Banks, Financial Services, Latvia, Legislation, Loan

Overall, KPMG Baltics has transferred LVL 90 million to the Deposit Guarantee Fund. The first transfer – LVL 50 million – was made in August, reports LETA.

The Deposit Guarantee Fund is the largest creditor of Krajbanka. Initially, the bank's liabilities to the Deposit Guarantee Fund amounted to LVL 336 million. At the moment, they have reduced to LVL 246 million, KPMG Baltics public relations consultant Oskars Firmanis told Nozare.lv.

As reported, under the law, the Deposit Guarantee Fund is the first to receive money earned by selling assets of a bank that has gone bankrupt.

After the Deposit Guarantee Fund, the bank has to settle its liabilities, in this exact order, with the bank's employees, pay unpaid taxes, settle payments into state and municipal budgets, pay the state for government-underwritten loans, pay debts to other lawful creditors, including depositors who have deposited over EUR 100,000 at the bank, pay interest to creditors, pay debts to creditors who have filed their claims past deadline, then subordinated loans and, finally, the bank's shareholders.

Such a procedure is to ensure that the Deposit Guarantee Fund could guarantee financial stability and protect minor depositors' interests, who are to get back deposits of up to EUR 100,000.

The administrator of Krajbanka plans to transfer money to creditors two to three times a year.

LETA also reported, the Riga Regional Court on May 8 this year decided to launch Krajbanka bankruptcy. The court's decision cannot be appealed. Audit company KPMG Baltics had demanded that bankruptcy proceedings be launched at Krajbanka, after the administrator concluded that none of the four proposals for recovery of the bank was viable. The administrator's decision was backed by the Financial and Capital Market Commission.

Also in May, KPMG Baltics Chief Financial Officer Aivars Jurcans told reporters that Krajbanka's liabilities to Deposit Guarantee Fund stood at LVL 336, and that the bank owed LVL 203 million to depositors with deposits in excess of EUR 100,000 (LVL 70,000).