Special tasks police force raids Baltic International Bank

  • 2022-12-12
  • LETA/TBT Staff

RIGA - A unit of special tasks police force on Monday evening raided Baltic International Bank in Riga Old City, breaking the entrance door of the bank's head office, LETA observed. 

According to unconfirmed information, police were searching also the residences of the bank's managers. 

As reported, the Board of the Financial and Capital Market Commission (FCMC) at an extraordinary meeting on Monday decided to suspend the provision of financial services at Baltic International Bank.

The financial supervisory authority has recognized Baltic International Bank as failing or likely to fail and decided not to take resolution action of Baltic International Bank, which means to take no action in order to stabilize the bank's activities.

The FCMC’s decision provides that as from December 12, 2022, 18:00 the bank has to suspend the provision of services in full, including the execution of customer transactions. This means that from now on, the operation of Baltic International Bank payment cards, internet banking and payments has been suspended. The decision is taken to prevent a run on the bank and to protect the interests of the bank’s customers and creditors.

The FCMC has based its decision to recognize Baltic International Bank as failing or likely to fail on the grounds that the bank has not been able to ensure the implementation of a viable business strategy over a sustained period.

The current business strategy does not conform to the bank’s capacity and is not feasible, therefore the bank has been continuously failing to provide a profitable business model. The bank also has serious internal governance deficiencies, including the area of the prevention of money laundering and terrorism and proliferation financing.

Despite the efforts of the FCMC to make improvements in these areas, the bank has not ensured compliance of its activities with the regulatory requirements governing the activities of credit institutions, as well as continues the current trend: the bank operates at a loss, is unable to restore profitability, fails to ensure an adequate internal control system and a stable future vision.

Exercising supervision over the credit institutions authorized in Latvia, the FCMC constantly evaluates Baltic International Bank's business strategy and its implementation procedures and measures taken to assess how the bank ensures compliance with regulatory requirements and risk management.

According to information available to the FCMC on December 2, 2022, the bank had 1,580 customers, of which 280 customers had accounts with a balance of 0. In accordance with the Deposit Guarantee Law disbursement of compensation of up to 100 000 euro is guaranteed for any customer. Initial estimates show that 1,012 of the bank's customers will receive their deposits back in full. The FCMC will ensure that the process of disbursement of the guaranteed compensation is as quick and convenient as possible for customers and will inform about further actions as soon as possible.

The law states that the FCMC shall take the decision on the unavailability of deposits within five working days from the day when it has detected that the deposit taker is not able to pay deposits. The disbursement of guaranteed compensation shall be started no later than in seven working days after the day when deposits have become unavailable.