FCMC decides to suspend the provision of financial services by Baltic International Bank SE

To ensure the stability of Latvia’s financial sector and protecting the interests of bank’s customers and creditors, the Board of the Financial and Capital Market Commission (FCMC) decided to suspend the provision of financial services at Baltic International Bank SE during the extraordinary meeting of 12 December. The FCMC has recognized Baltic International Bank SE as failing or likely to fail and decided not to take resolution action of Baltic International Bank SE, which means to take no actions in order to stabilise bank activities.

The suspension of financial services 

The FCMC’s decision provides that as from 12.12.2022 at 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, operation of Baltic International Bank SE payment cards, internet banking and payments has been suspended. The decision is taken to prevent a bank run and protect the interests of bank’s customers and creditors.

The basis for the FCMC’s decisions 

The FCMC has based its decision to recognise Baltic International Bank SE 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 authorised in Latvia, the FCMC constantly evaluates Baltic International Bank SE business strategy and its implementation procedures and measures taken to assess how the bank ensures compliance with regulatory requirements and risk management.

Customer protection

According to information available to the FCMC on 02.12.2022, the number of Bank’s customers was 1580 from 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 1012 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.

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