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Finance Business Service

Questions and answers to the Inaccessibility of Deposits in ABLV Bank

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On February 25, the Latvian bank ABLV Bank published supplementary information for the depositors on its official website in the form of the most common questions and answers to them.

“What should the depositors and clients of the bank do, holding funds at ABLV Bank at the moment?
At the moment, clients do not have access to their funds either in the branches or through the Internet bank. The card system of the bank is turned off, therefore the customers cannot pay by bank cards and cannot withdraw cash from ATMs. Customers can freely transfer securities from their accounts of financial instruments to the bank.

What sum will be paid by the state to the bank’s clients?
The state guarantees each client 100 000 euros in any Latvian bank. In case of the moment of inaccessibility of deposits, payments are made from the funds of the Deposit Guarantee Fund.
ABLV Bank has enough liquid assets to return all sums paid from the Deposit Guarantee Fund!

What funds of the bank’s customers are guaranteed payment?
The guaranteed payment covers all deposits in any currency on all accounts, including time deposit accounts, current accounts, salary accounts, savings accounts, including those opened in the branches of the bank. The amount of guaranteed payment can not exceed 100,000 euros, i.е. if the client’s funds on all accounts in the bank do not exceed 100,000 euros, the client will receive a guaranteed payment in the amount of the balance on all his accounts. Interest accrued on the date of the onset of inaccessibility of deposits is included in the guaranteed payment if the total amount of payment taking into account the interest does not exceed 100,000 euros.

Who has the right to a guaranteed payment of up to 100,000 euros?
All bank customers - both natural persons and legal entities, both residents and non-residents - are entitled to a guaranteed payment of up to 100,000 euros. This right extends to state institutions of the Republic of Latvia, as well as institutions of self-government which budget do not exceed 500,000 euros.

When will the procedure of guaranteed payments start?
The procedure of guaranteed payments will start no later than within 8 working days from the moment of inaccessibility of deposits (that is, not later than 07.03.2018).
Depositors have the right to receive guaranteed payment within five years from the time of inaccessibility of deposits.

In what currency can I receive payment?
In accordance with the law, the guaranteed payment is made in euros. Deposits in other currencies are converted into euros when paid. Normative acts do not provide for the compensation for conversion losses.

What will happen if several clients of the bank held funds in one account, whose total balance exceeds 100,000 euros?
If the bank has identified each such depositor timely, then each such depositor is entitled to a guaranteed payment of up to 100,000 euros.

Is the person who has made the subordinated deposit in the bank entitled to a guaranteed payment?
No. The subordinated contribution is one of the exceptions, there is no guaranteed payment for it.

How will the size of the amount to be paid to the depositor be determined?
The bank’s accounting registers contain information about all clients who are entitled to a guaranteed payment, and about balances on customers’ accounts. This database is supervised and checked by the CRFC.

In what cases can the amount of guaranteed payment exceed EUR 100,000?
The law provides for several cases where natural persons can apply for an additional guaranteed payment of up to 200,000 euros, thus the total amount of payment may reach 300,000 euros. Such an event occurs if, within the latest three months, funds have been credited from (a) the sale of immovable property, (b) social compensation paid by the state, (c) compensation paid for the damage suffered (eg payment under an insurance policy) or (d) compensation for the unfair verdict of the court.

Is the payment due to the client if the encumbrance is imposed on the account?
No, the client will be paid only the amount that was available to the client at the time of taking decision by the CRFC on the inaccessibility of deposits. If the bailiff or tax administrator has levied execution on funds of the client, then the amount claimed in the guaranteed state amount of up to 100,000 euros will be transferred to the bailiff or tax administrator. If, after making settlements with the bailiff or tax administrator, the part of the encumbered amount on the account is unlocked, the client has the right to receive a guaranteed payment later. In this case, the countdown of the statute of limitations (ie 5 years, during which the client can receive a guaranteed payment) starts from the day when the amount subject to guaranteed payment became available to the client.

What will happen to the funds credited to the customer’s account on the next working day after the decision of the CRFC of February 23, 2013 on the restrictions of the bank’s activities?
All investors who meet the client category, who are entitled to a guaranteed payment, irrespective of the time of crediting of funds to the account, are entitled to a guaranteed payment of up to 100,000 euros.

What will happen to other customers whose savings on the bank accounts exceed 100,000 euros?
Follow the information of the FCMC and SCB.

What should people do who have a loan from ABLV Bank?
Such clients must fulfill their credit obligations in accordance with the concluded loan agreement. If the client fulfills its obligations under the loan agreement, then no one has the right to change the terms of the contract or demand the credit repayment ahead of schedule. There is no reason to worry if the client fulfills its obligations on time”.

Ролан Бондарец
Author
Lawyer in tax disputes
Finance Business Service