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Latvia's largest bank fights off depositor run after rumours of imminent collapse

• http://ca.news.yahoo.com

RIGA, Latvia - Latvia's largest bank scrambled Monday to head off a run among depositors who were gripped by rumours of the bank's imminent ruin.

Weekend rumours that Swedbank was facing legal and liquidity problems in Estonia and Sweden sent thousands of Latvians to bank machines on Sunday, with some lines reaching as many as 50 people.

Latvians are particularly sensitive to speculation about banks' health. Latvijas Krajbanka, the country's 10th largest bank, was nationalized last month after regulators discovered evidence of massive fraud allegedly carried out by the bank's former owner, Russian businessman Vladimir Antonov. Depositors were deprived of access to their funds for days.

And three years ago the country's second largest bank, Parex Bank, entered technical default and had to be taken over by the government, which in turn forced Latvia to appeal to international creditors and the European Union for a €7.5 billion ($10.5 billion) bailout.

 

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