The translation of this document is outdated.
Translation validity: 29.10.2021.–30.05.2022.
Amendments not included:
28.04.2022.,
13.10.2022.
Text consolidated by Valsts valodas centrs (State
Language Centre) with amending laws of:
7 March 1996 [shall come
into force on 2 April 1996];
30 May 1996 [shall come into force on 26 June
1996];
17 October 1996 [shall come into force on 1 November
1996];
30 October 1997 [shall come into force on 27 November
1997];
21 May 1998 [shall come into force on 21 July
1998];
1 June 2000 [shall come into force on 1 July 2000];
11 April 2002 [shall come into force on 10 May
2002];
24 October 2002 [shall come into force on 20 November
2002];
8 May 2003 [shall come into force on 30 May 2003];
20 November 2003 [shall come into force on 1 January
2004];
20 November 2003 [shall come into force on 25 December
2003];
11 December 2003 [shall come into force on 7 January
2003];
27 May 2004 [shall come into force on 18 June
2004];
28 October 2004 [shall come into force on 26 November
2004];
26 May 2005 [shall come into force on 24 June
2005];
9 June 2005 [shall come into force on 12 July
2005];
22 June 2006 [shall come into force on 18 July
2007];
22 February 2007 [shall come into force on 22 March
2007];
17 May 2007 [shall come into force on 12 June
2007];
29 May 2008 [shall come into force on 1 July 2008];
23 October 2008 [shall come into force on 1 January
2009];
12 February 2009 [shall come into force on 19 February
2009];
26 February 2009 [shall come into force on 25 March
2009];
16 July 2009 [shall come into force on 13 August
2009];
22 October 2009 [shall come into force on 29 October
2009];
28 January 2010 [shall come into force on 11 February
2010];
11 March 2010 [shall come into force on 1 April
2010];
23 September 2010 [shall come into force on 22 October
2010];
23 December 2010 [shall come into force on 21 January
2010];
19 October 2011 [shall come into force on 19 October
2011];
15 March 2012 [shall come into force on 1 April
2012];
22 March 2012 [shall come into force on 25 April
2012];
24 May 2012 [shall come into force on 1 December
2012];
14 March 2013 [shall come into force on 10 April
2013];
16 May 2013 [shall come into force on 18 June
2013];
19 September 2013 [shall come into force on 1 January
2014];
24 April 2014 [shall come into force on 28 May
2014];
29 January 2015 [shall come into force on 25 February
2015];
7 May 2015 [shall come into force on 3 June 2015];
11 June 2015 [shall come into force on 14 July
2015];
8 July 2015 [shall come into force on 4 August
2015];
30 November 2015 [shall come into force on 1 January
2016];
17 December 2015 [shall come into force on 31 December
2015];
2 June 2016 [shall come into force on 1 July 2016];
23 November 2016 [shall come into force on 1 January
2017];
21 July 2017 [shall come into force on 3 August
2017];
21 July 2017 [shall come into force on 3 August
2017];
26 October 2017 [shall come into force on 9 November
2017];
1 March 2018 [shall come into force on 16 March
2018];
25 October 2018 [shall come into force on 1 January
2019];
1 November 2018 [shall come into force on 15 November
2018];
28 February 2019 [shall come into force on 28 March
2019];
13 June 2019 [shall come into force on 29 June
2019];
19 December 2019 [shall come into force on 13 January
2020];
17 June 2020 [shall come into force on 1 July
2020];
17 June 2020 [shall come into force on 14 July
2020];
9 July 2020 [shall come into force on 4 August
2020];
21 January 2021 [shall come into force on 16 February
2021];
29 April 2021 [shall come into force on 19 May
2021];
27 May 2021 [shall come into force on 23 June
2021];
27 May 2021 [shall come into force on 23 June
2021];
10 June 2021 [shall come into force on 12 July
2021];
23 September 2021 [shall come into force on 20 October
2021];
30 September 2021 [shall come into force on 29 October
2021].
If a whole or part of a section has been amended, the
date of the amending law appears in square brackets at
the end of the section. If a whole section, paragraph or
clause has been deleted, the date of the deletion appears
in square brackets beside the deleted section, paragraph
or clause.
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The Saeima 1 has adopted and
the President has proclaimed the following law:
Credit Institution Law
Chapter I
General Provisions
Section 1. (1) The following terms are used in this
Law:
1) [24 April 2014];
2) branch of a credit institution - a territorially or
otherwise separated structural unit of a credit institution which
does not have the status of a legal person and which acts in the
name of the credit institution;
3) representative office - a structural unit of a
credit institution which is located in another state and
represents the interests of the credit institution, but does not
engage in commercial activities;
4) financial services:
a) attraction of deposits and other repayable funds;
b) crediting;
b1) financial leasing;
c) payment services;
d) issuance and servicing of non-cash means of payment not
related to the provision of payment services;
e) trading in one's own name or in the name of a customer with
currency or financial instruments;
f) fiduciary operations (trust);
g) provision of investment services and non-core investment
services;
h) issuance of guarantees and other binding obligations which
create an obligation to be liable to the creditor for the debt of
a third person;
i) safekeeping of valuables;
j) [20 November 2003];
k) consultations with customers regarding issues of a
financial nature;
l) [20 November 2003];
m) provision of such information which is related to the
settlement of debt obligations of a customer;
n) other transactions which are similar in nature to the
aforementioned financial services;
o) emission of electronic money;
5) credit - a compensatory transaction in which a
credit institution transfers, on the basis of a written contract,
money or other items to a client into ownership and which imposes
a duty for the client to return the money or other items to the
credit institution within a specified period of time;
6) deposit - keeping of monetary funds in an account of
a credit institution for a specified or unspecified period of
time, with or without interest;
7) [24 April 2014];
8) [22 February 2007];
9) customer - a person to whom a credit institution
provides financial services;
10) [24 April 2014];
11) [24 April 2014];
111) parent credit institution of a Member State
- a credit institution defined as parent institution in a
Member State within the meaning of Article 4(1)(28) of Regulation
(EU) No 575/2013 of the European Parliament and of the Council of
26 June 2013 on prudential requirements for credit institutions
and investment firms and amending Regulation (EU) No 648/2012
(hereinafter - EU Regulation No 575/2013);
112) [24 April 2014];
113) parent credit institution of the European
Union - a credit institution defined as a European Union
parent institution within the meaning of Article 4(1)(29) of EU
Regulation No 575/2013;
114) [24 April 2014];
115) parent credit institution of the Republic
of Latvia - a credit institution registered in the Republic
of Latvia which has a subsidiary - credit institution or
financial institution - or which is a participant in a credit
institution or financial institution, but which itself is not a
subsidiary of a credit institution registered in the Republic of
Latvia or a subsidiary of a financial holding company registered
in the Republic of Latvia or a mixed financial holding company
registered in the Republic of Latvia;
116) parent financial holding company of the
Republic of Latvia - a financial holding company which is
registered in the Republic of Latvia, but which itself is not a
subsidiary of a credit institution registered in the Republic of
Latvia or a subsidiary of a financial holding company registered
in the Republic of Latvia or another mixed financial holding
company registered in the Republic of Latvia;
117) [24 April 2014];
118) [24 April 2014];
12) [24 April 2014];
13) [22 February 2007];
14) fiduciary operations (trust) - transactions in
which the relationship between a credit institution and a client
is based on mutual trust and in accordance with the provisions of
which the credit institution undertakes the responsibility for
the management of property owned by the client for the benefit of
the client, managing such property separately from its own
property;
15) [24 April 2014];
151) participation - the right to the
capital shares of a commercial company (regardless of whether
such rights have or have not been documented) which, in
establishing a long-term link with such commercial company, are
utilised in order to participate in the management thereof, or a
holding acquired by direct or indirect means which contains 20 or
more per cent of the equity capital or the number of voting stock
(shares) of the commercial company;
16) [24 April 2014];
17) [11 April 2002];
18) [24 April 2014];
19) [24 April 2014];
20) [24 April 2014];
21) [24 April 2014];
22) transit credit - a government credit which is
granted through credit institutions to entrepreneurs for the
implementation of specific objectives and which is not included
in such assets of the credit institution as may be subject to the
claims of creditors in case of liquidation of the credit
institution, including its insolvency;
23) tax administration - authorities determined in the
Law On Taxes and Fees;
24) voluntary liquidation - termination of the
activities of a credit institution in accordance with a decision
of the meeting of stockholders (shareholders) of the credit
institution;
25) liquidation - termination of the activities of a
credit institution in case of voluntary liquidation based on a
court ruling or in case of an insolvency;
26) insolvency - the state of a credit institution
established by a court judgment, when it is unable to fulfil its
debt obligations;
27) actual insolvency - the state of a credit
institution when it is unable to fulfil its debt obligations
until the initiation of an insolvency matter;
28) insolvency proceedings - proceedings which are
carried out at a credit institution from the day when an
insolvency petition is submitted to a court, until the day when
the court takes a decision to reject the insolvency petition or
to terminate the insolvency proceedings;
29) [1 November 2018];
30) [1 November 2018];
31) [1 November 2018];
32) creditor - the State, a local government, a natural
or a legal person, or a group of natural or legal persons, bound
by a contract, which has the right of claim against a credit
institution;
33) secured creditor - a creditor whose claim right
(claim) against a credit institution is secured by a pawn-pledge,
a commercial pledge or a mortgage recorded in the Land Register
or the Ship Register;
34) liquidator - a person elected by the meeting of
stockholders (shareholders) of a credit institution (in case of
voluntary liquidation), or a person appointed by a court
according to a recommendation of the Financial and Capital Market
Commission, who exercises the authorisation laid down in this Law
and is liable in accordance with the procedures laid down in this
Law;
35) administrator of insolvency proceedings
(hereinafter also - the administrator) - a person appointed by a
court who exercises the authorisation laid down in this Law and
is liable in accordance with the procedures laid down in this
Law;
36) interested persons with respect to a credit
institution are:
a) the shareholders, members of the council and the board, the
head of the internal audit service, the risk manager, the person
responsible for compliance control of a credit institution and
the company controller, as well as the spouses, parents and
children of such persons;
b) persons who are in employment relationship with the credit
institution;
c) persons who have been interested persons in accordance with
the provisions of Sub-clauses "a" and "b" of this Clause during
the previous six months up to the initiation of an insolvency
case;
37) financial leasing - crediting which is performed in
accordance with the basic principles laid down in the UNIDROIT
Convention on International Financial Leasing;
38) payment instrument - an instrument (separately or
together with other means of payment) or payment instrument,
which allows its user to receive cash or other objects, receive
or make payments, give an order for the transfer of monetary
funds or approve the transfer of monetary funds and which is also
accepted as a payment instrument by such persons who have not
placed such payment instrument in circulation. Cash, cheques,
payment cards (credit cards, debit cards and other similar
cards), automatic teller machine cards, payment documents,
electronic money, software for remote electronic bank operations
(in the World Wide Web or using a computer or telephone) and
other similar means shall be considered payment instruments;
39) [23 December 2010];
40) [24 April 2014];
41) meeting of creditors - an organised form of joint
activity of creditors in the insolvency and liquidation
proceedings of a credit institution;
42) committee of creditors - a body elected by the
meeting of creditors, which in the case of insolvency and
liquidation of a credit institution represents the meeting of
creditors in conformity with the specified amount of
authorisation;
43) [24 April 2014];
44) Member State - a European Union or European
Economic Area state;
45) foreign country - a country which is not a Member
State;
46) [24 April 2014];
47) [24 April 2014];
48) outsourced service provider - a person who on the
basis of a written contract with a credit institution undertakes
to provide or provides outsourced services to the credit
institution;
49) [24 April 2014];
50) competent authorities - State administrative
bodies, courts, liquidators, administrators and other
institutions or persons who in conformity with the authorisations
laid down in the relevant laws decide on reorganisation measures
or liquidation, carry out reorganisation measures or liquidation,
or supervise the course of reorganisation measures or
liquidation;
51) reorganisation measures - activities of legal
nature which might influence the rights of third parties and
which are performed to preserve or restore the solvency of a
credit institution, including its branch;
52) free capital - value of assets belonging to a
person which is reduced by the value of liabilities of such
person and by the value of those assets which are regarded as
long-term investments;
53) [30 September 2021];
54) netting of claims and liabilities - legal relations
between a debtor and a creditor, established on the basis of a
written contract, prior to commencement of the liquidation of a
debtor or setting in of insolvency recognised in accordance with
the procedures laid down in the law for expression of claims and
liabilities arising from mutual contracts in one claim or
liability in such a way that only one claim is brought and only
one liability needs to be fulfilled;
55) [16 May 2013];
56) foreign currency - any currency, except for
euro;
57) [24 April 2014];
58) [21 July 2017];
59) subordinate liabilities - liabilities which arise
for a credit institution from a loan (regardless of the type of
the transaction entered into) and which, on the basis of the
contract entered into with the credit institution, gives the
right to the lender to reclaim the loan early only in case of
insolvency or liquidation of the credit institution and only
after satisfying the claims of all other creditors, however,
prior to satisfying the claims of stockholders;
60) [24 April 2014];
61) college of supervisors - a consultative cooperation
unit created by supervisory authorities which is operating on the
basis of a cooperation contract between the supervisory
authorities involved;
62) internal approach - the method, model or other
internal approach provided for in EU Regulation No 575/2013 which
is used by a credit institution for the calculation of
risk-weighted exposures or own funds requirements:
a) the Internal Ratings Based Approach referred to in Article
143(1);
b) the internal models referred to in Articles 221, 283, and
363;
c) estimates of volatility to be performed by the institution
itself referred to in Article 225, estimating the adjustments of
volatility of risk exposure;
e) the Internal Assessment Method referred to in Article
259(3);
d) the Advanced Measurement Approach referred to in Article
312(2);
63) systemic risk - a risk of disruption in the
financial system with the potential to have serious negative
consequences for the financial system and national economy;
64) systemically important institution - such European
Union parent financial holding company, European Union parent
mixed financial holding company, parent credit institution of the
European Union, or credit institution the discontinuation of or
disruption in the operation of which may cause systemic risk;
65) senior management - those persons (employees) whose
position provides them with an opportunity of significantly
affecting the progress of the operation of the institution,
however, who are not members of the council or board;
66) less significant supervised credit institution - a
less significant supervised entity within the meaning of Article
2(7) of Regulation (EU) No 468/2014 of the European Central Bank
of 16 April 2014 establishing the framework for cooperation
within the Single Supervisory Mechanism between the European
Central Bank and national competent authorities and with national
designated authorities (SSM Framework Regulation) (ECB/2014/17)
(hereinafter - Regulation No 468/2014);
67) significant supervised creditor institution - a
significant supervised entity within the meaning of Article 2(16)
of Regulation No 468/2014;
68) outsourced service - any contractual agreement
between a credit institution and an outsourced service provider
which provides for an obligation for such outsourced service
provider to perform a specific process, service, or another
activity that would otherwise be performed by the credit
institution itself;
69) third-country group - a group whose parent company
is registered in a foreign country;
70) gender neutral remuneration policy - a remuneration
policy based on equal pay for male and female workers for equal
work or work of equal value.
