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Minister: state budget funds will not be used to compensate PNB Bank’s clients

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Latvian Finance Minister Jānis Reirs.

The Deposit Guarantee Fund is sufficient to pay compensations to affected PNB Bank clients. This means not a cent from Latvia’s state budget will be used, said Latvia’s Finance Minister Jānis Reirs in a telephone conversation with public broadcaster LTV programme Rīta Panorāma on Friday, 16 August.

Reirs stressed that Latvia’s deposit guarantee system is secure and it is commendable that 99.2% of PNB Bank’s depositors will be able to get their money back. He also added that the amount to be paid to affected clients of the bank provides no reasons for concern over resources available in the Deposit Guarantee Fund – the paid amount will be recovered using assets from PNB Bank. There are also other mechanisms that provide resources for the fund. However, currently there is no need to use said mechanisms.

Reirs stressed that PNB Bank’s case is not in any way related to recommendations from Moneyval and money laundering. The problem in this case is the bank lacks capital, which is why the decision was made on halting the bank’s operations.

The minister is aware the European Central Bank has spoken with PNB Bank’s shareholders about capital recovery. Reirs concluded that talks were not successful.

The minister also adds that ECB took charge over PNB Bank’s supervision because the bank had entered litigation process with the Latvian state.

BNN had previously reported that Latvia’s Finance and Capital Market Commission has decided to halt all of PMB Bank’s operations.

The decision made by the commission provides for the bank to completely cease providing financial services, including completion of clients’ payments as of 21:00 on Thursday, 15 August. This measure was applied to prevent outflow of the bank’s finances.

FCMC reports that operations of PNB Bank were halted and deposits made inaccessible in accordance with decisions made by European Central Bank and Single European Resolution.

«On 15 August European Central Bank as the direct supervisor of PNB Bank decided to declare this institution as one that has either ended up or will end up in financial services. The Single European Resolution’s board has made the decision to not perform regulation of PNB Bank. This means performing no measures to stabilize the bank’s operations. Considering the aforementioned and to ensure security for the bank’s deposits, FCMC council has decided at a meeting to halt financial operations in PNB Bank and has decided on inaccessibility of deposits,» the commission says.

European Central Bank has made its decision having found that the bank has not complied with regulations and after having assessed the bank’s financial situation.

«We understand this is an unexpected piece of news for the bank’s clients. However, we can prove FCMC will do all it can to come up with the most comfortable and efficient solution, as well as start paying compensations (up to EUR 100 000 to each) to all clients as soon as possible. In the coming days already 99.2% of depositors, according to initial estimates, will be able to start getting back the money they had saved up in the bank. The amounts will be fully covered using resources from the Deposit Guarantee Fund,» said FCMC head Kristīne Černaja-Mežmale.

The commission notes that FCMC council has decided on deposit inaccessibility to ensure clients are able to receive guaranteed compensation as soon as possible. FCMC will decide on the payment of compensations and its order in the coming days.

Payment of guaranteed compensation is to commence no later than the eighth day after declaration of inaccessibility of deposits. The deposit guarantee system provides each PNB Bank’s client with a compensation worth up to EUR 100 000.

The guaranteed amount will be paid to both private and legal persons for all kinds of deposits in any currency.


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