Banks, Financial Services
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Thursday, 18.04.2024, 08:29
FCMC files insolvency application against PNB Banka
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.