(2) Within the meaning of EU Regulation No 575/2013 the
following terms are used in the Law:
1) credit institution - within the meaning of Article
4(1)(1) of EU Regulation No 575/2013;
2) own funds - within the meaning of Article 4(1)(118)
of EU Regulation No 575/2013;
3) parent financial holding company in a Member State -
within the meaning of Article 4(1)(30) of EU Regulation No
575/2013;
4) European Union parent financial holding company -
within the meaning of Article 4(1)(31) of EU Regulation No
575/2013;
5) parent mixed financial holding company in a Member State
- within the meaning of Article 4(1)(32) of EU Regulation No
575/2013;
6) European Union parent mixed financial holding company
- within the meaning of Article 4(1)(33) of EU Regulation No
575/2013;
7) control - within the meaning of Article 4(1)(37) of
EU Regulation No 575/2013;
8) qualifying holding - within the meaning of Article
4(1)(36) of EU Regulation No 575/2013;
9) exposure - within the meaning of Article 5(1) of EU
Regulation No 575/2013;
10) group of connected customers - within the meaning
of Article 4(1)(39) of EU Regulation No 575/2013;
11) financial institution - within the meaning of
Article 4(1)(26) of EU Regulation No 575/2013;
12) financial holding company - within the meaning of
Article 4(1)(20) of EU Regulation No 575/2013;
13) close links - within the meaning of Article
4(1)(38) of EU Regulation No 575/2013;
14) dilution risk - within the meaning of Article
4(1)(53) of EU Regulation No 575/2013;
15) European Union parent institution - within the
meaning of Article 4(1)(29) of EU Regulation No 575/2013;
16) group - within the meaning of Article 4(1)(138) of
EU Regulation No 575/2013;
17) Tier 1 capital - within the meaning of Article 25
of EU Regulation No 575/2013;
18) global systemically important institution - within
the meaning of Article 4(1)(133) of EU Regulation No
575/2013;
19) non-EU global systemically important institution -
within the meaning of Article 4(1)(134) of EU Regulation No
575/2013.
(3) In addition to the terms referred to in Paragraphs one and
two of this Section the following terms are used in this Law
which correspond to the terms defined in EU Regulation No
575/2013:
1) parent company - the term "parent undertaking"
within the meaning of Article 4(1)(15) of EU Regulation No
575/2013;
2) subsidiary - the term "subsidiary" within the
meaning of Article 4(1)(16) of EU Regulation No 575/2013;
3) mixed holding company - the term "mixed activity
holding company" within the meaning of Article 4(1)(22) of EU
Regulation No 575/2013;
4) state of domicile - the term "home Member State"
within the meaning of Article 4(1)(43) of EU Regulation No
575/2013;
5) participating state - the term "host Member State"
within the meaning of Article 4(1)(44) of EU Regulation No
575/2013;
6) supervisory authority - the term "competent
authority" within the meaning of Article 4(1)(40) of EU
Regulation No 575/2013;
7) consolidating supervisor - the term "consolidating
supervisor" within the meaning of Article 4(1)(41) of EU
Regulation No 575/2013.
(4) The term "mixed financial holding company" used in the Law
shall correspond to the term used in the Financial Conglomerates
Law, whereas the term "close-out netting" - to the term used in
the Law on Close-out Netting Applicable to Qualified Financial
Transactions.
[30 May 1996; 30 October 1997; 21 May 1998; 1 June 2000; 11
April 2002; 24 October 2002; 20 November 2003; 11 December 2003;
28 October 2004; 9 June 2005; 22 February 2007; 26 February 2009;
22 October 2009; 11 March 2010; 23 December 2010; 16 May 2013; 19
September 2013; 24 April 2014; 21 July 2017; 1 November 2018; 29
April 2021; 30 September 2021 / Amendment regarding the
replacement of the words "Financial and Capital Market
Commission" with the words "Latvijas Banka" shall come into force
on 1 January 2023 and shall be included in the wording of the Law
as of 1 January 2023. See Paragraph 110 of Transitional
Provisions]
Section 2. (1) This Law prescribes the legal status of
credit institutions, governs the activities, liability and
supervision of such institutions, and also prescribes the rights,
obligations and liability of such persons who are subject to
requirements of this Law.
(2) The rights and obligations of credit institutions in
relation to prevention of money laundering are laid down in the
Law on the Prevention of Money Laundering and Terrorism and
Proliferation Financing.
(3) If, in accordance with the law On the Finality of
Settlement of Accounts in Payment Systems and Systems for
Settlement of Financial Instruments, a credit institution is a
participant of the system, during the insolvency proceedings of
the credit institution, as well as if the Financial and Capital
Market Commission has suspended the provision of financial
services in part or in full, the law On the Finality of
Settlement of Accounts in Payment Systems and Systems for
Settlement of Financial Instruments shall be applied in relation
to ensuring finality of settlement of accounts in the payment
system and system for the settlement of financial
instruments.
[21 May 1998; 11 April 2002; 11 December 2003; 28 January
2010; 13 June 2019]
Section 3. (1) A credit institution registered in a
Member State, the branches thereof or branches of a foreign
credit institution have the right to engage in activities of a
credit institution in the Republic of Latvia.
(2) In the Republic of Latvia a credit institution may be
founded only as a joint stock company.
(3) [23 December 2010]
(4) [23 December 2010]
[28 October 2004; 22 February 2007; 23 December 2010 /
Amendment regarding the replacement of the word "bank" with the
words "credit institution" and amendments on deletion of
Paragraphs three and four shall come into force on 30 April 2011.
See Paragraph 39 of Transitional Provisions]
Section 4. (1) The founding, activities, reorganisation
and liquidation of a credit institution shall be governed by this
Law, the Commercial Law, the Financial Instrument Market Law and
other laws, complying with the provisions included in this
Law.
(2) The provisions of this Law for the recovery of activities
and resolution of a credit institution shall be applicable
insofar as it is not otherwise provided for in the Law on
Recovery of Activities and Resolution of Credit Institutions and
Investment Firms.
[21 May 1998; 11 April 2002; 20 November 2003; 28 October
2004; 12 February 2009; 23 December 2010; 11 June 2015]
Section 4.1 The requirements provided for in
this Law or EU Regulation No 575/2013 or the measures which are
applied to a credit institution, a parent credit institution of a
Member State, a parent credit institution of the European Union,
and a European Union parent company in accordance with this Law
or the abovementioned Regulation on a consolidated or
sub-consolidated basis shall be applied to the following
companies in the cases referred to in the subsequent Clauses:
1) a financial holding company and a mixed financial holding
company to which a permit in accordance with Section
33.3, Paragraph two of this Law has been granted;
2) an institution within the meaning of Article 4(1)(3) of EU
Regulation No 575/2013 which is responsible for ensuring the
conformity of the group with the prudential requirements on a
consolidated basis and which is controlled by a European Union
parent financial holding company, a European Union parent mixed
financial holding company, a parent financial holding company in
a Member State, or a parent mixed financial holding company in a
Member State, if the relevant parent company is not required, in
accordance with Section 33.3, Paragraph three of this
Law, to receive the permit specified in Section 33.3,
Paragraph two of this Law;
3) a financial holding company, a mixed financial holding
company, or an institution within the meaning of Article 4(1)(3)
of EU Regulation No 575/2013 which has been appointed by the
consolidating supervisor as the temporary responsible institution
for the fulfilment of the consolidated requirements.
[29 April 2021]
Section 5. [11 April 2002]
Section 6. (1) The establishment, operation,
reorganisation, and liquidation of a branch of a foreign credit
institution shall be governed by this Law, except for Section 27,
Paragraph 1.1, Clause 2, Section 34.3,
Paragraphs four and five, Sections
35.2-35.32, 36.2, 43, 49,
49.1, 50.8, and 50.9, Section
57, Paragraph one, Sections 58, 59, 77, 78, 79, 80, 85, 86, 87,
90, 91, 101.3, and 109, Section 126, Paragraph one,
Clauses 1 and 3, Sections 127 and 128, Section 129, Paragraph
two, Sections 137, 138, 140, 141, 142, 143, 144, 145, 149, 152,
170, 172, 172.1, 173, 174, and 175 thereof, and also
by other laws.
(2) [23 December 2010]
(3) The laws and regulations of the Republic of Latvia
regarding the provision of statistical information and protection
of the public interest, and also the regulation of Section
34.2, Paragraph one of this Law in the field of the
credit risk management in relation to the application of the
borrower-based measures in the creditworthiness assessment
process of natural persons, the requirements of Sections
12.1, 37, Chapter V, Sections 95, 96,
108.1, and Chapter XVI of this Law shall be binding on
a credit institution registered in another Member State which is
entitled to provide financial services in the Republic of
Latvia.
(4) The regulation of Sections 59.2 and
59.4 of this Law regarding transition of a body of
property subject to separation, a body of assets or liabilities
or a body of standard contracts entered into with a credit
institution, of an undertaking or a part thereof, including a
branch, into the ownership or use of another person, shall apply
to a branch of a foreign credit institution or to a branch in the
Republic of Latvia of a credit institution registered in another
Member State.
(41) Section 34.5 of this Law regarding
the requirements for employees of a credit institution shall
apply to employees of a branch in the Republic of Latvia of a
credit institution registered in another Member State.
(5) The Financial and Capital Market Commission is entitled to
request a branch of a credit institution registered in another
Member State which has launched provision of financial services
in the territory of the Republic of Latvia in accordance with the
procedures laid down in this Law to provide information thereto
on its activities in the territory of the Republic of Latvia for
the needs of statistical information and supervision, and the
information which is necessary for the recognition of a branch of
a credit institution registered in another Member State as
significant branch of the credit institution in the territory of
the Republic of Latvia.
[22 February 2007; 29 May 2008; 12 February 2009; 16 July
2009; 23 December 2010; 24 April 2014; 21 July 2017; 1 November
2018; 28 February 2019; 29 April 2021]
Section 7. (1) Credit institutions shall be bound by
the regulatory provisions and orders regarding disclosure of
information issued by the Financial and Capital Market Commission
in accordance with this Law and other laws, the requirements
governing the activities of credit institutions and the
procedures for the calculation of indicators characterising the
activities of credit institutions and for the submission of
reports.
(2) Credit institutions shall be bound by the regulatory
directives and regulations approved by Latvijas Banka in
accordance with this Law and the law On Latvijas Banka which have
been issued in order to ensure the fulfilment of the functions
and tasks of Latvijas Banka laid down in this Law and the law On
Latvijas Banka.
[1 June 2000; 11 December 2003; 22 February 2007]
Section 8. (1) Credit institutions and persons to whom
the requirements of this Law apply have the obligation to submit
to the Financial and Capital Market Commission and Latvijas
Banka, within the time periods determined by them, all
information requested by them, which is necessary for the
Financial and Capital Market Commission and Latvijas Banka for
the performance of their functions as laid down in the law.
(2) Credit institutions have the obligation to prepare public
reports in order to inform the public of the activities and
financial indicators of the credit institution. The public
reports shall include a minimal amount of information and the
Financial and Capital Market Commission shall determine the
procedures for publication.
(3) The board and the council of the credit institution has
the obligation to inform the Financial and Capital Market
Commission in writing of all conditions, including of suspicious
and fraudulent transactions which may have a significant effect
on stable future management and activities of the credit
institution corresponding to the laws and regulations or which
may seriously endanger the reputation of the credit institution.
The credit institution shall also inform the Financial and
Capital Market Commission of the existing or potential financial
difficulties of the stockholders (shareholders) who have a
significant interest in the credit institution, or impact of such
persons on the activities of the credit institution.
[11 April 2002; 11 December 2003; 28 October 2004; 11 March
2010]
Section 9. (1) A person who provides financial services
in the Republic of Latvia is prohibited to use the words
"kredītiestāde" [credit institution], or the word "banka" [bank],
in any case or word combinations, in their name (firm name) or
for self-advertising in the manner which is misleading as regards
the activities thereof in accordance with this Law.
(2) [23 December 2010];
(21) In order to ensure unmistakeable use of the
firm name of a credit institution registered in another Member
State, the Financial and Capital Market Commission may request
that the firm name of the branch of such credit institution in
the Republic of Latvia is supplemented with explanatory
information.
(3) Only banks registered in the Republic of Latvia and
branches of foreign banks, as well as credit institutions of
other Member States and the branches thereof which according to
the procedures laid down in this Law have commenced the provision
of financial services in the territory of the Republic of Latvia
are permitted to announce the receipt of deposits and other
repayable funds, and to receive them.
(4) [23 December 2010]
(5) [11 March 2010]
(6) [23 December 2010]
(7) [23 December 2010]
[28 October 2004; 22 February 2007; 11 March 2010; 23
December 2010 / Amendments in respect of the replacement of the
word "bank" with the words "credit institution" and amendments on
deletion of Paragraphs two, four, six, and seven shall come into
force on 30 April 2011. See Paragraph 39 of Transitional
Provisions]
Section 10. A credit institution is prohibited from
distributing advertising that provides false information
regarding the activities thereof.
Section 10.1 (1) Only such outsourced
service provider is entitled to provide outsourced services which
has the necessary qualification and experience to fulfil the
duties delegated to him or her.
(2) The obligations of the internal audit service of a credit
institution as an outsourced service may be delegated only to a
sworn auditor or a commercial company of sworn auditors
(hereinafter also - the sworn auditor) which does not
concurrently audit the annual report and the consolidated annual
report of the credit institution, or to the parent company of a
credit institution - for a credit institution registered in a
Member State.
(3) If a credit institution delegates the provision of an
investment service, auxiliary investment service or the provision
of any essential element of such service to an outsourced service
provider, in addition to the requirements laid down in this Law
it shall conform to the requirements laid down for delegation of
outsourcing services laid down in the Financial Instrument Market
Law for an investment firm.
(4) A credit institution may not delegate the obligation of
administrative bodies of a credit institution, which are laid
down in accordance with laws and regulations or the articles or
association of the credit institution, as well as:
1) the attraction of deposits and other repayable funds;
2) the issuance of guarantees and deeds on such other
commitments under which it has undertaken the obligation to be
liable to the creditor for the debt of a third person.
(5) A credit institution which is planning to receive an
outsourced service shall develop an outsourced service policy and
procedures which determine the procedures for the use of
outsourced services and the obligations of the parties in
relation to the use of outsourced services. The requirements to
be included in the policy and procedures shall be determined in
accordance with the regulatory provisions of the Financial and
Capital Market Commission.
(6) The rights and obligations of the credit institution and
the outsourced service provider shall be indicated in an
outsourced service contract entered into in writing. The
requirements to be included in the significant outsourced service
contracts shall be determined in accordance with the regulatory
provisions of the Financial and Capital Market Commission.
(7) Prior to receiving a significant outsourced service, the
credit institution shall submit to the Financial and Capital
Market Commission a substantiated written submission on the
planned receipt of outsourced services. The submission shall be
accompanied by the documents specified in the regulatory
provisions of the Financial and Capital Market Commission and the
information which is necessary to assess the conformity of the
received outsourced service with the requirements of this
Law.
(8) The Financial and Capital Market Commission has the right
to inspect the activities of the outsourced service provider at
the location thereof or at the place where the outsourced
services are provided, including to request submission of any
documents and to become acquainted with all documents, accounting
and document registers, make copies or extracts of documents, as
well as request from the outsourced service provider or
representatives or employees thereof any explanations and
information, which is related to the provision of outsourced
services or necessary for the performance of the functions of the
Financial and Capital Market Commission, as well as interview any
third party, who has agreed thereto, in order to acquire
information regarding the outsourced service provider.
