LAND bank's license cancelled

RIGA (BNS) - The Bank of Latvia has canceled LAND bank's banking license July 16 and will file an insolvency claim with the Riga District Court later this week.

Bank of Latvia spokesman Edzus Vejins said the license was revoked since the bank had been misleading the central bank and provided false information about its financial situation.

In addition, LAND's equity capital does not meet the capital adequacy requirement of 2 million lats ($3.37 million.)

Late in March LAND ranked 23rd of Latvia's commercial banks in terms of assets. It did not have permission from the central bank to attract deposits from private individuals, and Vejins noted that cancellation of its banking license should not create any problems for Latvia's economy.

LAND bank has not announced yet whether it would file an appeal with the Bank of Latvia's council against the resolution of the central bank's board to revoke its banking license.

LAND bank's legal manager Andris Spone said the decision about any action was up to the bank's shareholders.

"We will not comment on the decision by the Bank of Latvia board. We are just a bank, but the Bank of Latvia is the Bank of Latvia," Spone said admitting that the central bank's decision came as a surprise.

Shareholders of LAND and Trasta Komercbanka in June decided to launch talks on the possible merger of the two. The shareholders were to provide their answer concerning the merger by Aug. 25.

Talks on the possible merger have been halted at this point, said Trasta Komercbanka acting President Gundars Grieza.

He pointed out though that cancellation of LAND's banking license and suspension of operations "does not mean that we cannot merge later through some reorganization process."

Grieza noted he could not say that LAND had been misleading Trasta Komercbanka about its financial situation as well because he had not yet received materials concerning the situation.

Bank of Latvia Vice-President Ilmars Rimsevics, in a press conference July 7, expresse hope the merger of the two banks will proceed successfully.

The Riga Stock Exchange has suspended LAND's status as a stock exchange member.