A decision by Deutsche Bank to discontinue handling of US dollar settlements in Latvian commercial banks is no surprise neither to the financial market participants nor the FCMC. The decision was based on the change of business strategy for interbank markets in several countries and it was in no way attributable to the assessment of Latvian banking sector. Correspondent relationship is a crucial issue in the global context, being discussed at the level of the World Bank and International Monetary Fund.
In view of common global trends in the interbank market over past years the Latvian commercial banks are well prepared for these changes and have switched to other cooperation partners, and they are working toward new solutions. The Latvian residents carry out their settlements mainly in the euro currency therefore no changes are expected in the course of their daily settlement procedures. Whereas for the foreign customers that have chosen transfers of the US dollars through the Latvian commercial banks, the price of this service or payment execution time may probably increase (as each bank sets its own pricelist for services).
Each commercial bank selects correspondent banks and the banks have to make targeted efforts to establish new business relations. Further development of Latvia as a regional financial centre is based on the direct correspondent relations. To meet this objective and create a favourable environment for establishing new relations with the US correspondent banks, the FCMC in close cooperation with partners have been working firmly and intensively to enhance the Latvian banking sector reliability as a sound and stable partner in the eyes of leading global financial institutions.
One should be aware that developing new correspondent relationship with leading global financial institutions in the provision of payment services in the US dollars is not a short term objective, and in our view a reasonable time period would be the years 2019/2020. A number of respectable international potential cooperation partners have already expressed their interest. Firstly, we assume a gradual resumption of cooperation. Over the last two years, Latvia has laid a solid foundation for new business relations; it has become the OECD member, as well as the regulatory framework has been completed, an independent testing was conducted using methodology under the US regulatory framework in the banks that focus on foreign customer service and also other measures were taken. In the future, good repute and long-term plans will be the decisive factors in our region for the choice of new partners.