Latvia’s largest bank is desperately trying to head off a run among customers unsettled by rumours of its imminent ruin.
Weekend tales that Swedbank was facing legal and liquidity problems in Estonia and Sweden sent thousands of Latvians to bank machines on Sunday, with some queues reaching as many as 50 people.
Latvians are particularly sensitive to speculation about banks’ health. Latvijas Krajbanka, the country’s 10th largest bank, was nationalised last month after regulators discovered evidence of massive fraud allegedly carried out by the bank’s former owner, Russian businessman Vladimir Antonov. Depositors were deprived of access to their funds for days.
And three years ago the country’s second largest bank, Parex Bank, entered technical default and had to be taken over by the government, which in turn forced Latvia to appeal to international creditors and the European Union for a bailout.
Prime Minister Vladis Dombrovskis said that the rumours were spread maliciously with the intent to harm Latvia’s banking system. Police have opened a criminal investigation.
The rumours were contained to Latvia and did not spread to neighbouring Estonia and Lithuania, which also have affiliates of the Swedish-controlled Swedbank.
Maris Mancinskis, Swedbank’s Latvian chief, slammed the rumours as “absurd” and said in a statement that the bank was functioning normally and that all deposit holders would have full access to their money via bank machines and branch offices.
Swedbank passed the European Banking Authority’s most recent stress test, the results of which were announced in July.