FCMC had requested that the ECB take over supervision for the Bank in the light of a case at the International Centre for Settlement of Investment Disputes (ICSID) filed by PNB Banka against Latvia and of the need for effective supervision the Bank (AS PNB Banka and others v. Republic of Latvia (ICSID Case No ARB/17/47).
FCMC Chairman Pēters Putniņš: “The ECB listened to our arguments for taking over the Bank’s supervision and decided that such work organisation would be optimal in future, taking into account the background of the international proceedings involving the Latvian State and Latvian commercial bank. Under the direct supervision of the ECB, the necessary supervision will be ensured for the Bank in line with the current situation and the SSM uniform standard, that could avoid any misunderstanding and possible reproaches to our country and the FCMC. This is just a matter of work organisation that has now been resolved. We are closely integrated into European structures and this is another example that cooperation and support in difficult situations, by finding new solutions to current challenges, provide even greater security and contribute to stability and to the development of a unified sector in the European financial system.”
The ECB may take over the direct supervision of less significant institution of any member state in order to ensure the application of high supervisory standards. According to the European banking union regulatory framework the supervision of banks must be in line with the size, complexity and risk of a bank.
Single Supervisory Mechanism (SSM):
Since 2014 Latvia is part of the Single Supervisory Mechanism of the European banking union, and three most significant banks in Latvia have been supervised within the single mechanism for the Eurozone countries.
The aim of the ECB Single Supervisory Mechanism is to ensure the safety and soundness of the European banking union, as well as balanced and steady progress and closer integration of European banking systems. The ECB in consistent cooperation with the FCMC oversees banking supervision in joint supervisory teams that are essential for day-to-day supervision. Currently, Swedbank and SEB banka are under the oversight of the ECB in cooperation with the FCMC. All the Eurozone countries take part in the Single Supervisory Mechanism, currently 19 countries, but the rest of European Union countries have an opt-in option.
ECB Press Release:
Information on ICSID Case No ARB/17/47:
Head of FCMC Communications Division
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