Banks, EU – Baltic States, Financial Services, Latvia

International Internet Magazine. Baltic States news & analytics Monday, 16.09.2019, 03:49

New owner of PNB Banka had considered several Latvian banks in mind before making decision

BC, Riga, 20.08.2019.Print version
The new owner of PNB Banka whose operations have been halted – gas and oil magnate and billionaire Roger Tamraz – had considered purchase of a number of Latvian banks, including Rietumu Banka, informed LETA.

“Initially I did not consider this [PNB] bank. First I talked with other bankers because there are many banks for sale in Latvia. Rietumu Banka was the biggest one among them and its main shareholders wanted to sell it during my first visit to Latvia. When I returned later, the owners had decided to keep the bank,” Tamraz said in an interview with Latvijas Avize daily.

Tamraz said that an agreement with Grigory Guselnikov on sale of PNB Banka was reached easily. “Our meetings lasted for half an hour at most. The meeting during which I bought the bank, took ten minutes,” he said.

Tamraz said that he planned to drop the court proceedings started by the bank, but Guselnikov was of a different opinion.

Asked about what caught his interest in the Latvian banking sector, Tamraz said that it is the fact that this market is in the outskirts of Europe. “I did not want to buy a bank in London or Paris, and they don’t need me – they have very many banks there. It is interesting to come to the outskirts – the north or the south. These are windows to the EU – by purchasing a bank in the euro area, it is possible to buy also another bank in Europe. This is the cheapest way to start operations in the European banking sector,” he said.

As reported, the Latvian Financial and Capital Market Commission (FCMC) decided that as of August 15, PNB Banka must completely cease the provision of financial services, including the execution of customer payments. Such a decision is taken to avoid the outflow of bank’s funds.

The European Central Bank (ECB) has declared PNB Banka failing or likely to fail in accordance with the Single Resolution Mechanism Regulation.

According to the ECB, the bank has been in breach of capital requirements since the end of 2017.

''PNB Banka had been called on by the competent authorities to restore compliance with prudential requirements on several occasions and given sufficient time to take measures. The bank consistently failed to implement remediation measures,'' the ECB said.

The ECB took over direct supervision of PNB Banka on April 4, 2019, at the request of the Financial Capital and Markets Commission.

On July 11, 2019 the ECB issued an early intervention decision, requiring the bank to address its capital shortfalls and other deficiencies according to a specific timeline.

The Deposit Guarantee Scheme ensures the disbursement of deposits up to EUR 100 000 for each customer of PNB Banka in the form of a guaranteed compensation.

It was also reported that in late June the bank representatives reported that a group of US and European investors has purchased 60% of the bank’s shares. Names of the shareholders were not revealed. The Latvian public television reported that one of the new shareholders is billionaire, gas and oil magnate Roger Tamraz.

The International Centre for Settlement of Investment Disputes (ICSID) has been hearing a claim filed by PNB Banka, Guselnikov and his family members against Latvia over allegedly “unfair, arbitrary, improperly motivated and unreasonable regulatory treatment accorded to the Bank by the Latvian authorities, contrary to Latvia's obligations under international law."

Allegedly, PNB Banka (then Norvik Banka) also complained that "a high-ranking official in the Latvian financial sector" had extorted bribes from the bank, promising to use his influence to prevent the Latvian financial regulator, the Financial and Capital Market Commission, from pressuring the bank.

According to Grigory Guselnikov, the high-ranking Latvian official mentioned in the claim is Bank of Latvia Governor Ilmars Rimsevics, who had been extorting bribes from Norvik Banka for years. In late December 2017, Guselnikov complained about extortion also to the Latvian State Police which have launched a criminal investigation.w

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