Latvia suspends bank due to asset shortfall

AP News
Posted: Nov 22, 2011 6:29 AM
Latvia suspends bank due to asset shortfall

Latvia's banking authority has suspended all operations of a mid-sized bank due to missing assets discovered during a audit.

The bank, Latvijas Krajbanka, came under scrutiny last week after its controlling shareholder, Snoras Bank, was nationalized after regulators in neighboring Lithuania discovered that up to several hundred million dollars in assets were missing.

Latvia's Finance and Capital Markets Commission said late Monday that it was taking over management of Latvijas Krajbanka and had appointed a temporary caretaker. The size of the bank's missing assets was unclear, but prosecutors were alerted, suggesting possible criminal activity.

Latvijas Krajbanka was Latvia's 10th largest bank by assets and 6th largest by deposits at the end of June, according to the Latvian Commercial Bank Association.

Martins Bicevskis, head of the association, said the Latvijas Krajbanka was so small there was little risk of a ripple effect through Latvia's financial industry.

"We can't recognize this bank as a systemic important bank," he said, adding that it was unclear whether the bank might be nationalized.

Since the Lithuanian government has taken over ownership of Snoras, which owns a 60 percent stake in Latvijas Krajbanka, it now controls the troubled Latvian bank as well.

Lithuanian Prime Minister Andrius Kubilius said Monday the situation with Snoras is "more complicated than previously thought," fueling speculation the asset-stripping may exceed the 1 billion litas ($391 million) originally reported.

Snoras and Latvijas Krajbanka were previously controlled by Russian businessman Vladimir Antonov, who tried to acquire the troubled Swedish carmaker Saab but was prevented from doing so by European and Swedish authorities over a lack of transparency and suspicions of money laundering.

Antonov, 36, is controlling owner of the Portsmouth football club and is believed to spend most of his time in England.