Latvian banking regulator has filed an insolvency suit against the troubled local lender PNB Banka.
The move comes just a week after the bank’s operations were suspended after the European Central bank (ECB) determined that PNB Banka is likely to fail.
The Financial and Capital Market Commission (FCMC) of Latvia has submitted an application to the City of Riga Vidzeme District.
It also requested the appointment of Vigo Krastiņš as the insolvency administrator.
Last week, FCMC suspended the operations of PNB Banka following repeated failures by the bank to comply with the stipulated regulatory requirements.
PNB Banka also received an opportunity to strengthen its capital, but it failed to achieve the target within the deadline. Also, the European Single Resolution Board (SRB) decided not to take any action to revive the bank’s financial health.
After the operations were suspended, new shareholders of troubled lender decided to invest €146m in the bank.
The shareholders also decided to challenge the insolvency claims against PNB Banka and criticised the regulator’s move to suspend lender’s operations.
As announced last week, the compensation payments of the suspended bank have also started.
“99.2% of JSC PNB Banka customers will recover their deposits in full in the form of guaranteed compensation. Of them, domestic customers account for 95%, while foreign customers – only 4.2%,” FCMC said in a statement.