Europe to Wind Down Latvian Bank Targeted by U.S. Over Sanctions

European authorities moved to liquidate Latvia’s ABLV Bank AS after clients pulled assets from the lender following U.S. accusations that it laundered money.

The European Central Bank, which had already placed a freeze on payments by the lender, said that ABLV was failing or likely to fail, handing it over to Europe’s Single Resolution Board. That authority said a resolution of the bank, which generally means a sale or restructuring, isn’t in the public interest because neither ABLV nor its Luxembourg-based subsidiary provide “critical functions” and their failure won’t have a “significant adverse impact” on financial stability.

ABLV was plunged into crisis after the U.S. Treasury Department this month proposed to ban it from the American financial system, saying it helped process illicit transactions, including for entities with alleged ties to North Korea’s ballistic missile program. The bank responded by saying the allegations are wrong and misleading and that it was working to provide information to the Treasury that would help to overturn the proposal.

“The bank is likely unable to pay its debts or other liabilities as they fall due,” the ECB said in a statement on Saturday in Frankfurt. “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.”

‘Absolutely Sufficient’

ABLV took a different view, saying it accumulated more than 1.36 billion euros ($1.67 billion) over four business days to strengthen its liquidity and ensure 86 percent of its demand deposits.

“The bank considers that it has fulfilled all requirements of the regulator in order to resume operation,” ABLV said in a statement. “It was absolutely sufficient for the bank to resume executing payments and meet all obligations toward its clients, yet due to political considerations the bank was not given a chance to do it.”

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