Banks, Deposits, EU – Baltic States, Financial Services, Latvia, Legislation

The bank has to ensure that its customers may freely transfer, or withdraw in cash, amounts of up to EUR 100,000 while the restrictions are in force.

93% of Trasta komercbanka customers' accounts each hold less than EUR 100,000, therefore they will not be affected by the restrictions. The Financial and Capital Market Commission also emphasizes that the restrictions will not concern amounts transferred to Trasta komercbanka customers' accounts following the commission's decision.

At the moment, Trasta komercbanka continues its daily mode of operation, it offers services and meets its obligations to the clients in compliance with the limits set by the Financial and Capital Market Commission, the commission informs in a press release.

The decision was adopted by the Financial and Capital Market Commission as it had scrutinized the bank's activities during the supervisory process, for instance, how the bank succeeded in dealing with several key priorities (capital increasing, improving the bank's development strategy and internal control system). Also, it was taken into account that the Financial and Capital Market Commission had already issued warnings to the bank's largest shareholders possessing a qualifying holding, Igors Buimisters and Ivan Fursin, regarding their failure to fulfill statutory obligation of shareholder having a qualifying holding under the Credit Institution Law.

"The bank was given time to address the particular issues to improve its activities. The bank has not managed to do it within a reasonable timeframe, therefore the regulator is compelled to take the next step and make use of instruments laid down in the Credit Institution Law – in this case to impose restrictions on the activities of the bank," points out Chairman of the Financial and Capital Market Commission Kristaps Zakulis.

Restrictions on the activities of Trasta komercbanka take effect on the date of adoption of the decision and are effective until the further decision by the Financial and Capital Market Commission. Restrictions apply to the bank's branch in Cyprus as well.

Currently, the bank continues to work on the adjustment of above processes, including attracting the potential investor. In parallel the Financial and Capital Market Commission, as Latvia's resolution authority, will examine the possibility of applying resolution tools as required by the Single Resolution Mechanism of the Europe's banking union.

The bank may appeal the decision to the Administrative Regional Court, however, the appeal of the administrative act issued by the Financial and Capital Market Commission does not suspend the execution thereof.

As reported, Trasta komercbanka posted EUR 2.44 million in losses in January-September 2015, while Trasta komercbanka Group's losses amounted to EUR 4.37 million.

Trasta komercbanka has been operating since 1989, offering services to local and foreign customers.

At the end of the third quarter of this year, Trasta komercbanka was the 13th largest bank in Latvia in terms of assets.

According to the Financial and Capital Market Commission, the bank's major shareholders are Igors Buimisters (33% to 50% of the bank's shares), and Ivan Fursin (indirectly owning 20% to 33% of the bank's shares).

LETA also reported, Trasta komercbanka board member Z was released from the bank's board earlier this month. Releasing Z from Trasta komercbanka's board has been approved by the bank's council.

Latvian State Television reported that Z could have been the one to run a major money laundering scheme through the bank. The Economy Police carried out a search of Z`s office.