“Temporarily, and until further notice, a prohibition of all payments by ABLV bank on its financial liabilities has been imposed, and is now in effect,” the ECB said in a statement.
It is the first time the ECB has used its power to impose a moratorium since taking on eurozone-wide banking supervision responsibilities in 2014.
The US Department of the Treasury last week named ABLV “an institution of primary money laundering concern” and accused it of connections to North Korea’s weapons development programme.
ABLV’s financial position, which had previously been stable, has rapidly deteriorated since as it found its access to the financial system cut off, even threatening the bank’s survival.
In late September 2017, the bank’s balance sheet stood at around 3.6 billion euros ($4.5 billion), with 1.0 billion euros of loans and 2.7 billion in deposits.
Just two days before the ECB’s moratorium, Latvian supervisor FCMC issued a statement saying the bank’s capital and liquidity ratios — key indicators of a bank’s financial health — were in good shape.
The ECB decision on Monday comes after Latvian central bank governor Ilmars Rimsevics, who sits on the ECB governing council, was arrested Saturday by the country’s Corruption Prevention Bureau (KNAB).
A source familiar with the case told AFP there was no connection between the ABLV case and the governor’s arrest.