The European Central Bank (ECB) has determined that Latvia's ABLV Bank is on the verge of failing and will be closed down under the Baltic country's law.
The ECB said in a statement on February 24 that it has concluded ABLV is "failing or likely to fail," as is its Luxembourg-based subsidiary, ABLV Bank Luxembourg.
"Due to the significant deterioration of its liquidity, the bank is likely unable to pay its debts or other liabilities as they fall due," the Frankfurt-based ECB said.
"The bank did not have sufficient funds which are immediately available to withstand stressed outflows of deposits before the payout procedure of the Latvian deposit guarantee fund starts," it added.
It said Europe's Single Resolution Board determined that action by the central bank to shore up ABLV "was not in the public interest," so it will be dissolved under Latvian law.
ABLV Bank is Latvia’s third-largest bank by assets.
The country’s financial regulator ordered the bank to cease all payments after its liquidity position deteriorated sharply amid U.S. accusations of money laundering and breaching sanctions aimed at thwarting North Korea's weapons program.
The U.S. Treasury Department said on February 13 that ABLV also facilitated transactions linked to "large-scale illicit activity connected to Azerbaijan, Russia, and Ukraine."
ABLV officials denied all allegations and had sought emergency ECB funding to remain in business.
Deposits at the bank are insured up to 100,000 euros ($123,000). Late last year, the Latvian bank reported it had deposits of 2.67 billion euros ($3.28 billion) and assets of 3.63 billion euros ($4.4 billion.)
Based on reporting by AFP and dpa