(9) The outsourced service provider shall commence the
provision of significant outsourced services to a credit
institution if the credit institution has not received a
prohibition from the Financial and Capital Market Commission to
receive outsourced services within 30 working days after the
submission referred to in Paragraph seven of this Section was
submitted. The Financial and Capital Market Commission has the
right, within the valuation period specified in this Paragraph,
to request additional information on the documents indicated in
Paragraph seven of this Section. Upon requesting additional
information, the Financial and Capital Market Commission has the
right, not later than until the fifteenth working day of the
valuation period, to suspend the valuation period once until the
day when such information is received, but for not more than 20
working days.
(10) The Financial and Capital Market Commission is entitled
to prohibit a credit institution from receiving the planned
outsourced service if:
1) the provisions of this Law have not been conformed to;
2) the receipt of the outsourced services may restrict the
possibility of the credit institution of providing financial
services, as well as may infringe upon the lawful interests of
the customer and depositors of the credit institution;
3) the receipt of the outsourced services may restrict the
possibility of the administrative bodies of the credit
institution to fulfil the obligations laid down for them in laws
and regulations, the articles of association of the credit
institution or in other internal instruments of the credit
institution;
4) the receipt of the outsourced services shall prohibit or
restrict the possibility of the Financial and Capital Market
Commission to carry out the functions laid down in the law;
5) the outsourced service contract does not conform to the law
and does not provide fair and true idea regarding the intended
co-operation between the credit institution and the outsourced
service provider and the requirements in relation to the amount
and quality of the outsourced service.
(11) The receipt of outsourced services shall not release a
credit institution from the liability that is laid down in the
law or in a contract with customers thereof. The credit
institution shall be liable for the performance of the outsourced
service provider to the same extent as for its own services.
(12) The Financial and Capital Market Commission has the right
to request that a credit institution rectifies deficiencies which
have been caused by the receipt of outsourced services and to
determine the time period for the rectification of such
deficiencies. If the deficiencies are not rectified within the
time period determined by the Financial and Capital Market
Commission, the Financial and Capital Market Commission shall
request that the credit institution terminates the outsourced
service contract, and shall determine the time period for such
termination.
(13) The Financial and Capital Market Commission is entitled
to request that a credit institution terminates an outsourced
service contract that is in effect if the Financial and Capital
Market Commission detects that:
1) the credit institution fails to perform continuous
supervision of the outsourced services or performs it irregularly
and inadequately;
2) the credit institution fails to perform risk management
related to the outsourced services or performs it irregularly and
inadequately;
3) the activities of the outsourced service provider have
significant deficiencies, which threaten or may threaten the
fulfilment of obligations by the credit institution;
4) any circumstance referred to in Paragraph ten of this
Section sets in.
(14) If a credit institution detects that the significant
outsourced service provider does not conform to the requirements
specified in the significant outsourced service contract in
relation to the amount or quality of outsourced services, it
shall, without delay, inform the Financial and Capital Market
Commission thereof.
(15) The receipt of outsourced services shall not release a
credit institution and the administrative bodies thereof from the
obligation to manage the risks related to the activities of
credit institutions laid down in laws and regulations.
(16) A credit institution shall submit to the Financial and
Capital Market Commission amendments which are made to the
outsourced service policy and procedure not later than within
three working days after the relevant amendments have been
approved.
(17) A credit institution shall inform the Financial and
Capital Market Commission of significant amendments which are
planned to be made to the concluded contract in relation to a
significant outsourced service at least 30 working days before
they have entered into effect.
(18) An outsourced service provider is entitled to delegate
the provision of a significant outsourced service further to
another person only after approval in writing has been received
from a credit institution. The credit institution, prior to
further delegation of a significant outsourced service, shall
notify the Financial and Capital Market Commission thereof in
writing and submit the documents referred to in this Section
thereto. The provisions of this Law shall apply to further
delegation of the outsourced service provision and the final
provider of outsourced services.
(19) Appeal of the administrative act issued by the Financial
and Capital Market Commission referred to in Paragraphs ten,
twelve, and thirteen of this Section shall not suspend the
operation thereof.
(20) The Financial and Capital Market Commission shall
determine the requirements for the use of an outsourced service,
including the requirements to be included in the outsourced
service policy and procedures and in significant outsourced
service contracts, the documents and information to be submitted
to the Financial and Capital Market Commission for the receipt of
significant outsourced services, the transactions which are not
considered as outsourced services, the procedures by which a
credit institution shall inform of further delegation of
outsourced services, and also the procedures by which a credit
institution shall identify significant outsourced services and
report on amendments thereto.
[29 April 2021 / The new wording of the Section shall come
into force on 1 July 2021. See Paragraphs 98, 99, 100, and 101 of
Transitional Provisions]
Section 10.2 The Financial Collateral Law
shall govern the legal relations related to financial
collateral.
[28 October 2004; 30 September 2021]
Section 10.3 If a credit institution
implements a covered bond programme, the restrictions and
prohibitions on deletion (set-off) of claims and liabilities of a
credit institution shall be governed by the Covered Bonds
Law.
[27 May 2021]
Section 10.4 Application of the close-out
netting to qualified financial transactions shall be governed by
the Law on Close-out Netting Applicable to Qualified Financial
Transactions.
[30 September 2021]
Chapter II
Licensing of Credit Institutions
Section 11. (1) A credit institution may commence its
activities in the Republic of Latvia only after obtaining and
registration of a licence (permit) for performance of commercial
activities in accordance with the procedures laid down in
laws.
(11) When assessing the compliance of stockholders
(shareholders) of the credit institution with the requirements of
this Law and the information included in the documents referred
to in Section 15, Clause 1 of this Law, the conditions for
activities of the credit institution, including the provision of
financial services, may be laid down in the licence (permit).
(2) [22 February 2007]
(3) [23 December 2010]
(4) [22 February 2007]
(5) The licence (permit) for the activities of a credit
institution shall be issued for an indefinite period of time.
(6) [23 December 2010]
[28 October 2004; 22 February 2007; 22 October 2009; 23
December 2010; 21 July 2017]
Section 11.1 [23 December 2010] Amendment
regarding the deletion of Section shall come into force on 30
April 2011. See Paragraph 39 of Transitional Provisions]
Section 12. (1) In order to open a branch in a foreign
country, credit institutions of the Republic of Latvia shall
receive a permit from the Financial and Capital Market
Commission.
(2) [29 May 2008]
(3) Foreign credit institutions and credit institutions of
Member States shall notify the Financial and Capital Market
Commission of opening representation offices in the Republic of
Latvia.
(4) Credit institutions of the Republic of Latvia have the
obligation to notify the Financial and Capital Market Commission
of the intent of opening a representation office in a foreign
country or a Member State and of closing such representation
office.
[11 April 2002; 11 December 2003; 28 October 2004; 29 May
2008; 22 March 2012; 21 July 2017]
Section 12.1 (1) Credit institutions
registered in another Member State may open branches in Latvia
without obtaining the licence (permit) laid down in this Law only
after:
1) the Financial and Capital Market Commission has received a
notification from the supervisory authority of credit
institutions of the relevant Member State, which includes:
a) a confirmation that the relevant credit institution has a
licence (permit) for the activities of a credit institution that
is in effect,
b) the operational programme of the branch,
c) the address of the branch,
d) the given name and surname of the head of the branch,
e) information on the amount of the credit institution's own
funds and indicators of sufficiency of capital,
f) information on indicators of sufficiency of capital of the
parent company of the credit institution which is a credit
institution or financial holding company,
g) information on the investment guarantee system of which the
relevant credit institution is a participant.
2) the Financial and Capital Market Commission has received
from the supervisory authority of credit institutions of the
relevant Member State a written confirmation that it will inform
the Financial and Capital Market Commission in a timely manner of
inspections in branches of the credit institution in Latvia and
will not hinder the participation of representatives of the
Financial and Capital Market Commission in such inspections, as
well as it will, without delay after completion of the
inspection, submit to the Financial and Capital Market Commission
a notice on the results of the completed inspection;
3) the Financial and Capital Market Commission has informed
the supervisory authority of credit institutions of the relevant
Member State that it is ready to commence supervision of the
branch of the credit institution, as well as regarding the laws
and regulations of the Republic of Latvia, which protect the
public interest, or two months have passed since the day when the
Financial and Capital Market Commission has received the
notification from the supervisory authority of credit
institutions of the relevant Member State.
(2) A credit institution registered in another Member State
has the obligation to inform the Financial and Capital Market
Commission one month in advance of any amendments to the
information referred to in Paragraph one, Clause 1 of this
Section, and also of the intention to suspend the operation of a
branch.
(3) For the enforcement of Paragraph one, Clause 1, Sub-clause
"b" of this Section documents which provide a clear idea of the
operational strategy of the branch of the credit institution,
financial forecasts for the next two years, market research plan,
organisational structure with precisely specified and divided
tasks of units and obligations of heads of units, as well as the
policy and procedures for the management of substantial risks,
the main principles of the accounting policy and organisation of
records, the description of the management information system,
the provisions for the protection of assets and information
system, the policy and procedures for internal audits, as well as
a description of the procedures for the identification of
suspicious financial transactions shall be submitted.
(4) A credit institution registered in another Member State
shall, within 30 days after it has submitted a relevant
notification regarding the provision of financial services in the
Republic of Latvia to the relevant supervisory authority of its
country, commence the provision of financial services in Latvia
without opening a branch.
(5) If within 30 days after receipt of the notification
referred to in Paragraph four of this Section, a substantiated
written refusal of the supervisory authority of credit
institutions of the relevant Member State has not been submitted
to the Financial and Capital Market Commission, it shall be
deemed that it does not object to the provision of financial
services by such credit institution in the Republic of
Latvia.
[11 April 2002; 24 October 2002; 11 December 2003; 28
October 2004; 22 February 2007]
Section 12.2 (1) A credit institution
registered in the Republic of Latvia shall open a branch in
another Member State in accordance with the procedures laid down
in this Section.
(2) The credit institution shall inform the Financial and
Capital Market Commission in writing that it wishes to open a
branch in another Member State. In the submission it shall
indicate other Member State in which it is intended to open the
branch, the address of the branch, and the given name, surname
and personal identification number, if any, of the head of the
branch.
(3) The credit institution shall append to the submission
referred to in Paragraph two of this Section documents that
provide a true and fair representation regarding planned
activities of the branch, the financial services to be provided,
and the structure and work organisation of the branch
corresponding thereto.
(4) The Financial and Capital Market Commission shall examine
the submission for opening a branch of a less significant
supervised credit institution in another Member State within
three months after receipt of all the necessary documents that
have been prepared in accordance with the requirements of laws
and regulations, and shall inform the supervisory authority of
credit institutions of the relevant Member State and the relevant
credit institution of its decision in writing.
(41) The submission for opening a branch of a
significant supervised credit institution in another Member State
in accordance with the provisions of Council Regulation (EU) No
1024/2013 of 15 October 2013 conferring specific tasks on the
European Central Bank concerning policies relating to the
prudential supervision of credit institutions (hereinafter - EU
Regulation No 1024/2013) by complying with the norms of this Law
in relation to opening a branch in another Member State shall be
examined by the European Central Bank.
(5) The Financial and Capital Market Commission shall inform
the supervisory authority of credit institutions of the relevant
Member State regarding the amount and structure of own funds of
the credit institution and the amount of own funds requirements,
as well as make known its point of view regarding the suitability
of the head of the branch to the position.
(6) [22 February 2007]
(7) A branch of a credit institution shall be established and
commence activities in another Member State if the credit
institution has obtained a certification from the supervisory
authority of credit institutions of the relevant Member State or
two months have passed from the day when the supervisory
authority of credit institutions of the relevant Member State has
received the notification referred to in Paragraph four of this
Section.
(8) The credit institution shall, not later than 30 days prior
to the making of amendments to the information referred to in
Paragraphs two and three of this Section, notify the Financial
and Capital Market Commission and the supervisory authority of
credit institutions of the relevant Member State thereof in
writing. The Financial and Capital Market Commission shall decide
on approval of the amendments and shall make known its decision
to the supervisory authority of credit institutions of the
relevant Member State and the credit institution in accordance
with the procedures and within the time period referred to in
Paragraph four of this Section.
(81) Regardless of the number of branches
established in another Member State, they shall be deemed to be
one branch in the relevant Member State.
(9) [22 February 2007]
[11 April 2002; 11 December 2003; 28 October 2004; 9 June
2005; 22 February 2007; 24 April 2014; 21 July 2017]
Section 12.3 (1) A credit institution
registered in the Republic of Latvia shall commence the provision
of financial services in another Member Stat, without opening a
branch therein in accordance with the procedures laid down in
this Section.
(2) The credit institution shall inform the Financial and
Capital Market Commission in writing that it would like to
commence the provision of financial services in another Member
State without opening a branch there. In the submission the
credit institution shall indicate the Member State in which the
financial services will be provided, and the financial services
it intends to provide.
(3) The Financial and Capital Market Commission shall examine
the submission for the provision of financial services of a
credit institution in another Member State without opening a
branch therein, and shall inform the supervisory authority of
credit institutions of the relevant Member State, the European
Central Bank, and the credit institution of its decision in
writing within 30 days after receipt thereof.
[11 April 2002; 11 December 2003; 28 October 2004; 22
February 2007; 21 July 2017]
Section 12.4 (1) A financial institution of
another Member State which is controlled by one or more credit
institutions may provide financial services in the territory of
the Republic of Latvia with or without opening a branch if it
conforms to all of the following conditions:
1) the credit institution or credit institutions, which
control the financial institution, have obtained a licence
(permit) for operation in the Member State in accordance with the
laws whereof the relevant financial institution operates;
2) the financial institution provides financial services in
the territory of its Member State in accordance with the laws
whereof the relevant financial institution operates;
3) the credit institution or credit institutions which control
the financial institution own at least 90 per cent of the voting
stock of the financial institution;
4) the credit institution or credit institutions which control
the financial institution ensure prudent management of such
financial institution in conformity with the requirements of the
supervisory authority of the state of domicile of the relevant
credit institution or the relevant credit institutions;
5) the credit institution or credit institutions which control
the financial institution have publicly revealed information on
the fact that they are solidarily liable for the financial
obligations of such financial institution and the relevant credit
institution or the supervisory authority of the state of domicile
of the relevant credit institutions has not objected against
it;
6) activities of the financial institution are subordinated to
consolidated supervision of the controlling credit institution or
the controlling credit institutions, especially in relation to
capital sufficiency, large exposures and participation in other
commercial companies.
(2) A financial institution registered in the Republic of
Latvia is entitled to commence the provision of financial
services in another Member State via opening a branch according
to the procedures laid down in Section 12.2 of this
Law or not opening a branch according to the procedures laid down
in Section 12.3 of this Law.
(21) Upon sending information regarding a branch in
a foreign country of a financial institution registered in the
Republic of Latvia, the Financial and Capital Market Commission
shall send, in addition to the information referred to in Section
12.2, Paragraph five of this Law, information
regarding total exposure value of the credit institution which is
the parent company of the financial institution registered in the
Republic of Latvia.
(3) A financial institution registered in the Republic of
Latvia is entitled to provide financial services in the territory
of another Member State, if the supervisory authority of credit
institutions of the relevant Member State has received a
notification from the Financial and Capital Market Commission,
which certifies the conformity of such financial institution with
the conditions referred to in Paragraph one of this Section.
