Latvijas Krājbanka bankruptcy – deposits compensated up to 100 000 EUR


As of November 29, the clients of “Latvijas Krājbanka” – legal entities and individuals (both residents and non-residents) can apply for the payment of the state-guaranteed compensation of their deposits up to the sum of 100 thousand euros per person.

Pursuant to the Law on Deposit Guarantees, the State guarantees the repayment of the amount not exceeding the equivalent of 100,000 euros or 70,280.40 lats. The amount of the compensation payable includes also the accrued interest calculated until November 22.

Subject to the established limit on compensation, the payment thereof to one person is made for any and all types of deposits in any and all currencies held in all accounts altogether, in case there are several accounts (including, without limitation, the balance of the current account and savings account).

Those clients of Krājbanka whose funds held in Krājbanka exceed the guaranteed minimum will be able to apply their creditor claims within the insolvency proceedings of the credit institution.

Payment of compensations from the Deposit Guarantee Fund is made by AS “Citadele banka”. The money can be received at almost all 42 branches of AS “Citadele banka” in the entire territory of Latvia as well as via the Internet bank of AS “Citadele banka” (provided the client has opened an account with AS “Citadele banka” and has been granted access to online banking services).

According to the law, the money shall be disbursed in lats only. Deposits made in other currencies will be converted into lats, in accordance with the currency exchange rate set by the Bank of Latvia on November 22. Any losses incurred as a result of currency exchange will not be indemnified.

Transfers from the Deposit Guarantee Fund into the client’s account, including into the account opened with another bank registered in Latvia, will be made commission-free.

Depositors will retain the right to receive the guaranteed compensation for 60 years after the date on which the deposit will become non-available, i.e. until 2071.

Borrowers who have taken loans in Krājbanka should continue performing their commitments. While the obligations under the loan agreement are being complied with, nobody has a right to claim early repayment of the loan. If the client has taken out a loan in some other bank, towards the repayment whereof it is impossible to make the necessary payments, because the money is held in Krājbanka, it is advisable to promptly contact the bank which issued the loan and inform it regarding the situation, so that it would thus be informed that the delay in payments will be short-term.

In the event that for the same reason it is impossible to make the payment of the calculated taxes when due, we would advise to contact the SRS as soon as practicably possible, filing an application for extension of the due date for payment of taxes. Taxpayers may submit the application also electronically, via the Electronic Declaration System of the SRS. The SRS has promised to review the applications for extension the due date for payment of taxes within the shortest possible term, which will not exceed seven days. Upon granting the extension for payment of taxes, calculation of late charges will be terminated as of November 21, 2011.

Should you have any additional questions or need any clarifications in respect to the above, please feel free to contact our lawyers.