German Deutsche Bank, which secures US dollar transactions for multiple Latvian banks, has decided to cease relations with banks in Latvia.
Last year, Deutsche Bank narrowed its activities in Latvia and ceased cooperation with multiple Latvian banks for which servicing foreign clients is major part of their business model. Now Deutsche Bank has decided to completely cease all cooperation with banks in Latvia.
Deutsche Bank did not provide any comments on its plans for Latvia. Representatives of commercial banks in Latvia say that Deutsche Bank’s decision will not affect their work. They said that such a decision be Deutsche Bank may be associated with the change in the bank’s business strategy.
SEB Bank manager Ieva Tetere admits that Deutsche Bank’s decision to cease providing Latvian banks with US dollar transactions is, in a way, an evaluation of Latvia’s financial sector, its longevity and compliance with business standards. «Development that have taken place in Latvia’s financial sectors in recent years have impacted the general reputation more than they have strengthened it. At the same time – the decision not to secure US dollar transactions for all market participants is more likely associated with Deutsche Bank’s development plans. It is good that the financial sector is already undergoing the much-needed changes that will improve the financial sector’s reputation,» Tetere said.
The bank’s manager turned attention towards the fact that SEB Bank in Latvia has been using services of multiple corresponding banks for US dollar transactions in recent years. With that, this decision by Deutsche Bank is more of a signal that Latvia’s financial market should continue its work on adopting more compliance norms in everyday activities. «SEB Bank continues to work with other international banks to secure corresponding banking services. Deutsche Bank’s decision should not affect our work,» Tetere said.
Rietumu Bank’s press secretary Eleonora Gailisa explains that Deutsche Bank has started changing its correspondent communication strategy. The bank has ceased cooperation with many countries. Latvia is among those countries. Deutsche Bank was an important partner in this field. The bank’s representative says Rietumu Bank continues work to raise the quality of correspondent relations. «This is why this decision will not create inconveniences for our clients. This includes situations when they perform US dollar transactions,» Gailisa explains.
Deutsche Bank also secured US dollar transactions for Citadele Bank. The bank’s external communications manager Baiba Abelniece did not provide any comments on relations with Deutshe Bank. She only said that Citadele Bank has correspondent relations with more than 20 banks outside of Latvia.
The bank’s representative said that the proportion of US dollar transactions in Citadele’s payment range is small. «But we can say that we continue working on expanding the range of services our cooperation partners can provide so that our clients have access to services at affordable tariffs,» said Citadele’s representative.
Deutsche Bank itself is undergoing tough times. According to information from LETA, Deutsche Bank worked with EUR 1.4 billion losses last year. Massive fines have been applied to Deutsche Bank as well. For example, in January, New York and British authorities had applied a fine of EUR 593 million on Deutsche Bank for the bank’s inability to prevent money laundering activities in Russia.
Latvia’s market has also lost JPMorgan and Commerzbank in recent years. Those two were also partners of Latvian banks in US dollar transactions.
This year, the government approved Latvian Financial Sector’s Development Plan for 2017-2019. One of the objectives listen in this plan is commencing cooperation with a single bank that would provide correspondent banking services in US dollars.
Peteris Putnins, chairman of the Finance and Capital Market’s Commission, had said multiple times in the past that a lot of time would be necessary for Latvia to improve relations with corresponding banks.