(4) A financial institution registered in another Member State
is entitled to commence the provision of financial services in
the Republic of Latvia according to the procedures laid down in
Section 12.1 of this Law after the Financial and
Capital Market Commission has received a notification from the
supervisory authority of credit institutions of the relevant
Member State, which includes the following documents:
1) documents in which information laid down in Section
12.1, Paragraph one, Clause 1, Sub-clauses "a", "b",
"c", "d" and "e" of this Law has been included;
2) documents in which information regarding the amount of own
funds of the financial institution and the indicator of
sufficiency of capital of the consolidation group its controlling
credit institution or controlling credit institutions thereof has
been included;
3) a statement which certifies the conformity of the financial
institution with the conditions referred to in Paragraph one of
this Section.
(5) If the Financial and Capital Market Commission receives a
notification from the supervisory authority of the state of
domicile of the financial institution regarding the fact that the
financial institution no longer conforms to conditions referred
to in Paragraph one of this Section, it shall, without delay,
send a notification to the relevant financial institution. The
notification shall indicate that from the day of receipt of the
notification the financial institution has lost its right to
provide financial services in the territory of the Republic of
Latvia in accordance with the procedures laid down in this
Section. In order to provide licensed financial services in the
territory of the Republic of Latvia, the financial institution
registered in another Member State may turn to the Financial and
Capital Market Commission with a submission to obtain a licence
(permit) in accordance with general procedures.
(6) If a financial institution registered in the Republic of
Latvia which has commenced the provision of financial services in
the territory of another Member State in accordance with the
procedures laid down in this Section no longer meets the
conditions referred to in Paragraph one of this Section, the
Financial and Capital Market Commission shall, without delay,
inform the supervisory authority of the involved state of the
financial institution and the financial institution of its
failure to fulfil the conditions referred to in Paragraph one of
this Section.
[28 October 2004; 22 February 2007; 24 April 2014]
Section 12.5 [23 December 2010] Amendment
regarding the deletion of Section shall come into force on 30
April 2011. See Paragraph 39 of Transitional Provisions]
Section 13. (1) A newly founded credit institution
prior to recording thereof in the Commercial Register shall
submit to the Financial and Capital Market Commission a
submission for the receipt of a licence (permit). Registration of
the credit institution in the Commercial Register shall be
carried out only after the decision to issue a licence (permit)
for the activities of a credit institution has been submitted to
the Commercial Register.
(2) [21 May 1998]
(3) The founders of a credit institution shall organise
paying-in of money into a temporary account at Latvijas Banka and
shall fully prepay the founding equity capital of the credit
institution until the submission referred to in Paragraph one of
this Section at the Financial and Capital Market Commission is
examined. The founding equity capital of the credit institution
may be deposited only in money.
(4) The Financial and Capital Market Commission shall
determine the procedures and documents to be submitted for the
issuance of a licence (permit) for the activities of a credit
institution and other permits provided for in this Law and for
the submission of notifications, as well as restrictions related
to the operation of credit institutions.
(5) Entries in the Commercial Register shall be made only
after receipt of the relevant licences (permits) laid down in
this Law.
[21 May 2998; 1 June 2000; 11 April 2002; 11 December 2003;
28 October 2004; 21 July 2017]
Section 14. (1) The submission for obtaining a licence
(permit) shall be examined within three months after receipt of
all the necessary documents, however, not later than within 12
months from the day when the submission for obtaining a licence
(permit) was received. The Financial and Capital Market
Commission has the right to take the decision to refuse to issue
a licence (permit) for a credit institution to be newly founded
if:
1) laws have not been complied with in the founding of the
credit institution;
2) close relationship of the credit institution with third
parties may endanger the financial stability thereof or restrict
the right of the Financial and Capital Market Commission to carry
out the supervisory functions specified n in the law;
3) the laws and other laws and regulations of other countries,
which apply to persons who have close links with the credit
institution to be newly founded, restrict the right of the
Financial and Capital Market Commission to carry out the
supervisory functions specified in the law;
4) the documents submitted by the credit institution contain
false information;
5) one or more of the persons referred to in Sections 24 and
26 of this Law do not conform to the requirements laid down in
the law;
6) the Financial and Capital Market Commission determines that
the financial means invested in the equity capital of the credit
institution have been acquired in unusual or suspicious financial
transactions or there are no documents to prove the lawful
acquisition of such financial means;
7) the credit institution to be newly founded is a subsidiary
of some foreign credit institution or financial institution, in
the registration state of which supervision equivalent to the
requirements accepted in Member States on the basis of a
consolidated financial report is not carried out, or if the
foreign institution responsible for such supervision has not
entered into an agreement with the Financial and Capital Market
Commission regarding co-operation and exchange of
information;
8) the internal control system created by the credit
institution does not ensure comprehensive and efficient risk
management of the credit institution.
(2) The Financial and Capital Market Commission shall reject
the issuance of a licence (permit), if the documents governing
activities of a credit institution prescribe that this credit
institution, including the management thereof, will not be
established in Latvia and is not related to any financial
group.
[11 April 2002; 11 December 2003; 28 October 2004; 26
February 2009; 23 December 2010; 24 April 2014; 21 July 2017; 29
April 2021]
Section 15. In order to receive a licence (permit) for
the activities of a credit institution, its founders must
ensure:
1) founding documents, articles of association and documents
governing the activities of the credit institution, which give a
clear overview of the planned activities and the organisation
corresponding thereto;
2) payment of the minimum initial capital;
3) candidates for the position of members of the council and
board, the head of the internal audit service, the risk manager,
the person responsible for the conformity control of the
activities, the person responsible for the fulfilment of the
requirements for the prevention of money laundering and terrorism
and proliferation financing of the credit institution, and the
head of a branch of a foreign credit institution conforming to
the requirements of the law. If the obligations of the internal
audit service have been delegated to the parent company of the
credit institution - a credit institution registered in the
Member State, the founders of the credit institution shall submit
to the Financial and Capital Market Commission the original
contract concluded with the parent company. If the duties of the
internal audit service have been delegated to a sworn auditor or
a commercial company of sworn auditors, the founders of the
credit institution shall submit the documents referred to in
Section 10.1 of this Law.
[21 May 1998; 1 June 2000; 11 April 2002; 24 October 2002;
11 December 2003; 28 October 2004; 22 February 2007; 2 June 2016;
21 July 2017; 13 June 2019]
Section 16. (1) A credit institution may be founded
by:
1) natural person who is of legal age and has the capacity to
act;
2) legal person;
3) the State or a local government.
(2) It shall be necessary for the persons referred to in
Paragraph one of this Section to be identifiable, have an
impeccable reputation, financial stability, as well as for the
legality of their financial resources to be provable by
documentary evidence.
(3) In evaluating the reputation and financial stability of a
person, the Financial and Capital Market Commission has the right
to verify the identity, criminal record, and documents of the
persons referred to in Section 19 of this Law which allow the
Commission to ascertain that the credit institution has
sufficient free capital for the amount of investments made into
its capital and reserves, and also that the invested funds have
not been acquired in unusual or suspicious transactions. In
evaluating the financial stability of a person, the requirements
regarding sufficiency of free capital shall not be applicable to
credit institutions and insurance companies.
(4) Natural persons, and also legal (registered) persons the
founders (stockholders (shareholders) and owners (beneficial
owners) of which - natural persons referred to in Section 19 of
this Law - are subject to Section 25, Paragraph one, Clause 1 or
2 of this Law, or who have fulfilled the duties of a member of
the board or council of a credit institution or financial
institution, which has been declared as insolvent during the
period of fulfilling the relevant duties, or who have fulfilled
the duties of a member of the board or council of another
commercial company and have brought this commercial company to
insolvency for which criminal liability is provided.
[28 October 2004; 9 June 2005; 26 February 2009; 22 March
2012; 24 April 2014; 11 June 2015; 1 November 2018]
Section 17. The Financial and Capital Market Commission
has the right to request additional information regarding the
persons referred to in Sections 16 and 29 of this Law, in order
to evaluate their financial condition and reputation when
investigating the aforementioned person for the following
purposes:
1) the sufficiency of their financial resources;
2) the activities and management plans of the credit
institution;
3) their previous activities, competence and experience.
[1 June 2000; 11 December 2003]
Section 18. [11 April 2002]
Section 19. The Financial and Capital Market Commission
has the right to verify the identity of the founders of a credit
institution. If the founders of the credit institution are legal
(registered) persons, the Financial and Capital Market Commission
has the right to verify information regarding their founders
(stockholders (shareholders)) and owners (beneficial owners),
until information is acquired regarding owners (beneficial
owners) - natural persons. The legal persons referred to in this
Section have the obligation to provide such information to the
Financial and Capital Market Commission if it is not accessible
in public registers from which the Financial and Capital Market
Commission is entitled to receive such information.
[28 October 2004]
Section 19.1 (1) The Financial and Capital
Market Commission shall consult with the supervisory authority of
the relevant Member State prior to the issuance of a licence
(permit) to such credit institution to be newly founded:
1) which is a subsidiary of a credit institution, insurance
company or investment broker company registered in the relevant
Member State;
2) which is a subsidiary of such a parent company, another
subsidiary of which is a credit institution, insurance company or
investment broker company registered in the relevant Member
State;
3) which is controlled by any natural person or legal person
who also controls the credit institution, insurance company or
investment broker company registered in the relevant Member
State.
(2) The Financial and Capital Market Commission, prior to the
issuance of a licence (permit), as well as during the course of
supervision of a licensed credit institution, shall request and
evaluate information from the supervisory authority of the
relevant Member State on the suitability of the stockholders
(shareholders) of the credit institution and the reputation and
experience of those members of the council and the board of the
credit institution who are involved in the management of other
undertakings of the group thereof in which the credit institution
to be newly founded will be included.
[9 June 2005; 22 February 2007; 24 April 2014]
Section 20. (1) A foreign credit institution may open a
branch in Latvia, if the minimum initial capital of such credit
institution meets the requirements of Section 21 of this Law, and
its period of operation is not less than three financial
years.
(2) The provisions of this Section on the period of activities
of the credit institution shall not be applicable to a credit
institution which has been registered in a foreign country that
is a member of the World Trade Organisation.
(3) A branch of a foreign credit institution shall provide
information to the Financial and Capital Market Commission on its
activity to the extent and within the time period provided for in
the regulatory provisions of the Financial and Capital Market
Commission.
(4) If a foreign credit institution is operating in several
Member States with the intermediation of branches, the Financial
and Capital Market Commission shall cooperate with the
supervisory authorities of the involved Member States in order to
preclude non-conformity with the requirements laid down in this
Law, the laws and regulations issued on the basis thereof, and EU
Regulation No 575/2013 and negative impact on the financial
stability of the European Union would not be caused.
[11 April 2002; 11 December 2003; 28 October 2004; 9 June
2005; 29 April 2021]
Section 21. (1) The initial capital of a credit
institution shall be not less than EUR 5 million. The initial
capital shall consist of one or several following items which
correspond to the requirements of EU Regulation No 575/2013
regarding Common Equity Tier 1 items:
1) shares, as well as other capital instruments and respective
premiums;
2) retained earnings or losses;
3) other accrued income indicated in the statement of
comprehensive income;
4) other reserves;
5) profit of the current business year.
(2) [23 December 2010]
(3) [24 April 2014]
(4) If the equity capital is reduced, the credit institution
has an obligation, in accordance with Section 264 of the
Commercial Law, to publish a notification in the official gazette
Latvijas Vēstnesis that the decision to reduce the equity
capital has been taken, and to send the notice of reduction of
the equity capital to all known creditors which had the right of
action against the credit institution until the aforementioned
decision was taken. The aforementioned notification need not be
sent to creditors whose right of action results from the credit
institution providing such creditors with financial services.
[28 October 2004; 22 February 2007; 23 December 2010; 19
September 2013; 24 April 2014; 21 July 2017]
Section 22. [11 April 2002]
Section 23. [9 June 2005]
Section 24. (1) The following person may be the
chairperson of the board, a member of the board, the head of the
internal audit service, the risk manager, the person responsible
for conformity control of the operation, the person responsible
for fulfilment of the requirements for the prevention of money
laundering and terrorism and proliferation financing, the company
controller of the credit institution, the head of a branch of a
foreign credit institution or a branch of a credit institution in
another Member State, and a procuration holder:
1) [22 February 2007];
2) who is competent in the financial management issues. Also a
person who is competent in the management issues of an
undertaking may be the person responsible for the fulfilment of
the requirements for the prevention of money laundering and
terrorism and proliferation financing;
3) who has the necessary education and three years
professional work experience in a commercial company,
organisation or institution of the relevant size;
4) who has an impeccable reputation;
5) who has not been deprived of the right to perform
commercial activities.
(2) The chairperson of the board, members of the board, the
head of the internal audit service, the risk manager, the person
responsible for conformity control of the operation, the person
responsible for the fulfilment of the requirements for the
prevention of money laundering and terrorism and proliferation
financing of the credit institution, the head of a branch of a
foreign credit institution or a branch of a credit institution in
another Member State, and the company controller must have higher
education.
(21) None of the positions referred to in Paragraph
one of this Section may be held by a person whose direct or
indirect holding represents 10 or more per cent of the number of
the voting stock of the credit institution.
(3) A credit institution has an obligation, upon its own
initiative or upon proposal of the Financial and Capital Market
Commission, to remove the persons referred to in Paragraph one of
this Section from the office without delay, if they do not
conform to the requirements of this Section.
(4) [24 April 2014]
[28 October 2004; 22 February 2007; 24 April 2014; 11 June
2015; 2 June 2016; 1 November 2018; 13 June 2019; 29 April
2021]
Section 25. (1) The following person may not be the
chairperson of the board, a member of the board, the head of the
internal audit service, the risk manager, the person responsible
for conformity control of the operation, the person responsible
for the fulfilment of the requirements for the prevention of
money laundering and terrorism and proliferation financing, the
company controller of the credit institution, the head of a
branch of a foreign credit institution or a branch of a credit
institution in another Member State, and a procuration
holder:
1) who has been convicted of committing an intentional
criminal offence, including of driving into insolvency
(regardless of extinguishment or setting aside of criminal
record);
2) against whom the criminal proceedings for committing an
intentional criminal offence have been terminated, even if the
criminal proceedings against the person have been terminated for
non-exonerating reasons.
(2) The council of a credit institution or - in relation to
the company controller - the meeting of shareholders has the
obligation, upon its own initiative or upon proposal of the
Financial and Capital Market Commission, to remove the persons
referred to in Paragraph one of this Section from the office
without delay, if Paragraph one, Clause 1 or 2 of this Section
may be applied to them.
(3) [24 April 2014]
[28 October 2004; 9 June 2005; 24 April 2014; 11 June 2015;
2 June 2016; 1 November 2018; 13 June 2019; 29 April
2021]
Section 26. (1) The persons who meet the requirements
of Section 24, Paragraph one, Clauses 2, 3, 4, and 5 of this Law
may be the chairperson of the council and the members of the
council of a credit institution. The persons to whom Section 25,
Paragraph one, Clause 1 or 2 of this Law may be applied may not
be the chairperson of the council and the members of the council
of a credit institution.
(2) The meeting of stockholders (shareholders) has the
obligation to immediately remove from the office the persons
referred to in Paragraph one of this Section, if they do not meet
the requirements laid down in this Section.
(3) [24 April 2014]
[11 April 2002; 11 December 2003; 28 October 2004; 24 April
2014]
Section 26.1 (1) Upon determining the number
of positions of a member of the council or the board that a
member of the council or the board of a credit institution may
simultaneously hold, individual circumstances, as well as the
type, scope and complexity of the activities of the credit
institution shall be considered.
