Banks, Financial Services, Latvia, Legislation

Valerijs Kargins.

The Latvian government yesterday approved the Finance Ministry's amendments to the Law on Credit Institutions that limit benefits that shareholders derive from banks that have received state aid, informs LETA.

This primarily concerns former Parex owners – Kargins and Viktors Krasovickis, who have deposited significant amounts of money in the bank, that earn them large interest.

"We, just as the other foreign and local subordinated capital participants, will be forced to defend ourselves in court," Kargins declared. He added that he feels that the initiators of the amendments "have something personal against us, and are acting overly emotionally, not understanding the legal and economic consequences."

The amendments to the Law on Credit Institutions limit benefits that shareholders derive from state-supported banks will be in force as long as the given bank receives state support. The new regulation will come into force on June 1 this year, therefore there is a sufficient transition period provided in the bill.