November 30, 2011
More than LVL 70 million already has been paid out to Latvijas Krājbanka clients after the financial institution’s collapse, but account holders abroad may have a tougher time getting to their money.
The bank, Latvia’s 10th largest in terms of deposits, was shut down by regulators after its parent company—Lithuania’s Bankas Snoras, that country’s third largest bank—collapsed amid allegations its owners siphoned off an estimated USD 1.3 billion in assets.
Lithuania’s government refused to bail out the bank. Latvian authorities followed up by taking over Krājbanka on Nov. 21, the Financial and Capital Market Commission (Finanšu un kapitālu tirgus komisija, or FKTK) announced.
Under Latvian banking law, deposits are insured up to EUR 100,000 (about LVL 70,000) from the Deposit Guarantee Fund, regardless of whether the account holder is a resident or a non-resident of the country. Reimbursements began to be paid out on Nov. 29.
Latvijas Krājbanka’s customers abroad can designate someone in Latvia to collect the insured value of their account by preparing a notarized proxy, an FKTK spokeswoman told Latvians Online in an email. The commission recommends that customers contact the nearest Latvian embassy or consulate for assistance on preparing the proxy.
Clients abroad who have used a Latvijas Krājbanka credit or debit card (norēķinu karte) to pay bills may have to ask friends, relatives or acquaintances in Latvia to help them get their money using a money transfer service like MoneyGram or Western Union, the spokesperson suggested.
Otherwise, customers from abroad can apply for the funds when in Latvia. The insured amount will be available for 60 years—until 2071, according to the FKTK.
An estimated 235,000 customers of Latvijas Krājbanka will receive the guaranteed payments.
Ironically, the payouts from Latvijas Krājbanka are being made through Citadele Bank. Citadele was formed in 2010 after the Latvian government took over the failed Parex Bank and transferred that bank’s good assets to the new financial institution.
After the collapse of Bankas Snoras and the seizure of Latvijas Krājbanka, Lithuanian authorities issued arrest warrants for Russian businessman Vladimir Antonov and his Lithuanian partner Raimondas Baranauskas, who were the major shareholders in Snoras. Both were arrested Nov. 24 in London and then released on bail.
Latvijas Krājbanka was founded in 1924. Bankas Snoras in 2005 bought majority interest in Krājbanka.
According to its 2010 annual report, Latvijas Krājbanka held more than LVL 575 million in deposits from customers, almost 60 percent of them private citizens. About 17 percent of the total deposits were from non-residents of Latvia.
Further information about account reimbursements is available by calling the Citadele Bank client contact center at +371 6 7010000.
Andris Straumanis is a special correspondent for and a co-founder of Latvians Online. From 2000-2012 he was editor of the website.