On 23rd of February European Central Bank (ECB) has announced that the bank ABLV’s performance is showcasing first signs of a potential crash.
As ECB further explained, due to substantial worsening of liquidity ABLV will not be able to fulfil its debts and other duties within the set deadline. Head of Commission of Trade and Capital (CTC) Peters Putninis claims that future of ABLV is only in hands of ECB.
The ABLV representative has in contrast argued that the bank has completed all conditions of CTC in order to be approved to renew the operation of the bank.
It is important to note, that from 19th of February CTC of Latvia is setting new transaction limits towards its debit accounts. In order to stabilise its financial state, ABLV referred to the Central Bank of Latvia for a loan of 480 million euros, and using its valuable bonds as a deposit. The Central Bank accepted the terms of the loan and gave 97.5 million euros, followed by an additional 199.7 million euros after a period of time. Within that period, the depositors of the bank have managed to withdraw around 600 million euros.
The head of CTC added, that Latvia will see more banks liquidated or merged together with others in the near future, particularly those whose main customer base are non-residents and that are following the same scheme as ABLV. As of today, most of these banks are undergoing the same scenario as ABLV.
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