26.02.2018 an informational message that the bank’s management made a decision on self-liquidation was published on the official website of the Latvian bank ABLV Bank, AS. This material describes the circumstances and presents the chronology of events that led to the liquidation of the second largest bank in Latvia.
- 12.02.2018 a division of the US Department of the Treasury called Financial Crimes Enforcement Network (“FinCEN”) published a report proposing some measures against the Latvian bank ABLV Bank, AS (“ABLV”) in the form of prohibition of all transactions through the accounts of correspondent banks of ABLV in US dollars. The justification of application of this measure by FinCEN was presented as “the participation of managers, shareholders and employees of ABVL in money laundering schemes”, and also “soliciting the highrisk shell company activity that enables the bank and its customers to launder funds, as well as maintaining inadequate controls over high-risk shell company accounts”. The report also contained mentioning of possible participation of ABLV in transactions that involved persons included by the US and the UN authorities in the list of persons suspected in arms shipments to North Korea.
- 14.02.2018 Latvian media reported that the Latvian Bureau for the Prevention and Combating of Corruption (“CPCB”) initiated an investigation against some ABLV managers who were suspected in money laundering and giving bribes in the light of the publication of FinCEN report.
- 16.02.2018 ABLV suspended its participation in the Latvian Association of Commercial Banks. As of this date, the possibility of using of Visa bank cards in transactions have been already restricted to 1 600 ABLV clients who were users of such cards.
- 18.02.2018 the decision to suspend all ABLV clients transactions in any currencies was made on the emergency meeting of the Financial and Capital Market Commission (“FCMC”) of Latvia pursuant to the instructions of the European Central Bank (“ECB”). The suspension has been activated at 00-00 of central European time in the night of 18 to 19 February 2018.
- 19.02.2018 the Bank of Latvia has provided ABLV with a loan of 97 500 000 Euro with collateral in the form of high liquidity securities in order to maintain the possibility to fulfill the interests of ABLV clients and creditors.
- 20.02.2018 ABLV announced the cancellation of issue of new securities planned previously in its statement to the stock exchange Nasdaq Riga. The decision was made due to the reluctance to deteriorate the position of clients and creditors.
- 22.02.2018 ABLV shareholder Ernest Bernis stated at a press conference that one-third of the ABLV securities portfolio was sold on the securities market in order to increase the amount of available funds required in current situation.
- 23.02.2018 Latvian Police started the investigation of money laundering schemes, for participation in which the management and staff of ABLV was accused. At the same time, ABLV has not met the deadline set by ECB to raise funds in the amount of 1 000 000 000 Euro that was necessary to lift restrictions on the conduct of ABLV’s client operations.
- 24.02.2018 the official website of ABLV published a message stating that the bank has received the decision of the Council of the FCMC “On Occurrence of Unavailability of Deposits”. In accordance with this decision, the prohibition on conducting operations established on 18.02.2018, was not withdrawn for lack of grounds for such action.
- 26.02.2018 the shareholders of ABLV decided to initiate self-liquidation.
In the light of recent events, ABVL has informed all interested parties (namely the holders of accounts, deposits, debtors and creditors of both parent bank and its subsidiaries) that in accordance with the Deposit Insurance Law and due to the inaccessibility of funds, such persons are entitled to the following guarantees:
- Any holder of a deposit, a current account, a salary account, a savings account, including those opened in subsidiary organizations of ABLV, is entitled to compensation within the amount of 100 000 Euro. Compensation will be paid from the Deposit Guarantee Fund to clients who are private individuals or legal entities of any residence.
- The amount of payments may exceed 100 000 Euro only in cases specified by law. At the same time, the additional payment cannot exceed 200 000 Euro (that is, the total amount of all payments cannot be more than 300 000 Euros). Such cases include funds deposited during the last three months and received as a result of:
(a) the sale of real property;
(b) payment of social compensation by the state;
(c) compensation for damages (for example, insurance payments);
(d) compensation for the unfair sentence of the court.
- Payments will start not later than March 7, 2018 and will be carried out in Euros. If the account or deposit was opened in other currencies, then the payment of the compensation will be conducted with conversion of such currency into Euro.
- The period for payment of compensation may extend to 5 years from the date of the beginning of unavailability of deposits. According to preliminary estimates, 22 751 persons (private individuals and legal entities) will be entitled to such compensation, and the total amount of payments may reach 470 000 000 Euro. As of the present day, ABLV is able to provide such amounts for further payment to clients.
- The transfer of securities of clients from accounts in ABVL is available in a default mode, so they can be transferred to the account in another bank without any kind of obstacle.