Banks, Financial Services

Vigo Krastins has been proposed as the candidate for PNB Banka’s insolvency administrator.

The court has yet to set the date for hearing the insolvency application.

FCMC representatives said that after the European Central Bank (ECB) had found PNB Banka to be failing or likely to fail and the decision by the European Single Resolution Board that resolution action was not necessary in the public interest, the FCMC has prepared an application to the court for the opening PNB Banka's insolvency proceedings.

The application has been filed with Riga City Vidzeme District Court, at the same time asking to appoint Vigo Krastins as insolvency administrator of the bank’s insolvency proceedings.

“The bank’s supervisors, the ECB and the FCMC, have repeatedly applied to JSC PNB Banka supervisory measures for the purpose that the bank would meet regulatory requirements, as well as granted the bank an opportunity to carry out capital strengthening measures within the specified deadlines, but the bank was unable to meet the set limits and deadlines. All the information submitted so far has been evaluated and has not provided assurance to the FCMC that the set supervisory measures would be complied,” the regulator said.

Consequently, the ECB as the direct supervisor of PNB Banka decided to declare the bank as failing or likely to fail, and based on the findings that the bank’s debt obligations exceeded its assets. In this situation, in accordance with the Credit Institution Law the FCMC can submit an insolvency petition to the court, the regulator indicated.

The nomination and appointment of an insolvency administrator are regulated by the FCMC regulations. The FCMC shall select the insolvency administrator from the list provided by the Insolvency Control Service. The FCMC shall assess the vision for managing the bank’s insolvency proceedings proposed by applicants, existing experience and available resources, in addition assessing their understanding of the issues related to the prevention of money laundering and terrorism financing, as well as the information received from the law enforcement authorities.

Krastins will become PNB Banka’s insolvency administrator if his nomination is approved by the court.

As reported, the Financial and Capital Market Commission on August 15 suspended PNB Banka’s financial services, including the execution of customer payments, in order to avoid an outflow of the bank’s funds.

The European Central Bank (ECB) has assessed that PNB Banka in Latvia was 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.