Tyler Durden - Bank Run Feared After ECB Unexpectedly Pulls Plug On Latvia Largest Private Bank

The financial press said Latvia was said to be the poster child of neoliberalism. It massively deregulated, privatised, implemented austerity, lowered taxes on the rich and raised them on everyone else, crushed labour slashing wages,  and the economy seemed to boom as exports increased. But young graduates could not find jobs so they emigrated in droves, while Latvian gangsters came back seeing that the lack of deregulation meant they could get up to serious mischief.   

 Last week we reported that as part of a rapidly deteriorating banking crisis in Latvia, which culminated with the detention of central bank head Ilmars Rimsevics on suspicion of accepting a bribe of more than €100,000 (which prompted both the prime minister and president to demand his resignation, something he has so far refused to do), the European Central Bank froze all payments by Latvia's largest private bank, ABLV, following U.S. accusations the bank laundered billions in illicit funds, including for companies connected to North Korea’s banned ballistic-missile program.

Then overnight the Latvian banking crisis escalated when in a statement released early Saturday, the ECB said ABLV Bank’s liquidity had deteriorated significantly, making it unlikely to pay its debts and declaring it "failing or likely to fail." As a result, Latvia's third largest bank will be wound up under local laws after the European Central Bank

Following the ECB’s decision, which also included the bank’s subsidiary in Luxembourg, the WSJ reported that Europe’s banking resolution authority decided the banks didn’t represent a systemic risk for their countries or the region and should be wound up by local authorities rather than be “bailed in” under EU rules.

Tyler Durden - Bank Run Feared After ECB Unexpectedly Pulls Plug On Latvia Largest Private Bank

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