Liquidation of liquid Latvian banks

As you already know from media reports, two Baltic banks had their licenses revoked and liquidation proceedings were initiated.

These are the Latvian bank ABLV and the Estonian bank Versobank.

Officially, the liquidation of the banks was attributed to violations of anti-money laundering laws, although both banks were fully solvent.

We deliberately took a break and did not report on these events because we wanted to thoroughly understand the situation and describe it as objectively as possible.

ABLV

ABLV Bank was liquidated primarily due to actions taken by the U.S. financial regulatory authority in connection with allegations of ongoing violations of anti-money laundering regulations.

Versobank

As for Verso Bank, its liquidation is linked exclusively to actions taken by the Estonian Financial Supervision Authority regarding previous instances of inadequate anti-money laundering measures.

According to the head of the Estonian Financial Inspection (EFI), starting from February 2017, the bank was repeatedly issued orders and warnings, which were either ignored or responded to with information that was not entirely accurate.

According to the new head of Versobank, they understood that sanctions would be imposed on the bank but did not expect them to be so severe. It was assumed that the Estonian Financial Supervision Authority would limit itself to a fine.

Conclusion

Thus, the relative coincidence of these situations in time is a coincidence that does not reflect trends in the banking sector of the Baltic states.

To reiterate, both banks were fully liquid, and there were no economic grounds for ceasing operations.

To summarise, we can observe a continuing trend toward restricting access of non-residents to business activities within the EU, as well as regular pressure on companies in the SME segment.