RIGA, Feb. 24 (Xinhua) -- Latvia's troubled ABLV Bank, which U.S. authorities accused of involvement in money laundering schemes and bribery, is likely to be liquidated as the European Central Bank has determined that the bank is failing or likely to fail, the Baltic country's financial regulator said Saturday.
"On 23 February, the European Central Bank (ECB) determined that ABLV Bank was failing or likely to fail in accordance with the Single Resolution Mechanism Regulation. The ECB also determined ABLV Bank Luxembourg, a subsidiary of the Latvian bank, failing or likely to fail," the ECB said in a statement.
The ECB explained that since ABLV Ban's liquidity has significantly deteriorated over the past week the bank is unlikely to be able to pay its debts or other liabilities.
"As a consequence, the winding up of the banks will take place under the law of Latvia and Luxembourg, respectively," the ECB said.
Speaking at a news conference in Riga on Saturday, Latvian Finance Minister Dana Reizniece-Ozola said that the winding up of ABLV was only one of the options.
The ECB, which is ABLV Bank's direct supervisor, does not say the Latvian bank has to be shut down but just points to its inability to meet its liabilities. The ECB has yet to take further decisions, the minister said.
Reizniece-Ozola said that ABLV Bank ran into trouble because of reputation issues, not liquidity problems.
She also denied a crisis in the whole Latvian banking sector, saying that no other bank is facing similar problems at the moment.
Late Friday night, Latvia's financial regulator the Financial and Capital Market Commission (FCMC) adopted a decision on the occurrence of unavailability of deposits at ABLV Bank because the ECB had not told to lift the payment restrictions imposed on ABLV Bank on 18 February.
In a report released last week, the U.S. Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) said that the ABLV management "used bribery to influence Latvian officials when challenging enforcement actions and perceived threats to their high-risk business".
FinCEN has proposed sanctioning ABLV for its money laundering schemes by banning the bank from opening or maintaining correspondent accounts in the U.S. or altogether blocking the bank from the U.S. financial system.
When the news of the U.S. report broke last Wednesday, clients rushed to withdraw their money from ABLV Bank. To curb the outflow of funds and in compliance with the ECB's instructions, the Latvian banking regulator suspended ABLV Bank's client payments in all currencies on Feb. 18. By that time, clients had withdrawn around 600 million euros (738 million U.S. dollars) from the bank.
ABLV is the third largest bank in Latvia by assets.
