Banks, Financial Services, Latvia

International Internet Magazine. Baltic States news & analytics Friday, 22.03.2019, 15:01

Baltic International Bank ends cooperation with more than 1,200 customers in 2016, 2017

BC, Riga, 12.04.2018.Print version
Latvia's Baltic International Bank ended cooperation with more than 1,200 customers in total during 2016 and 2017, the deputy chairman of the bank's Management Board, Viktors Bolbats, told LETA.

He said that the decision to reduce the number of risky customers at Latvian banks, including termination of cooperation with shell companies, was an understandable and adequate process.

In 2016 the Baltic International Bank selected about 1,000 customers or 70% of its customer base for review for anti-money laundering (AML) and other risks and afterwards ceased cooperation with 616 customers, including 302 customers, cooperation with whom was terminated on the bank's initiative. In 2017, cooperation with another 606 customers was ceased, mostly on the customers' own initiative because the bank revised its price list and introduced new AML disclosure requirements.

Bolbats agreed that shell companies was the most risky group of customers. At the end of last year 11% of the bank's customers met at least one of criteria for identifying them as shell companies, he said, stressing that the bank for the past several years had been working to cut its risks.

"Now the legislators say: Well done, and now turn them all out within a month! This causes concern," he said. It is obvious that the number of risky customers must be reduced but it is alarming that the government started the discussion by saying that the number of foreign customers had to be cut to 5% of the total number of customers in the Latvian banking sector and in few weeks the definition of risky customers has been narrowed down to shell companies, Bolbats said.

"It is exactly the same thing as would be banning of mortgage loans just because they created problems during the [financial] crisis," he said, implying that shell companies should not have been singled out among other high-risk customers.

The Baltic International Bank's strategy is aimed at downsizing payment services and shifting the focus to asset management. "Our challenge is that we have cut the risky business but it will take several years to increase the amount of new services," the deputy chairman of the Management Board.

As reported, in 2017 Baltic International Bank posted a preliminary loss of EUR 2.668 million in contrast to a profit made in 2016 year. The bank’s assets stood at EUR 303.348 million at the end of December 2017, down 1.6% or EUR 5.041 million from the end of 2016 when the bank’s assets were worth EUR 308.39 million.

The key shareholders of Baltic International Bank are Valerijs Belokons (69.9%) and Vilorijs Belokons (30.05%). At the end of 2017, Baltic International Bank was the 12th largest bank in Latvia in terms of assets, according to the data of the Latvian Association of Commercial Banks.

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