New rules on bank investments drafted

  • 1998-09-10
RIGA (BNS) - The Bank of Latvia is working to introduce new norms to regulate the maximum volume of investments by banks in different regions of the world.

The Russian crisis has brought about the necessity to review the existing norms because even a demand for 100 percent risk provisions cannot guarantee investments in certain regions of the world, said the bank's senior official, Janis Placis.

Before the Russian crisis began, the Bank of Latvia, like the central banks of other countries, viewed investments in Russian government securities as investments with a conditioned risk for which no provisions were required.

One of the versions of the new project provides for the introduction of a maximum limit for investments by banks in a particular region of the world.

The Bank of Latvia's spokesman Edzus Vejins told BNS the central bank will consult on the issue with the Latvian Association of Commercial Banks.

Once the new rules are accepted, banks will be given time to restructure their assets in accordance with these requirements, Placis noted.

Under Latvian law the Bank of Latvia may adopt new rules on the decision of its council. The council will meet Sept. 17.