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International Internet Magazine. Baltic States news & analytics Monday, 20.05.2019, 01:51

ECB will take over direct supervision of Latvia’s PNB Banka

BC, Riga, 12.03.2019.Print version
The European Central Bank (ECB) based on the request of the Latvian Financial and Capital Market Commission (FCMC) has decided to assume direct supervision of Latvian commercial bank PNB Banka (formerly Norvik Banka), LETA learned from FCMC.

In future, the ECB will supervise three Latvian banks within the European Banking Union Single Supervisory Mechanism (SSM). The ECB by taking over direct supervision of AS PNB Banka has classified it as significant.

FCMC had requested that the ECB take over supervision for the bank in the light of a case at the International Center for Settlement of Investment Disputes (ICSID) filed by PNB Banka against Latvia and of the need for effective supervision of PNB Banka.

The bank has launched a case against the Latvian state in the case related with Winergy wind park. Winergy wind power project developer have not repaid the bank a loan worth several millions of euros. A settlement has been reached in the case, the wind park is now controlled by the bank, but still several court proceedings are in process.

"The ECB listened to our arguments for taking over the Bank's supervision and decided that such work organization would be optimal in future, taking into account the background of the international proceedings involving the Latvian State and Latvian commercial bank. Under the direct supervision of the ECB, the necessary supervision will be ensured for the Bank in line with the current situation and the SSM uniform standard, that could avoid any misunderstanding and possible reproaches to our country and the FCMC. This is just a matter of work organization that has now been resolved. We are closely integrated into European structures and this is another example that cooperation and support in difficult situations, by finding new solutions to current challenges, provide even greater security and contribute to stability and to the development of a unified sector in the European financial system," said FCMC chairman Peters Putnins.

At present the ECB has direct supervision over three banks – Swedbank, SEB Banka and now also PNB Banka.

According to preliminary results, in 2018 PNB Banka posted EUR 5.099 mln in loss, down 8.6 times from 2017, and the group’s loss was EUR 18.403 mln, down 49.2% y-o-y.

At the end of September 2018, Norvik Banka was Latvia’s seventh largest bank by assets. The bank’s key owner is Grigory Guselnikov.

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