(2) A member of the council or the board of a credit
institution which is significant as regards to its size, type of
internal organisation and operation, scope and complexity, shall
not, except in cases where he or she represents the Republic of
Latvia, simultaneously hold more than:
1) one position of a member of the board and two positions of
a member of the council;
2) four positions of a member of the council.
(3) Within the meaning of this Section one position of a
member of the board or council shall be considered positions of a
member of the board or council:
1) within the framework of one consolidation group;
2) in the institutions which are members of the same
institutional protection scheme corresponding to the conditions
of Article 113(7) of EU Regulation No 575/2013;
3) at undertakings (including other than financial
institutions) in which the credit institution has qualifying
holding.
(4) Within the meaning of this Section positions of a member
of the board or council in associations, foundations and other
organisations whose activities are not aimed at generating profit
shall not be considered a position of a member of the board or
council.
(5) The Financial and Capital Market Commission may permit a
member of the council or the board of a credit institution to
hold one additional position of a member of the council.
(6) The Financial and Capital Market Commission shall
regularly provide information to the European Banking Authority
on permits granted in accordance with Paragraph five of this
Section.
[24 April 2014]
Section 27. (1) The licence (permit) of a credit
institution may be cancelled if:
1) the credit institution has not commenced the operation
thereof within 12 months after the day when the licence (permit)
was issued;
2) it is determined that the credit institution has submitted
false information to receive the licence (permit);
3) the credit institution has suspended the operation thereof
for a period of time that is longer than six months;
4) [29 April 2021];
5) [29 April 2021];
6) [29 April 2021];
7) [29 April 2021];
8) the credit institution fails to conform to the requirements
of this Law and other laws and regulations governing the
activities of a credit institution, except for the requirements
of Articles 92.a and 92.b of EU Regulation No 575/2013;
9) the prohibition of utilisation of the voting right of
stocks (shares) belonging to stockholders (shareholders) of the
credit institution with a qualifying holding has set it and it
lasts for more than six months;
10) the Financial and Capital Market Commission or the Single
Resolution Board which has been created as an agency of the
European Union in accordance with Article 42 of Regulation (EU)
No 806/2014 of the European Parliament and of the Council of 15
July 2014 establishing uniform rules and a uniform procedure for
the resolution of credit institutions and certain investment
firms in the framework of a Single Resolution Mechanism and a
Single Resolution Fund and amending Regulation (EU) No 1093/2010
(hereinafter - EU Regulation No 806/2014) has taken the decision
not to take a resolution action for the credit institution.
(11) The licence (permit) of a credit institution
shall cease to be in effect if:
1) the credit institution has received a permit to commence
the self-liquidation proceedings;
2) the credit institution has received a permit for its
reorganisation and therefore it does not require a licence
(permit) for the activities of the credit institution;
3) a court has rendered a judgment by which the credit
institution is declared insolvent.
(2) The cancelled or invalid licence (permit) of the credit
institution is not renewed.
(3) Contesting the decision to cancel the licence (permit) of
the credit institution in the Administrative Review Council and
appeal to the Court of Justice of the European Union in
accordance with EU Regulation No 1024/2013 shall not suspend the
operation of the decision, except for the case laid down in
Article 24 of EU Regulation No 1024/2013.
[11 April 2002; 11 December 2003; 28 October 2004; 26 May
2005; 23 December 2010; 24 April 2014; 11 June 2015; 21 July
2017; 1 November 2018; 29 April 2021]
Section 27.1 (1) The Financial and Capital
Market Commission shall, not later than within 30 days from the
day when the decision to issue a licence (permit) to a credit
institution or a branch of a foreign credit institution for the
activities of a credit institution was taken, notify the European
Banking Authority thereof.
(2) The Financial and Capital Market Commission shall, not
later than within 30 days from the day when the decision to
cancel a licence (permit) for the activities of a credit
institution was taken or the licence (permit) has become invalid,
notify the European Banking Authority thereof.
(3) The Financial and Capital Market Commission shall inform
the European Commission and the European Banking Authority
regarding refusal for a credit institution registered in the
Republic of Latvia to open a branch in another Member State,
refusal for a credit institution registered in another Member
State to open a branch in the Republic of Latvia and measures,
which the Financial and Capital Market Commission has taken in
accordance with Section 108.1, Paragraphs three and
four of this Law.
(4) The Financial and Capital Market Commission, not later
than 30 days from the day when the decision has been taken
to:
1) issue a licence (permit) for the activities of a credit
institution to a credit institution, control of which is directly
or indirectly implemented by a foreign merchant, shall notify the
European Commission and the supervisory authorities of credit
institutions of other Member States thereof. The structure of the
group of the credit institution shall be indicated in the
notification to the European Commission;
2) acquire a qualifying holding in a credit institution, shall
notify the European Commission and the supervisory authorities of
credit institutions of other Member State, if the acquirer of
such qualifying holding is a foreign merchant and upon acquiring
the qualifying holding the credit institution becomes a
subsidiary of the foreign merchant. The structure of the group of
the credit institution shall be indicated in the notification to
the European Commission;
3) [29 April 2021].
(41) The Financial and Capital Market Commission
shall inform the European Banking Authority of:
1) changes in the licence (permit) issued to a branch of a
foreign credit institution for the activities of a credit
institution;
2) the total amount of assets and liabilities of a branch of a
foreign credit institution;
3) the name of the group of the foreign credit institution to
which the branch belongs.
(5) The Financial and Capital Market Commission shall inform
the European Commission of problems with which a credit
institution registered in the Republic of Latvia comes into
contact in commencing or carrying out of activities of the credit
institution in a foreign country.
(6) The Financial and Capital Market Commission shall inform
the European Commission and the European Banking Authority of the
laws and regulations governing the founding and operation of
credit institutions in the Republic of Latvia.
(7) If the Financial and Capital Market Commission is the
consolidated supervisor, it shall provide information to the
European Banking Authority and the relevant supervisory
authorities of the Member States regarding the consolidation
group of the credit institution in respect of the compliance with
the requirements of Section 14, Paragraph one, Clauses 2 and 3,
Section 34.1 and Section 50.9 of this Law,
as well as regarding the legal, managerial and organisational
structure of the consolidation group.
[28 October 2004; 9 June 2005; 22 February 2007; 22 March
2012; 16 May 2013; 24 April 2014; 21 July 2017; 29 April
2021]
Chapter III
Qualifying Holding
Section 28. (1) A person who meets the requirements of
Section 16 and ensures the fulfilment of the conditions of
Section 19 and the criteria laid down in Section 29, Paragraph
five of this Law, or several persons on the basis of an agreement
who have operated in coordination (hereinafter in this Chapter -
the person) may acquire direct or indirect qualifying holdings in
a credit institution; moreover, such person needs to be
financially stable in order for the person, if necessary, to be
able to perform additional investments for renewal of the capital
of the credit institution by ensuring the conformity of the
capital of the credit institution with the requirements of the
law and the fulfilment of the requirements governing the
operation of credit institutions.
(2) The Financial and Capital Market Commission has the right
to request information on persons who apply for a qualifying
holding (the actual acquirer of the qualifying holding or a
person suspected of holding such an acquired holding), including
owners of legal (registered) persons (beneficial owners) -
natural persons, in order to assess the conformity of such
persons with the requirements laid down in Section 29, Paragraph
five of this Law.
(3) The Financial and Capital Market Commission has the right
to identify founders of legal (registered) persons (stockholders
(shareholders)) and owners (beneficial owners) who apply for a
qualifying holding (the actual acquirer of the qualifying holding
or a person suspected of holding such an acquired holding), until
information is acquired regarding the owners (beneficial owners)
- natural persons. For the identification of such persons, the
aforementioned legal persons have the obligation to submit to the
Financial and Capital Market Commission the information requested
thereby, unless such information is accessible in public
registers from which the Financial and Capital Market Commission
is entitled to receive such information.
(4) If the persons who are suspected of acquisition of
qualifying holding in a credit institution, do not submit or
refuse to submit the information referred to in Paragraph two or
three of this Section and altogether the participation thereof
encompasses 10 or more per cent of the equity capital of the
credit institution or the number of the voting stock, such
stockholders (shareholders) may not use all of the voting rights
belonging to them. The Financial and Capital Market Commission
shall inform the relevant stockholders (shareholders) and the
credit institution of such fact without delay.
[28 October 2004; 26 February 2009; 11 June 2015]
Section 29. (1) Any person who wishes to acquire a
qualifying holding in a credit institution shall notify the
Financial and Capital Market Commission thereof in writing in
advance. The amount of the qualifying holdings to be acquired as
a percentage of the equity capital of the credit institution or
the number of the voting stock shall be indicated in the
notification. The information provided for in regulatory
provisions of the Financial and Capital Market Commission, which
is necessary in order to assess the compliance of the person with
the criteria laid down in Paragraph five of this Section, shall
be appended to the notification. The list of information to be
appended to the notification shall be published on the website of
the Financial and Capital Market Commission.
(2) If a person wishes to increase his or her qualifying
holdings, thereby reaching or exceeding 20, 33, or 50 per cent of
the equity capital of the credit institution or of the number of
the voting stock, or if the credit institution becomes a
subsidiary of such person, he or she shall notify the Financial
and Capital Market Commission thereof in writing in advance. The
amount of the qualifying holdings to be acquired as a percentage
of the equity capital of the credit institution or the number of
the voting stock shall be indicated in the notification. The
information provided for in regulatory provisions of the
Financial and Capital Market Commission, which is necessary in
order to assess the compliance of the person with the criteria
laid down in Paragraph five of this Section, shall be appended to
the notification. The list of information to be appended to the
notification shall be published on the website of the Financial
and Capital Market Commission.
(3) The Financial and Capital Market Commission shall, within
two working days from the day when the notification referred to
Paragraph one or two of this Section was received, or within two
working days after receipt, in writing, of the additional
information requested by the Financial and Capital Market
Commission, inform the person regarding receipt of the
notification or additional information and the deadline for the
assessment period.
(4) The Financial and Capital Market Commission, during the
assessment period laid down in Paragraph five of this Section but
not later than on the 50th working day of the
assessment period, has the right to request additional
information on the persons referred to in this Section, in order
to assess the compliance of such persons with the criteria laid
down in Paragraph five of this Section.
(5) The Financial and Capital Market Commission shall, not
later than within 60 working days from the day when the
information referred in Paragraph three of this Section on
receipt of the notification or additional information was sent to
the person, evaluate the sufficiency of free capital and the
financial stability of the person and the financial validity of
the planned acquiring of a holding, in order to ensure consistent
and careful management of such credit institution in which
acquisition of the holding is planned, as well as the potential
influence of the person on the management and activities of the
credit institution. During the evaluation process the Financial
and Capital Market Commission shall also take into account the
following criteria:
1) impeccable reputation of the person and compliance with the
requirements laid down for the founders of the credit
institution;
2) conformity of knowledge and professional experience with
the requirements of this Law and impeccable reputation of the
council and the board which will manage the activities of the
credit institution as a result of the planned acquisition of the
holding;
3) financial stability of the person, in particular in
relation to the type of the performed or planned economic
activity in the credit institution where the acquisition of the
holding is planned;
4) whether the credit institution will be able to conform to
the regulatory requirements laid down in this Law and other laws
and regulations, and whether the structure of such group of
undertakings where it is going to be incorporated, is not
restricting the possibilities of the Financial and Capital Market
Commission to perform the supervisory functions thereof laid down
in the law, to ensure efficient exchange of information between
the supervisory authorities of credit institutions and to
determine the allocation of the supervisory powers between the
supervisory authorities of credit institutions;
5) whether there are reasonable doubts that, in relation to
the planned acquisition of the holding, money laundering and
terrorism and proliferation financing has been carried out or an
attempt to carry out such activities has been made, or that the
planned acquisition of the holding could increase such a
risk.
(51) If the Financial and Capital Market Commission
in accordance with Paragraphs six and 6.1 of this
Section has suspended the assessment period, such suspension
period shall not be included in the assessment period.
(6) When requesting the additional information referred to in
Paragraph four of this Section, the Financial and Capital Market
Commission has the right to suspend the assessment period once
until the day when such information is received but not more than
for 20 working days. The Financial and Capital Market Commission
has the right to extend the referred to suspension of the
assessment period up to 30 working days, if the person who wishes
to acquire, has acquired, wishes to increase or has increased the
qualifying holding thereof in a credit institution is not subject
to the supervision of activities of credit institutions,
insurance companies, reinsurance companies, investment management
companies or investment firms, or the place of residence
(registration) of the person is located in a foreign country.
(61) If a person who wishes to acquire a qualifying
holding is concurrently assessed in another Member State in
accordance with provisions similar to Section 33.3 of
this Law in relation to granting of a permit, the Financial and
Capital Market Commission has the right to suspend the valuation
period until the day when the relevant authority performing the
consolidated supervision completes the assessment.
(7) In accordance with the procedures referred to in EU
Regulation No 1024/2013, in conformity with the time period laid
down in Paragraph five of this Section, the decision by which the
person is prohibited to acquire or increase the qualifying
holding in a credit institution shall be taken by the European
Central Bank if:
1) the person does not conform to the criteria laid down in
Paragraph five of this Section;
2) the person does not provide or refuses to provide to the
Financial and Capital Market Commission or the European Central
Bank the information laid down in this Law or the additional
information requested by the Financial and Capital Market
Commission or the European Central Bank;
3) due to circumstances beyond the control of the person, he
or she is unable to submit to the Financial and Capital Market
Commission or the European Central Bank the information requested
thereby or laid down in this Law or the additional information
requested by the Financial and Capital Market Commission or the
European Central Bank.
(8) In accordance with the procedures laid down in EU
Regulation No 1024/2013 the European Central Bank shall, within
two working days without exceeding the assessment period laid
down in Paragraph five of this Section, after taking the decision
referred to in Paragraph seven of this Section, send it to the
person who is prohibited to acquire or increase the qualifying
holding thereof in a credit institution.
(9) If, in accordance with the procedures laid down in EU
Regulation No 1024/2013, the European Central Bank, within the
time period referred to in Paragraph five of this Section, does
not send to the person the decision prohibiting the acquisition
or increasing of the qualifying holding thereof in a credit
institution, it shall be deemed that the Bank consents to the
person acquiring or increasing its qualifying holding in the
credit institution.
(10) The provisions of Paragraph seven, Clause 3 of this
Section shall not be applicable to a legal (registered) person if
the stock thereof is listed in any regulated market of a Member
State or another regulated market, the organiser of which is a
full member of the International Federation of Stock Exchanges,
and such legal (registered) persons submits information to the
Financial and Capital Market Commission regarding the
stockholders thereof who own a qualifying holding therein.
(11) If the person has received a consent for acquisition or
increasing the qualifying holding thereof in a credit
institution, such person shall acquire or increase the qualifying
holding thereof in the credit institution not later than within
six months from the day when the information referred in
Paragraph three of this Section on receipt of the notification or
additional information was sent. If until the end of the
abovementioned time period the person has not acquired or
increased the qualifying holding in the credit institution, the
consent for acquisition or increasing the qualifying holding
thereof in the credit institution shall cease to be in effect.
Upon a substantiated request of the person in writing, the
Financial and Capital Market Commission may decide on extending
the abovementioned time period.
(12) Contesting the decision referred to in Paragraph seven of
this Section to the Administrative Review Council or appeal of
the decision to the Court of Justice of the European Union in
accordance with EU Regulation No 1024/2013 shall not suspend the
operation of the decision, except for the case laid down in
Article 24 of EU Regulation No 1024/2013.
