Rumors hit Swedbank

  • 2011-12-14
  • From wire reports

RIGA - Latvia’s Security Police have opened a criminal investigation on dissemination of false information - Swedbank bankruptcy rumors - in an attempt to destabilize the banking situation in the country, Prime Minister Valdis Dombrovskis (Unity) and Interior Minister Rihards Kozlovskis (Zatlers’ Reform Party) said after a government session on Dec. 12, reports LETA. “The rumors were spread deliberately - to destabilize the situation in Latvia,” said the prime minister.
Kozlovskis confirmed that the authorities have several versions of what happened, and considerable effort will be dedicated to analyze them. It will be assessed whether the rumors came from other banks, from within the financial system or from abroad.

Dombrovskis said that the rumors were timed with the Latvijas Krajbanka crisis. The prime minister repeatedly emphasized that they are unfounded and the country’s banking system is stable.
As a result of last Sunday’s rumors that Swedbank was in financial crisis, hundreds of people gathered at the bank’s ATM machines to withdraw their cash in the outlying regions and the panic later also spread to Riga. At the beginning, the longest lines were at Swedbank ATMs; when those were emptied of cash, people rushed to other bank ATMs.
The rumors were flooding out of social media channels. Although nothing indicated that the rumors were true, and the bank continued operations as usual, many people who opted to withdraw cash from Swedbank ATMs said that it had been the same before Latvijas Krajbanka’s collapse.

The Swedish lender said on Sunday that lines of people withdrawing money at its cash machines in Latvia were due to a false rumor spread by social media that Swedish banks had problems, reported Reuters. “These are totally irrelevant rumors coming out of social media. The bank’s position is more than solid,” Swedbank spokesman Thomas Backteman said.
“The rumors are not only about us, but about Swedish banks,” he added.

Backteman said Swedbank had seen an increase in withdrawals from its cash machines in parts of Latvia. The rumors began about two weeks ago when Latvian authorities took over Latvijas Krajbanka, and intensified Friday, Backteman said, but he added that the rumors were “completely groundless.”
He said Swedbank was monitoring the situation and was making sure customers were able to withdraw their money from the bank if they so wished. Swedbank does not expect the weekend’s extensive cash withdrawals in Latvia to result in any liquidity problems.

Around a third of the bank’s Latvian cash machines were empty by Sunday evening.
Backteman said that his company is working closely with Swedish and Latvian authorities and with other Swedish banks in Latvia. The rumors in Latvia included unfounded claims that Swedbank would leave the country and that it would be impossible to withdraw cash from the machines.
Several dozen people have already responded to the Security Police’s request to report the potential Swedbank rumor-mongers. So far, no one has been detained on suspicion of spreading the rumors, Security Police chief aide Kristine Apse-Krumina noted.

Jelgava Region Council Chairman Ziedonis Caune (Union of Greens and Farmers) and Jelgava Mayor Andris Ravins (Union of Greens and Farmers) were summoned by the Security Police over the bank run, reports newspaper Zemgales Zinas’ portal
It was on Saturday that Jelgava Region Administration was instructed to transfer more than 1 million lats (1.4 million euros) from the municipality’s account in Swedbank to the State Treasury, Caune has confirmed. Jelgava City Council also withdrew its money from Swedbank.

Tens of millions of lats were withdrawn in total from Swedbank during the panic, with the largest withdrawals made in Zemgale province, Jelgava and Ventspils.
Swedish bank SEB also sensed panic among its Latvian clients, SEB Vice President Laurence Westerlund said to Swedish news agency TT. “There has been a bit of a spillover effect for us. We are now focusing on getting money in the cash machines if things continue on Monday,” he said.

Sunday’s rumors were a purposeful campaign instigated by someone, President Andris Berzins said in an interview with the Latvian State Television’s morning show Labrit, Latvija! on Dec. 13. Berzins believes that people panicked without reason, forgetting that Swedbank is a Swedish bank and cannot be compared to Latvijas Krajbanka. “Both banks have different owners, and it is well-known that the stability of Swedish banks lies not only in their considerable capital, but also in their well-established international recognition,” said the president.

Since Sunday, Swedbank customers withdrew around 30 million lats or 1.5 percent of the bank’s total deposit portfolio, said bank representative Kristine Jakubovska.

Bank operations were returning to normal at the start of the week as the panic subsided.