RIGA, May 21 (Xinhua) -- Nonresident deposits with estimated worth of 3 billion euros (3.53 billion U.S. dollars) have run away from Latvian banks over the past year, the Baltic country's financial regulator said on Monday.
According to the data released by the Financial and Capital Market Commission (FCMC), the total amount of nonresident bank deposits in Latvia has dwindled by a third over the past year and by 27 percent from the end of 2017.
The steepest drop in nonresident bank deposits in Latvia was recorded during the first months of this year -- from 8,05 billion euros at the beginning of the year to 5.869 billion euros at the end of the first quarter of 2018, the regulator said.
Nonresident deposits in U.S. dollars fell at the steepest rate, from 4.3 billion euros at the end of 2017 to 1.8 billion euros at the end of the first quarter. Nonresident deposits in the euro currency, meanwhile, grew from 3.3 billion euros to 3.75 billion euros.
Nonresident money has been flowing away from the banks as Latvian authorities are taking steps to clean up the national banking sector after the Baltic country's third largest bank by assets, ABLV Bank, had to cease operations in February following a report by the Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of the Treasury, which accused the Latvian bank of involvement in money-laundering schemes and bribing Latvian officials.
Although giving up high-risk nonresident business is likely to affect both the banking sector and the Latvian economy in general, Latvian Prime Minister Maris Kucinskis is confident that the national economy "will get over it". The likely economic impact from the banking sector's clean-up is currently being estimated at around 0.5 percent of GDP. (1 euro = 1.18 U.S. dollars)