[26 February 2009; 24 April 2014; 11 June 2015; 13 June
2019; 29 April 2021]
Section 30. [21 May 1998]
Section 30.1 Upon assessing the
notifications referred to in Section 29, Paragraphs one and two
of this Law, the Financial and Capital Market Commission shall
consult with the supervisory authorities of the relevant Member
State if the acquirer of a qualifying holding is a credit
institution, an insurance company, a reinsurer, an investment
management company, a manager of alternative investment funds, an
investment firm registered in the relevant Member State, or a
parent company of the credit institution, insurance company,
reinsurer, investment management company, manager of alternative
investment funds, investment firm registered in the Member State,
or a person who controls the credit institution, insurance
company, reinsurer, investment management company, manager of
alternative investment funds, investment firm registered in the
Member State, and if, upon the relevant person acquiring or
increasing the qualifying holding, the credit institution becomes
a subsidiary of such person or comes under his or her
control.
[26 February 2009; 16 May 2013]
Section 31. (1) If a person wishes to terminate his or
her qualifying holdings in a credit institution, he or she shall
notify the Financial and Capital Market Commission regarding such
decision in writing. The person's remaining share of the equity
capital of the credit institution or the number of the voting
stock in percentage shall be indicated in the notification. If
the person wishes to reduce his or her qualifying holding under
20, 33, or 50 per cent of the equity capital of the credit
institution or of the number of the voting stock, or if the
credit institution stops being the subsidiary of such person, he
or she shall notify the Financial and Capital Market Commission
of such decision in writing in advance.
(2) The person who has received a permit for the acquisition
of the qualifying holding in a credit institution has the
obligation to, within 10 days after entering into the
transaction, submit a written notification to the Financial and
Capital Market Commission if the person uses the stocks of the
credit institution belonging thereto as security for carrying out
his or her commitments or commitments of another person. The
type, amount, time period of the commitments of persons whose
commitments are being secured shall be indicated in the
notification and a short description of the transaction shall be
provided, as well as information shall be provided as to how
entering into such transaction will limit the freedom of the
person in relation to the voting rights of stocks belonging
thereto used in security.
[24 October 2002; 11 December 2003; 28 October 2004; 21
July 2017]
Section 32. (1) A credit institution shall, without
delay, according to the specified procedures inform the Financial
and Capital Market Commission in writing of the acquisition,
increase or reduction in the qualifying holdings of each person.
The amount of holding by the relevant person as percentage of the
equity capital of the credit institution or the number of the
voting stock, or information regarding the termination of the
qualifying holding, shall be indicated in the notification.
(2) [26 February 2009]
[24 October 2002; 11 December 2003; 28 October 2004; 26
February 2009]
Section 33. (1) [24 April 2014]
(2) A stockholder (shareholder) does not have the right to use
all stock-voting rights belonging to him or her in a credit
institution, and a decision of the meeting of stockholders
(shareholders), which has been taken using such stock-voting
rights, shall be void from the moment of being taken, and a
request to make an entry in the Commercial Register and other
public registers may not be requested on their basis if:
1) the Financial and Capital Market Commission in the cases
referred to in this Law has prohibited the person the utilisation
of all stock-voting rights belonging to him or her;
2) the person has acquired or increased a qualifying holding
in a credit institution prior to the submission of the
notification referred to in Section 29, Paragraph one or two of
this Law to the Financial and Capital Market Commission;
3) the person has acquired or increased a qualifying holding
in a credit institution during examination of the notification
referred to in Section 29, Paragraph one or two of this Law.
(3) If a stockholder (shareholder) of a credit institution has
been prohibited from the utilisation of all stock-voting rights
belonging to him or her in the credit institution, the total
number of stock with decision-making rights shall be calculated
by deducting such stock from all voting stock, the utilisation of
voting rights of which is prohibited. The provisions of this Law
regarding qualifying holdings shall not be applicable to such
stockholders (shareholders) of a credit institution whose
qualifying holding in the credit institution has been created due
to the prohibition of voting rights applied to another
stockholder (shareholder).
(4) [24 April 2014]
[28 October 2004; 24 April 2014]
Section 33.1 (1) In determining the amount
of holdings acquired by a person in an indirect way in a credit
institution, the following acquired voting rights of such persons
(hereinafter - the specific person) in the credit institution
shall be taken into account:
1) voting rights which may be exercised by a third party, with
whom the specific person has entered into an agreement, imposing
the obligation to co-ordinate the exercising of the voting rights
and action policy in long-term in relation to the management of
the specific issuer;
2) voting rights which may be exercised by a third party in
accordance with an agreement that has been entered into with the
specific person and provides for temporary transfer of the voting
rights;
3) voting rights which arise from stocks (shares), which the
specific person has received as security, if he or she may
utilise the voting rights and has expressed his or her intention
to utilise them;
4) voting rights which may be exercised by the specific person
for an unlimited period of time;
5) voting rights which may be utilised by a commercial company
controlled by the specific person or which may be utilised by
such commercial company in accordance with the provisions of
Clauses 1, 2, 3, and 4 of this Paragraph;
6) voting rights which arise from stocks (shares) transferred
to and held by the specific person, and which the person may
utilise upon his or her own initiative if special instructions
have not been received;
7) voting rights which arise from shares held in the name of
third parties and for the benefit of the specific person;
8) voting rights which may be sold by the specific person as
an authorised person, when he or she is entitled to utilise the
voting rights upon his or her own initiative if special
instructions have not been received;
9) voting rights which arise from stocks (shares) acquired by
the specific person in any other indirect way.
(2) A person who wishes to acquire, has acquired, wishes to
increase or has increased a qualifying holding in a credit
institution in an indirect way, on the basis of a request from
the Financial and Capital Market Commission, shall submit
information thereto which allows it to ascertain the conformity
of such person with the requirements of Chapters II and III of
this Law.
(3) For determination of the amount of the qualifying holding
the voting rights arising from stocks (shares) in holding of the
credit institution which the credit institution has acquired by
buying out such stocks (shares) during initial placement or
guaranteeing buying out of the stocks (shares) not placed during
the initial placement if the credit institution does not exercise
the voting rights arising from such stocks (shares) and alienates
or deletes such stocks (shares) within a year from the day of
acquisition.
[24 October 2002; 28 October 2004; 22 February 2007; 21
July 2017]
Section 33.2 [21 July 2017]
Chapter
III,1
Permit for a Holding Company and Licence
(Permit) for a Credit Institution in a Third-country Group
[29 April 2021]
Section 33.3 (1) A parent financial holding
company in a Member State and a parent mixed financial holding
company in a Member State, a European Union parent financial
holding company and a European Union parent mixed financial
holding company, a financial holding company and a mixed
financial holding company (hereinafter in this Section - the
holding company) shall submit an application and the following
information to the Financial and Capital Market Commission which
performs consolidated supervision:
1) information on the organisational structure of such group
to which the financial holding belongs, indicating the location
and type of activity of the subsidiary, parent company of the
group and each company belonging to the group;
2) information on at least two members of the board of the
holding company and their conformity with the requirements of
Sections 24 and 25 of this Law;
3) information on the conformity of stockholders or
shareholders of a holding company who have a qualifying holding
in the holding company with the requirements brought forward for
the founder in Section 16 of this Law and also the requirements
of Section 29;
4) information on the creation of an internal control system -
at least the division of the responsibility, functions, and
competence in relation to decision-making in the group, the
prevention of conflicts of interest in the group, and the
application of internal procedures and policies in the group
management.
(2) The Financial and Capital Market Commission as the
consolidated supervisor shall permit a holding company to be a
parent company of a credit institution if:
1) the internal control system in the group conforms to the
purpose of ensuring conformity with the requirements laid down in
this Law and EU Regulation No 575/2013 on a consolidated or
sub-consolidated basis;
2) the organisational structure of such group to which the
holding company belongs does not obstruct the possibilities of
the Financial and Capital Market Commission as the consolidated
supervisor to efficiently supervise subsidiaries and parent
companies in relation to individual, consolidated, or
sub-consolidated liabilities;
3) conformity of at least two members of the board of the
holding company and stockholders or shareholders of the holding
company who have a qualifying holding in the holding company with
the requirements of Sections 24 and 25 of this Law and the
requirements brought forward for the founder in Section 16, and
also the requirements of Section 29 has been ensured.
(3) The holding company shall not need the permit referred to
in Paragraph two of this Section if all of the following
conditions are met:
1) the principal activity of the holding company is to acquire
holdings in subsidiaries;
2) the holding company is not a resolution entity within the
meaning of the Law on Recovery of Activities and Resolution of
Credit Institutions and Investment Firms;
3) a credit institution which is a subsidiary is entitled to
ensure the conformity of the group with prudential requirements
on a consolidated basis and it has all the necessary resources to
ensure it;
4) the holding company does not engage in taking management,
operational, or financial decisions affecting the group or its
subsidiary which is a credit institution, an investment firm, or
a financial institution;
5) there are no impediments to the effective supervision of
the group on a consolidated basis.
(4) The Financial and Capital Market Commission as the
consolidated supervisor may request additional information which
is necessary for the performance of the assessment referred to in
Paragraphs two and three of this Section.
(5) The Financial and Capital Market Commission as the
consolidated supervisor shall take the decision on the permit
referred to in Paragraph two of this Section or on the
application of the exception referred to in Paragraph three
within four months from the day when complete information for the
taking of the decision has been received, but not later than
within six months from the day when the application and complete
information were submitted.
(6) If a holding company is registered in another Member
State, the Financial and Capital Market Commission as the
consolidated supervisor shall, prior to taking of the decision,
cooperate with the supervisory authority of the Member State and
provide its assessment thereto on the conformity of the holding
company with the conditions of Paragraphs two and three of this
Section. The Financial and Capital Market Commission as the
consolidated supervisor, having joint discussions and
coordinating opinions with the supervisory authority of the
Member State and the coordinator within the meaning of the
Financial Conglomerates Law, shall, within two months from the
day of preparation of the assessment, take the decision on the
provision of the permit to the holding company to be a parent
company of a credit institution or on the application of an
exception in accordance with Paragraph three of this Section. If
the abovementioned decision is not taken, the Financial and
Capital Market Commission as the consolidated supervisor has the
right, in order to settle disputes, to turn to the relevant
European Supervisory Authority for the settlement of disputes in
accordance with Regulation (EU) No 1093/2010 of the European
Parliament and of the Council of 24 November 2010 establishing a
European Supervisory Authority (European Banking Authority),
amending Decision No 716/2009/EC and repealing Commission
Decision 2009/78/EC (hereinafter - EU Regulation No
1093/2010).
[29 April 2021 / See Paragraph 106 of Transitional
Provisions]
Section 33.4 (1) A credit institution
belonging to a third-country group the total value of assets of
which in the European Union is at least EUR 40 billion may
receive a licence (permit) for the performance of registration in
the Commercial Register and for the operation in the Republic of
Latvia only if at least one of the following conditions has been
met:
1) the credit institution is the only credit institution or
investment firm of the third-country group in the European
Union;
2) the credit institution has a registered parent company in
the European Union;
3) the credit institution is a parent company for a credit
institution or investment firm registered in the European
Union.
(2) The total value of assets of a third-country group in the
European Union shall consist of the following sum:
1) the sum total of the value of assets of each credit
institution and investment firm of the third-country group in the
European Union on the basis of the data of consolidated financial
statements or, if consolidated data is not available, - on the
basis of the data of individual financial reports;
2) the sum total of the value of assets of each branch of such
third-country group which has received a permit for the operation
in the European Union as a credit institution or investment
firm.
(3) If a credit institution belongs to a third-country group
and also a credit institution or investment firm of the Member
State belongs to such group, the third-country group has an
obligation to create one parent company in the European Union.
The Financial and Capital Market Commission may permit the
creation of a second parent company in the European Union, if it
performs consolidated supervision of the credit institution in
accordance with Section 112.2 of this Law and one of
the following conditions has been met:
1) the creation of one parent company in the European Union
would not ensure the requirement to separate activities as
provided in the provisions or by the supervisory authority of
such foreign country in which the main management of the parent
company of the third-country group is located;
2) the creation of one parent company in the European Union
would reduce the efficiency of supervision in comparison to the
case when two parent companies are in the European Union.
(4) In the case referred to in Paragraph three of this Section
a parent company of a credit institution may be a credit
institution established in a Member State or a holding company
which has been granted with a permit in accordance with Section
33.3, Paragraph two of this Law.
(5) The Financial and Capital Market Commission shall provide
the following information to the European Banking Authority in
relation to a third-country group operating in the territory of
the Republic of Latvia:
1) on the credit institution and investment firm which belong
to any third-country group - the name and the total value of
assets;
2) on the branch which is operating in the Republic of Latvia
as a credit institution or investment firm - the name, the total
value of assets, and the type of activity;
3) on the credit institution and the parent company of the
investment firm which is registered in the Republic of Latvia -
the name and the name of such third-country group to which it
belongs.
[29 April 2021 / See Paragraph 105 of Transitional
Provisions]
Chapter IV
Requirements Governing the Operation of Credit Institutions and
Capital Reserves
[24 April 2014]
Section 34. [24 April 2014]
Section 34.1 (1) A credit institution shall
ensure the establishment and operation of a comprehensive and
efficient internal control system which is applicable to the
nature, volume, and complexity of the activities thereof. The
internal control system shall include the following basic
elements:
1) an organisational structure conforming to the size and
operational risks of the credit institution, in which there is a
clearly determined, unambiguous and systematic division of
duties, powers and responsibilities in relation to making and
controlling transactions between the structural units and
responsible employees of the credit institution;
2) a system for the identification, management, supervision
and reporting of inherent and potential risks for activities of
the credit institution;
3) internal control procedures;
4) remuneration system, including gender neutral remuneration
policy.
(2) The Financial and Capital Market Commission shall
determine the requirements for the establishment of the internal
control system of a credit institution.
[22 February 2007; 23 December 2010; 24 April 2014; 29
April 2021]
Section 34.2 (1) A credit institution shall
draw up and implement a cautious strategy, policies, and
procedures which allow management, including timely
identification, evaluation, analysis, and supervision of the
credit risk and the counterparty credit risk, concentration risk,
securitisation risk, market risk, operational risk, including
model risk, risks arising due to receipt of an outsourced service
and events with low frequency, but high severity, interest rate
risk of the non-trading book, credit spread risk of the
non-trading-book, residual risk, liquidity risk, risk of
excessive leverage, and other risks important for a credit
institution.
(2) The strategy, policies, procedures and systems of a credit
institution shall correspond to the complexity and scope of its
activities, as well as to the allowed risk level determined by
the council of the credit institution, and shall be drawn up with
consideration to the systemic significance of the credit
institution in each Member State in which it operates.
(3) A credit institution shall draw up action plans for
emergency situations, restoration of liquidity and ensuring of
ongoing functioning, as well as determine the measures necessary
for the implementation thereof.
(4) The Financial and Capital Market Commission shall
determine the requirements in relation to the risk management and
action plans for emergency situations, restoration of liquidity
and ensuring ongoing functioning of a credit institution.
[24 April 2014; 29 April 2021 / Amendment to Paragraph one
regarding its new wording in relation to the credit spread risk
of the non-trading book shall be applied starting from 28 June
2021. See Paragraph 104 of Transitional Provisions]
Section 34.3 (1) A credit institution shall
ensure such remuneration policy and practice for its officials or
employees whose professional activities have a material impact on
the risk profile of the credit institution, which corresponds to
cautious and effective risk management and facilitates it, but
does not facilitate undertaking of risks which are above the
allowed level of undertaking of risks determined by the credit
institution.
