Latvia Analyzing Rimsevics Role at ECB as He Returns to WorkBy , , and
Baltic country is in process of providing information to ECB
Nation expects to see notable decline in non-resident deposits
Latvia is still considering the ramifications of central bank Governor Ilmars Rimsevics’s status as a suspect in a bribery probe, as he returned to work this week and weighs up how to continue his role at the European Central Bank.
“All the details are still to be analyzed on how big the mandate is for the governor to attend the ECB meetings,” Finance Minister Dana Reizniece-Ozola said Friday in an interview with Bloomberg TV. Latvia’s anti-corruption office “is in the process of getting all the information provided to the ECB so that they can make their decision on whether or not the principles of the independence of the ECB have been infringed.”
Latvia has been rocked by Rimsevics’s detention and release on bail as part of a corruption investigation, and after a U.S. proposal to lock ABLV Bank AS out of the American financial system triggered the No. 3 lender’s demise. While the scandals aren’t deemed a threat to the economy, they may accelerate a shift in the country’s banking industry.
Both ABLV and Rimsevics deny the accusations in cases that the authorities say aren’t linked. Rimsevics has rejected calls for his resignation.
While he returned to work on Monday, Rimsevics is subject to a travel ban and restrictions on his role as president of Latvia’s central bank, according to its spokesman Janis Silakalns. His deputy, Zoja Razmusa, will attend next week’s ECB meeting in Frankfurt on his behalf, though Rimsevics can still work with documents related to his job on the ECB’s governing council, Silakalns said.
Latvia -- long plagued by accusations its banks handle illicit cash from the former Soviet Union -- has tightened rules on lenders that hold foreign money, raised fines and forced lenders to undergo audits at their own expense. The crackdown has led to a fall by more than a third in the size of non-resident deposits in the banking sector.
The U.S. Treasury Department alleges ABLV engaged in institutionalized money laundering and violated sanctions put in place to counter North Korea’s weapons program.
“The simple transaction business servicing non-residents is a business of yesterday,” Reizniece-Ozola said. “This is the agenda for the following few years, to notably decrease the non-resident business so we can be trusted and no suspicions on the potential use of the Latvian finance sector for criminal activities would be possible.”
Reizniece-Ozola said this week that there are no signs other Latvian banks are experiencing outflows after the ECB decided to close ABLV on the grounds that it was failing or likely to fail. What happened to ABLV is a signal to other banks to follow the rules, she said.