ABLV Bank, AS in liquidation begins payment of creditor’s claims

Riga, Latvia, October 25, 2019, 15:25 / Banking

In October this year, ABLV Bank, AS in liquidation (the Company) began new stage of its voluntary liquidation process, i.e., first payment of admitted creditor’s claim was made to the Company’s creditor, following all the creditor reviews performed in accordance with the methodology approved by the Financial and Capital Market Commission (the FCMC).

Payments were started under the claims of 2nd group set forth in the Credit Institution Law, and currently the total amount of admitted claims assigned this group is EUR 347 million. Those are the claims of 865 creditors, who are individuals, as well as small and medium-sized enterprises.

“No such creditor reviews have been performed in Latvia and Europe before. Thus, we had to develop totally new processes and procedures to ensure the reviews. The time spent exceeded that planned, but now preparatory works are completed and first test has been successful, so that payments to creditors can be started,” said the Company’s Liquidator Arvīds Kostomārovs.

Payment of admitted creditor’s claims is performed only if no hindrances for such payment set forth in the normative acts are revealed under the creditor review. The reviews are performed in accordance with the methodology by international team of EY specialists from five countries, including the USA. Currently, there are hundreds of creditors undergoing the review process.

From 6 March this year, when the methodology was approved by the FCMC, EY has developed the necessary procedures, built a team of review specialists, and ensured their training on application of the methodology. EY has also implemented necessary software tools, made safe IT environment for the reviews, and tested the system operability. The Company has ensured all necessary support.

The review process consists of three stages, namely:

  • creditor due diligence — identification, detection of the actual beneficiary, analysis of the origin of wealth and funds, and identification of PEP status;
  • review of past transactions performed by the creditor and its related partners, which includes analysis of account payments and transactions in financial instruments;
  • screening of the creditor and its partners against international sanction lists (EU, UNO, OFAC) and detection of possible sanctions violations.

As at the end of September, the Company’s assets amounted to EUR 2.36 billion, which is completely sufficient for covering all creditor’s claims in full. In H1 2020, the payments are planned to be started under the claims of a larger group, which is currently constituted by claims of more than 2 thousand creditors, the total amount of their admitted claims being EUR 1.5 billion.

From 3 March 2018, payment of guaranteed deposit compensations is performed by Citadele banka, AS. By the beginning of October 2019, those compensations have been received by more than 13 700 former clients of ABLV Bank, AS, and the payments to them amounted to EUR 440 million, i.e., 91% of the funds transferred to the Deposit Guarantee Fund. All the funds required for payment of guaranteed compensations are ensured by the Company.