(2) For the officials or employees of a credit institution
whose professional activities have a material impact on the risk
profile of the credit institution, the credit institution shall
not determine the variable component of the remuneration to be
such that exceeds the fixed component of the remuneration
determined for the respective official or employee in the
reporting year, except in the cases where the provisions of
Paragraphs three, four, five and six of this Section are
conformed to.
(3) For the officials or employees whose professional
activities have a material impact on the risk profile of a credit
institution, the meeting of stockholders of a credit institution
may determine, by a separate decision, the variable component of
the remuneration to be of such amount which exceeds, however not
more than two times, the fixed component of the remuneration
determined for the respective official or employee in the
reporting year.
(4) The meeting of stockholders of a credit institution shall
take the decision on the variable component of the remuneration
which exceeds the fixed component of the remuneration determined
for a particular official or employee in the reporting year with
regard to the officials or employees whose professional
activities have a material impact on the risk profile of the
credit institution, on the basis of a draft decision prepared by
the credit institution, in which the justification for
determining the abovementioned variable component of remuneration
is included, the number, positions and functions of the
respective officials or employees are indicated, as well as the
effect of the decision on the capacity of the credit institution
to maintain own funds which are necessary for a stable operation
thereof is assessed. The decision shall be taken by at least the
majority of 66 per cent of the voting shares, provided that at
least 50 per cent of the voting shares are represented at the
meeting of stockholders of the credit institution, or by at least
the majority of 75 per cent of the voting shares, provided that
less than 50 per cent of the voting shares are represented at the
meeting of stockholders of the credit institution, if such
meeting of stockholders is competent in accordance with the
requirements of laws and regulations or the provisions of the
articles of association of the credit institution. The official
or employee of the credit institution, who is simultaneously a
holder of voting shares, shall not participate in taking such
decision of the meeting of stockholders of the credit
institution, which is related to determination of his or her
remuneration.
(5) The credit institution shall without delay, but not later
than within five working days after submission of the draft
decision drawn up in accordance with the requirements of
Paragraph four of this Section to shareholders, electronically
submit to the Financial and Capital Market Commission such draft
decision and evidence that determination of the variable
component of the remuneration in the amount which exceeds the
fixed component of the remuneration determined in the reporting
year for the respective officials or employees whose professional
activities have a material impact on the risk profile of the
credit institution does not limit the capacity of the credit
institution to further conform to the requirements of this Law
and EU Regulation No 575/2013, especially the own funds
requirements.
(6) The credit institution shall without delay, but not later
than within five working days after taking of the decision of the
meeting of stockholders referred to in Paragraph three of this
Section, electronically submit it to the Financial and Capital
Market Commission.
(7) The Financial and Capital Market Commission shall
determine the requirements for the remuneration policy and
practice, including for such officials or employees of a credit
institution whose professional activities have a material impact
on the risk profile of the credit institution.
[24 April 2014; 29 April 2021]
Section 34.4 [11 June 2015]
Section 34.5 (1) To safeguard the reputation
of a credit institution, to prevent a credit institution from
being involved in illegal activities, to identify and eliminate
other risks of significance to a credit institution, and to
protect the confidentiality of the persona, accounts, deposits
and transactions of a customer, the credit institution shall lay
down additional requirements for the candidates for a position in
the credit institution and employees who are directly involved in
the provision of financial services or management of credit risk,
or affect the risk profile of the credit institution and have not
been indicated in Section 24, Paragraph one of this Law.
(2) In order to ascertain the suitability (eligibility) of a
candidate for work in a credit institution or suitability
(eligibility) of an employee of a credit institution for the
official duties to be fulfilled or the position, a person
specifically authorised by the credit institution for this
purpose shall perform an inspection by processing the information
provided by the candidate or employee and the information
regarding the candidate or employee acquired by the credit
institution in accordance with this Law or other laws and
regulations for the purpose of achieving the objectives referred
to in Paragraph one of this Section.
(3) If the official duties in the credit institution are
directly associated with the provision of financial services or
credit risk management affects the risk profile of the credit
institution, the credit institution may not employ a person who
meets at least one of the following conditions to fulfil such
official duties:
1) person has been convicted of committing an intentional
criminal offence against the State, property or governance
procedures, or of committing an intentional criminal offence in
national economy or while in service in a governmental authority,
or of committing a terrorism related criminal offence, and the
criminal record thereon has not been extinguished or set
aside;
2) the supervisory and control authority specified in the Law
on the Prevention of Money Laundering and Terrorism and
Proliferation Financing or the competent authority specified in
the Law on International Sanctions and National Sanctions of the
Republic of Latvia has imposed a sanction on the person and has
published information on the sanction (except for a warning) for
international or national sanction or violation of the laws and
regulations governing the prevention of money laundering and
terrorism and proliferation financing on its website, and less
than a year has passed since the day when the sanction was
imposed;
3) insolvency proceedings of a natural person have been
declared for the person, and less than a year has passed since
the day of their termination.
(4) Credit institution shall determine the official duties or
positions which shall be subject to Paragraphs one and three of
this Section.
(5) Credit institution shall receive and process personal data
from the Punishment Register in order to comply with the
condition provided for in Paragraph three, Clause 1 of this
Section.
[1 November 2018; 13 June 2019; 29 April 2021]
Section 35. [24 April 2014]
Section 35.1 [24 April 2014]
Section 35.2 [23 December 2010] Amendment
regarding the deletion of Section shall come into force on 30
April 2011. See Paragraph 39 of Transitional Provisions]
Section 35.3 (1) A credit institution shall
ensure that its Common Equity Tier 1 capital is sufficient in
order to cover the capital conservation buffer in the amount of
2.5 per cent from the total risk exposure which has been
calculated in accordance with Article 92(3) of EU Regulation No
575/2013. The credit institution shall conform to the requirement
to ensure the capital conservation buffer on an individual,
consolidated or sub-consolidated basis in accordance with Part
One, Title II of EU Regulation No 575/2013.
(2) [29 April 2021]
(3) A credit institution which fails to ensure the capital
conservation buffer in accordance with the requirements of
Paragraphs one and two of this Section, shall conform to the
distribution restrictions laid down in Section 35.27,
Paragraphs one and three of this Law.
[24 April 2014; 29 April 2021]
Section 35.4 (1) A credit institution shall
ensure that its Common Equity Tier 1 capital is sufficient to
cover the institution-specific countercyclical capital buffer
which is determined as a multiplication of the total exposure
value calculated in accordance with point (3) of Article 92 of EU
Regulation No 575/2013 by the institution-specific
countercyclical capital buffer rate.
(2) [29 April 2021]
(3) A credit institution which fails to ensure the
countercyclical capital buffer in accordance with the
requirements of Paragraphs one and two of this Section, shall
conform to the distribution restrictions laid down in Paragraphs
one and three of Section 35.27 of this Law.
[24 April 2014; 29 April 2021]
Section 35.5 (1) The Financial and Capital
Market Commission shall evaluate intensity of cyclical systemic
risk and, if necessary, determine or adjust the specified
countercyclical capital buffer rate which is applicable to
exposures with residents of the Republic of Latvia, on a
quarterly basis. The Financial and Capital Market Commission
shall determine the countercyclical capital buffer rate with
consideration to:
1) the countercyclical capital buffer guide calculated for the
respective quarter;
2) variables which it considers important for the assessment
of the cyclical systemic risk;
3) applicable recommendations of the European Systemic Risk
Board regarding the determination of the countercyclical capital
buffer rate.
(2) The Financial and Capital Market Commission shall
determine the countercyclical capital buffer guide which is used
as the basis for determination of the countercyclical capital
buffer rate in accordance with Paragraph one of this Section, on
a quarterly basis. The countercyclical capital buffer guide shall
meaningfully reflect the present stage of a crediting cycle in
the Republic of Latvia, risks which result from excessively fast
crediting of the national economy of the Republic of Latvia, as
well as specific characteristics of the national economy of the
Republic of Latvia. The calculation of the countercyclical
capital buffer guide shall be based on the deviation of the ratio
of the loans issued to residents of the Republic of Latvia and
gross domestic product from the long-term trend thereof
calculated with consideration to:
1) the indicator of growth of the volume of issued loans and
especially the indicator which reflects the change in the ratio
of the volume of issued loans and gross domestic product;
2) the applicable guidelines and recommendations of the
European Systemic Risk Board regarding the calculation of the
countercyclical capital buffer guide and how the deviation of the
ratio of the volume of issued loans and gross domestic product
from the long-term trend thereof shall be measured and
calculated.
(3) The countercyclical capital buffer rate which is expressed
as percentage of the total value of exposures with residents of
the Republic of Latvia, which is calculated in accordance with EU
Regulation No 575/2013, shall be determined between 0 to 2.5 per
cent, calibrated in steps of 0.25 percentage points or multiples
of 0.25 percentage points.
(4) The Financial and Capital Market Commission may determine
a countercyclical capital buffer rate in excess of 2.5 per cent,
where it is justified, with consideration to the indicators and
criteria laid down in Paragraph one of this Section. Such
increased countercyclical capital buffer rate shall be included
in the calculation of the institution-specific countercyclical
capital buffer rate.
(5) The Financial and Capital Market Commission, upon
determining for the first time such countercyclical capital
buffer rate that is higher than zero or upon increasing of the
applicable countercyclical capital buffer rate, shall set a date
as of which a credit institution shall apply such countercyclical
capital buffer rate for the purpose of calculation of the
institution-specific countercyclical capital buffer rate. This
date shall be the date of a day which follows 12 months after the
day on which the notification regarding determination of a
countercyclical capital buffer rate that is higher than zero or a
notification regarding increase of the currently applicable
countercyclical capital buffer rate is published in accordance
with Paragraph seven of this Section. In extraordinary cases the
Financial and Capital Market Commission may determine an earlier
date than a day which follows 12 months after the day on which
the notification regarding determination of a countercyclical
capital buffer rate that is higher than zero or a notification
regarding increase of the currently applicable countercyclical
capital buffer rate is published.
(6) Upon decreasing the countercyclical capital buffer rate,
regardless of the countercyclical capital buffer rate being
decreased to zero, the Financial and Capital Market Commission
shall determine an approximate period of time within which the
increasing of the countercyclical capital buffer rate is not
intended. The Financial and Capital Market Commission may change
the duration of this previously determined period of time.
(7) The Financial and Capital Market Commission shall publish
a report on a quarterly basis on its website, indicating at least
the following information:
1) the determined countercyclical capital buffer rate;
2) the respective ratio of the volume of issued loans and
gross domestic product and the deviation thereof from the
long-term trend;
3) the countercyclical capital buffer guide calculated in
accordance with Paragraph two of this Section;
4) the basis of the determined countercyclical capital buffer
rate;
5) the date as of which a credit institution shall apply the
countercyclical capital buffer rate upon calculation of the
institution-specific countercyclical capital buffer rate, if such
countercyclical capital buffer rate is determined which is higher
than zero, or if the applicable countercyclical capital buffer
rate is increased;
6) emergency circumstances due to which the date referred to
in Clause 5 of this Paragraph is earlier than a day which follows
12 months after the day on which the notification regarding the
increasing of a countercyclical capital buffer rate is
published;
7) an approximate period of time within which the increase of
countercyclical capital buffer rate is not intended, as well as
the basis for determination of such period of time, if the
countercyclical capital buffer rate is decreased.
(8) The Financial and Capital Market Commission shall take all
reasonable measures to approve the time of publishing of the
notification referred to in Paragraph seven of this Section with
the responsible authorities of other Member States.
(9) The Financial and Capital Market Commission shall notify
each change of the specified countercyclical capital buffer rate
to the European Systemic Risk Board, providing the information
referred to in Paragraph seven of this Section.
[24 April 2014; 11 June 2015; 29 April 2021]
Section 35.6 (1) The Financial and Capital
Market Commission may recognise a countercyclical capital buffer
rate in excess of 2.5 per cent which has been determined by an
authority of another Member State or a foreign country
responsible for determination of the countercyclical capital
buffer rate. If the Financial and Capital Market Commission has
recognised a countercyclical capital buffer rate in excess of 2.5
per cent, a credit institution shall apply this countercyclical
capital buffer rate upon calculating the institution-specific
countercyclical capital buffer rate.
(2) The Financial and Capital Market Commission shall inform
that it has recognised a countercyclical capital buffer rate in
excess of 2.5 per cent determined in another Member State or a
foreign country by publishing a relevant notification on its
website. The notification shall contain at least the following
information:
1) the recognised countercyclical capital buffer rate;
2) the Member State or the foreign country to the transactions
with the residents of which the recognised countercyclical
capital buffer rate shall apply;
3) if the countercyclical capital buffer rate has increased as
a result of the recognition - the date as of which a credit
institution shall apply the recognised countercyclical capital
buffer rate upon calculation of the institution-specific
countercyclical capital buffer rate;
4) if the date referred to in Clause 3 of this Paragraph is
earlier than a day which follows 12 months after the day on which
the notification referred to in this Paragraph is published - the
extraordinary circumstances on which such earlier term of
application is based.
[24 April 2014; 11 June 2015; 29 April 2021]
Section 35.7 (1) If one or several credit
institutions registered in the Republic of Latvia perform
exposures subjected to credit risk with foreign residents, but
the authority of that foreign country responsible for
determination of the countercyclical capital buffer rate has not
determined and published the countercyclical capital buffer rate
which is applicable to transactions with its residents, the
Financial and Capital Market Commission may determine a
countercyclical capital buffer rate for the transactions
subjected to credit risk with residents of that foreign country,
which a credit institution shall apply upon calculating the
institution-specific countercyclical capital buffer rate.
(2) If one or several credit institutions registered in the
Republic of Latvia perform exposures subjected to credit risk
with foreign residents, and the authority of that foreign country
responsible for determination of the countercyclical capital
buffer rate has determined and published the countercyclical
capital buffer rate which is applicable to transactions with its
residents, but in accordance with the assessment carried out by
the Financial and Capital Market Commission it is not
sufficiently high to secure a credit institution against the
risks caused by too fast increase of the volume of loans issued
in that foreign country, the Financial and Capital Market
Commission may determine a different countercyclical capital
buffer rate for exposures subjected to credit risk with residents
of that foreign country, which a credit institution shall apply
upon calculating the institution-specific countercyclical capital
buffer rate.
(3) Upon determining the countercyclical capital buffer rate
in accordance with Paragraph two of this Section, the Financial
and Capital Market Commission shall not determine it lower than
the countercyclical capital buffer rate determined by the
authority of the respective foreign country responsible for
determination of the countercyclical capital buffer rate if the
countercyclical capital buffer rate determined by such foreign
authority is not in excess of 2.5 per cent of the total exposure
value of the credit institutions which perform exposures
subjected to credit risk with residents of that foreign country
which has been calculated in accordance with Article 92(3) of EU
Regulation No 575/2013.
(4) The Financial and Capital Market Commission, upon
determining such countercyclical capital buffer rate for
transactions with foreign residents in accordance with Paragraphs
one and two of this Section, which is higher than the applicable
countercyclical capital buffer rate, shall determine a date as of
which credit institutions shall apply such higher countercyclical
capital buffer rate upon calculation of the institution-specific
countercyclical capital buffer rate. This date shall be the date
of a day which follows 12 months after the day on which the
notification regarding determination of a countercyclical capital
buffer rate is published in accordance with Paragraph five of
this Section. In extraordinary cases the Financial and Capital
Market Commission may determine an earlier date than a day which
follows 12 months after the day on which the notification
regarding determination of a countercyclical capital buffer rate
is published.
