Banks, Financial Services, Latvia

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Citadele Bank to pay guaranteed compensation to PNB Banka customers

BC, Riga, 16.08.2019.Print version
Citadele Bank will pay guaranteed compensation to PNB Banka customers, Jelena Lebedeva, head of the Financial and Capital Market Commission's (FCMC) Resolution and Guarantee Funds Division, told LETA on Friday.

The mechanism for guaranteed compensation payments has already been agreed upon, and the most favorable terms will offered to PNB Banka customers, said Lebedeva.


She added that the mechanism of payments would be finalized within one to two business days, and that FCMC expects the guaranteed compensation payments to begin sooner than August 27.


About EUR 279 million could be paid from the Deposit Guarantee Fund to PNB Banka's customers whose deposits do not exceed EUR 100,000, as well as state and municipal companies and institutions with a budget of up to EUR 500,000. Currently, EUR 206 million has been deposited at the Deposit Guarantee Fund, while the total available amount is EUR 506 million, said Lebedeva.


Customers whose deposits exceed the state guaranteed compensation amount of EUR 100,000 will be able submit a creditor's claim for the remaining amount as part of the bank's liquidation or insolvency proceedings.


Of the 99,600 PNB Banka customers, 91,400 are resident customers, of which 38% have zero account balance.


The FCMC chairwoman Kristine Cernaja-Mezmale said that in the coming days, 99.2% of the bank's customers would be paid guaranteed compensation. The remaining 0.8% of customers have a total of EUR 135 mln deposited in the bank and will be eligible to recover their deposits as creditors.


In turn, 40,000 clients of the State Social Insurance Agency who currently receive their pensions and benefits through PNB Banka need to open an account with another bank and contact the Social Insurance Agency. Those who also have an account in another bank have to inform the agency thereof, and the payments will be transferred to that account.


"The mechanism developed by the FCMC not only provides for guaranteed compensation payments, it will also ensure that customers can receive their benefits as soon as possible," said Cernaja-Mezmale. If a PNB Banka's customer faces significant financial problems as a result of the halt to the bank's operations, the FCMC advises them to contact social services or their relatives.


As for retirement plans, they are managed by PNB Asset Management, a subsidiary of PNB Bank that is a separate legal entity, and money in the retirement plans is deposited not at PNB Banka but at Swedbank. The suspension of PNB Banka therefore does not in any way affect the process of managing the retirement plans' assets.


As reported, the FCMC last night decided to halt the operations of PNB Banka (formerly Norvik Banka).






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