiņš of New Unity told Latvian Radio.

Proposals for a final reading on this bill are due by the end of this working week. Then, very soon, the Saeima Defense Committee plans to see them and move the draft decision to the Saeima in January.

The property on Marijas Street 7 is due to be owned by the state in person of the Ministry of Transport. It was previously estimated that the commitment to the maintenance of the building would be around half a million euros per year. But more concrete scenarios for the future use of this House must be submitted by the government in a report to the Saeima by March 31. It has already been announced that this building could be made available to Ukraine or house Ukrainian support-related activities.

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