(5) The Financial and Capital Market Commission shall notify
determination of a countercyclical capital buffer rate applicable
to the exposures subjected to capital risk with foreign residents
in accordance with Paragraphs one and two of this Section by
publishing a respective notification on its website. The
notification shall contain at least the following
information:
1) the determined countercyclical capital buffer rate and the
foreign country to the exposures subjected to credit risk with
whose residents it applies;
2) the basis of the determined countercyclical capital buffer
rate;
3) if an increased countercyclical capital buffer rate has
been determined for transactions with foreign residents - the
date as of which a credit institution shall apply it upon
calculation of the institution-specific countercyclical capital
buffer rate;
4) the emergency circumstances due to which the date indicated
in Clause 3 of this Paragraph is earlier than a day following 12
months after the day on which the which the notification
regarding determination of a countercyclical capital buffer rate
is published.
[24 April 2014; 11 June 2015; 29 April 2021]
Section 35.8 The procedures for the
calculation of the institution-specific countercyclical capital
buffer rate shall be determined by the Financial and Capital
Market Commission.
[24 April 2014 / The requirements of Section for
countercyclical capital buffer shall come into force on 1 January
2016. See Paragraph 56 of Transitional Provisions]
Section 35.9 The Financial and Capital
Market Commission shall identify on a consolidated basis the
global systemically important institutions registered in the
Republic of Latvia, with consideration to the requirements of
Section 35.10 and the methodology laid down in Section
35.11 of this Law, and other systemically important
institutions on an individual, consolidated, or sub-consolidated
basis in accordance with the requirements of Section
35.13 and the criteria laid down in Section
35.14 of this Law.
[24 April 2014; 29 April 2021]
Section 35.10 A consolidation group of a
parent credit institution of the European Union, a European Union
parent financial holding company, or a European Union parent
mixed financial holding company registered in the Republic of
Latvia or a credit institution which is not a subsidiary of a
parent credit institution of the European Union, a European Union
parent financial holding company, or a European Union parent
mixed financial holding company may be recognised as a global
systemically important institution.
[29 April 2021]
Section 35.11 (1) A consolidation group of a
credit institution, a financial holding company, or a mixed
financial holding company or a credit institution which has been
recognised as a global systemically important institution is
included in one of at least five sub-categories of global
systemically important companies, on the basis of the assessment
of the following criteria:
1) the size of the credit institution or the consolidation
group;
2) the interconnectedness of the credit institution or the
consolidation group with the financial system;
3) the substitutability of the services provided by the credit
institution or the consolidation group or the financial
infrastructure provided by the group;
4) the complexity of the credit institution or the
consolidation group;
5) cross-border activities of the consolidation group both in
other Member States and in foreign countries.
(2) For the assessment of each criterion quantifiable
indicators shall be used and all criteria shall have equal
weighting for determination of the overall assessment. The
division into sub-categories and the boundaries between the
sub-categories shall be clearly defined on the basis of the
assessment performed in accordance with Paragraph one of this
Section, and shall reflect the expected impact of problems of a
global systemically important credit institution on the global
financial market.
(21) In addition to the assessment specified in
Paragraph one of this Section, additional evaluation shall be
performed on the basis of the assessment of the following
criteria:
1) the criteria specified in Paragraph one, Clauses 1, 2, 3,
and 4 of this Section;
2) cross-border activities of the credit institution or
consolidation group, except for the activities of the credit
institution or the consolidation group in the participating
Member States within the meaning of Article 4 of EU Regulation No
806/2014.
(22) For the assessment of each criterion
quantifiable indicators shall be used and all criteria shall have
equal weighting for determination of the overall assessment. For
the assessment of the criteria specified in Paragraph
2.1, Clause 1 of this Section, the same criteria which
are used for the assessment of the criteria specified in
Paragraph one, Clauses 1, 2, 3, and 4 of this Section shall be
used.
(23) On the basis of additional assessment which
has been performed in accordance with Paragraphs 2.1
and 2.2 of this Section, additional joint score is
specified for each consolidation group of a credit institution, a
financial holding company, or a mixed financial holding company
or each credit institution which is assessed for the recognition
as a global systemically important institution.
(3) The Financial and Capital Market Commission is entitled,
taking into account the sub-categories of global systemically
important institutions specified in accordance with Paragraph one
of this Section and the conditions for the division of
sub-categories specified in Section 35.12, Paragraph
one of this Law, and also on the basis of the supervisory
assessment:
1) to allocate a global systemically important institution to
a sub-category which corresponds to a higher systemic
significance than determined in the calculation performed in
accordance with the methodology referred to in Paragraphs one and
two of this Section;
2) to recognise as a global systemically important institution
such consolidation group of a credit institution, a financial
holding company, or a mixed financial holding company or such
credit institution the systemic significance assessment of which,
performed in accordance with the requirements of Paragraphs one
and two of this Section, is lower than the minimum according to
which a credit institution, a financial holding company, or a
mixed financial holding company is recognised as a global
systemically important institution, and to allocate such global
systemically important institution to a sub-category that is
higher than a sub-category which corresponds to the minimum
systemic significance;
3) taking into account the operation of the Single Resolution
Mechanism, to include a global systemically important institution
in a sub-category which conforms to a lower systemic significance
than determined by the calculation performed in accordance with
the methodology referred to in Paragraphs one and two of this
Section, on the basis of the additional joint score specified in
accordance with Paragraph 2.3 of this Section.
(4) The Financial and Capital Market Commission shall inform
the European Commission, the European Systemic Risk Board, and
the European Banking Authority of consolidation groups of a
credit institution, a financial holding company, or a mixed
financial holding company or of credit institutions which have
been recognised as global systemically important institutions,
and of the respective sub-categories to which they have been
allocated, provide a complete justification for the use or
non-use of the supervisory assessment provided for in Paragraph
three of this Section, and also make public a list of global
systemically important institutions with indication of the
respective sub-categories to which they have been allocated.
(5) The Financial and Capital Market Commission shall, not
less than once a year, review the systemic significance of
consolidation groups of a credit institution, a financial holding
company, or a mixed financial holding company or of credit
institutions which have been recognised as global systemically
important institutions and the respective sub-categories to which
they have been allocated and inform the global systemically
important institutions of the decision thereof, communicate this
information to the European Systemic Risk Board, and also make
public a list of global systemically important institutions with
indication of the respective sub-categories to which they have
been allocated.
(6) [29 April 2021]
(7) A consolidation group of a credit institution, a financial
holding company, or a mixed financial holding company, or a
credit institution is recognised as a global systemically
important institution and allocated to a respective sub-category
on the basis of the methodology laid down in a directly
applicable legal act of the European Union.
[24 April 2014; 29 April 2021]
Section 35.12 (1) For a global systemically
important institution on a consolidation group level, such
capital buffer rate of a global systemically important
institution shall be determined which is not less than 1 per cent
from the total exposure value which has been calculated in
accordance with Article 92(3) of EU Regulation No 575/2013 with
relevance to the sub-category which is determined in accordance
with Section 35.11 of this Law. For the sub-categories
referred to in Section 35.11, Paragraph one of this
Law, the capital buffer rate of a global systemically important
institution shall be calibrated in steps of not less than 0.5 per
cent. For all sub-categories, except the fifth sub-category or
higher sub-category (if such has been specified), the capital
buffer rate of a global systemically important institution shall
increase linearly to the expected impact of problems of a global
systemically important credit institution on global financial
markets.
(2) The capital buffer of a global systemically important
institution shall be calculated as a multiplication of the total
exposure value calculated in accordance with Regulation No
575/2013 by the applicable capital buffer rate of the global
systemically important institution. A global systemically
important institution shall ensure that its Common Equity Tier 1
capital is sufficient to cover the capital buffer of the global
systemically important institution.
(3) [29 April 2021]
[24 April 2014; 29 April 2021]
Section 35.13 The Financial and Capital
Market Commission shall identify other systemically important
institutions. A credit institution or a consolidation group of a
parent credit institution registered in the Republic of Latvia, a
parent financial holding company registered in the Republic of
Latvia, a parent mixed financial holding company registered in
the Republic of Latvia, a parent credit institution of the
European Union, a European Union parent financial holding
company, or a European Union parent mixed financial holding
company may be recognised as other systemically important
institution.
[24 April 2014; 29 April 2021]
Section 35.14 (1) A credit institution, a
financial holding company or a mixed financial holding company
may be recognised as other systemically important company on the
basis of the assessment of one or several of the following
criteria:
1) the size of the credit institution or the group;
2) the significance for the national economy of the European
Union or the Republic of Latvia;
3) the significance of cross-border activities;
4) the interconnectedness of the group with the financial
system.
(2) The Financial and Capital Market Commission shall
determine the methodology of the assessment of systemic
significance of a credit institution, a financial holding company
or a mixed financial holding company with consideration to the
criteria referred to in Paragraph one of this Section.
[24 April 2014 / The requirements of Section for the
capital buffer of other global systemically important institution
shall come into force on 1 January 2016. See Paragraph 58 of
Transitional Provisions]
Section 35.15 (1) For a credit institution,
a financial holding company or a mixed financial holding company
which has been recognised as other systemically important
institution as a result of the assessment referred to in Section
35.14 of this Law, the Financial and Capital Market
Commission may determine the capital buffer rate of other
systemically important institution of up to 3 percent. Upon
determining the capital buffer rate of other systemically
important institution the Financial and Capital Market Commission
shall take into account that the application thereof shall not
have disproportionate adverse effects on the whole or part of the
financial system of other Member States or of the European Union
as a whole, resulting in obstacles to the functioning of the
internal market of the European Union.
(2) After submission of a notification in accordance with
Paragraph six of this Section, the Financial and Capital Market
Commission may, upon receipt of a permit of the European
Commission, determine the capital buffer requirement of other
systemically important institution which exceeds 3 per cent for a
parent credit institution of the European Union registered in the
Republic of Latvia, a European Union parent financial holding
company, or a consolidation group of a European Union parent
mixed financial holding company, or for a credit institution
which has been recognised as other systemically important
institution as a result of the assessment referred to in Section
35.14 of this Law.
(3) The capital buffer requirement of other systemically
important institution shall be calculated as a multiplication of
the total exposure value calculated in accordance with Article
92(3) of EU Regulation No 575/2013 by the applicable capital
buffer rate of other systemically important institution.
(4) For a subsidiary of other systemically important
institution which is a subsidiary of a global systemically
important institution, or of other systemically important
institution which is a parent company of the European Union for
which the capital buffer requirement of other systemically
important institution has been set on a consolidated basis, the
capital buffer requirement of other systemically important
institution set on individual or sub-consolidated basis shall not
exceed the lowest of the following indicators:
1) 1 per cent of the total exposure value which has been
calculated in accordance with Article 92(3) of EU Regulation No
575/2013 and the largest of the following capital buffers: the
capital buffer of a global systemically important institution
specified for the consolidation group which has been calculated
in accordance with Section 35.12, Paragraph two of
this Law and the capital buffer of other systemically important
institution which has been calculated, taking into account the
requirements of Paragraph two of this Section;
2) 3 per cent from the total exposure value which has been
calculated in accordance with EU Regulation No 575/2013 or the
capital buffer rate of other systemically important institution
which the European Commission has permitted to be applied by the
parent company at the level of a consolidation group in
accordance with Paragraph two of this Section.
(5) The Financial and Capital Market Commission shall, not
less than once a year, review the justification for determining
of the capital buffer rate of other systemically important
institution applicable to credit institutions, financial holding
companies, or mixed financial holding companies which have been
recognised as other systemically important institutions and
notify other systemically important institutions of the decision
thereof, communicate this information to the European Commission,
the European Systemic Risk Board, the European Banking Authority,
and also make public a list of other systemically important
institutions.
(6) The Financial and Capital Market Commission shall
communicate to the European Commission, the European Systemic
Risk Board and the European Banking Authority and make public the
name of the credit institution, financial holding company or
mixed financial holding company which has been recognised as
other systemically important institution.
(7) Not later than one month prior to the publication of the
decision taken with regard to determination or reviewing of the
capital buffer rate of other systemically important institution
in the amount of up to 3 per cent, or not later than three months
before it is planned to make public the decision on determination
or reviewing of the capital buffer rate of other systemically
important institution in an amount exceeding 3 per cent as
specified in Paragraph two of this Section, the Financial and
Capital Market Commission shall submit to the European Systemic
Risk Board a notification which:
1) provides a detailed justification of why it is considered
that determining of the capital buffer rate of other systemically
important institution may be an effective and commensurate tool
for risk mitigation;
2) assesses in detail, with utilisation of all available
information, the potential positive or negative impact of
determination of the capital buffer rate of other systemically
important institution on the internal market of the European
Union;
3) presents the capital buffer rate of other systemically
important institution which is planned to be determined.
[29 April 2021]
Section 35.16 (1) In order to prevent or
mitigate macroprudential or systemic risks of disruption in the
operation of the financial system which may have an essential
negative impact on the financial system and national economy of
the Republic of Latvia and which are not covered in accordance
with the conditions of EU Regulation No 575/2013 or Sections
35.5, 35.12, and 35.15 of this
Law, the Financial and Capital Market Commission may determine a
requirement for credit institutions or one or several sub-groups
of credit institutions to maintain a systemic risk capital buffer
for all exposures or for one of the types of exposures specified
in Section 35.17, Paragraph one of this Law.
(2) The requirement for the systemic risk capital buffer shall
be the sum total of the following values:
1) the multiplication of the systemic risk buffer rate
applicable to the total exposure value specified in the
notification published in accordance with the requirements of
Section 35.20, Paragraph one of this Law by the total
exposure value calculated in accordance with EU Regulation No
575/2013;
2) the multiplication of the systemic risk buffer rate
applicable to the type of exposure specified in the notification
published in accordance with the requirements of Section
35.20, Paragraph one of this Law by the exposure value
of such exposure type calculated in accordance with EU Regulation
No 575/2013.
(3) The systemic risk buffer rate shall be determined on the
grounds of exposures to which the systemic risk buffer shall be
applied in accordance with Paragraph one of this Section on an
individual, consolidated or sub-consolidated basis in accordance
with EU Regulation No 575/2013.
(4) A credit institution which fails to ensure the systemic
risk buffer in accordance with the requirements of Paragraph one
of this Section, shall conform to the distribution restrictions
laid down in Paragraphs one and three of Section 35.27
of this Law.
(5) If the Common Equity Tier 1 capital of a credit
institution is not sufficiently increased as a result of
conformity with the distribution restrictions, taking into
account the relevant systemic risk, the Financial and Capital
Market Commission may implement one or several actions laid down
in Section 113 of this Law.
[29 April 2021]
Section 35.17 (1) The Financial and Capital
Market Commission may, on an individual, consolidated, or
sub-consolidated basis, determine a requirement for a credit
institution to maintain a systemic risk buffer with regard
to:
1) all exposures in the Republic of Latvia;
2) the following types of exposures or their sub-types in the
Republic of Latvia:
a) all exposures with private individuals (natural persons)
that are secured with a mortgage on a dwelling;
b) all exposures with natural persons that are not secured
with a mortgage on a dwelling;
c) all exposures with legal persons that are secured with a
mortgage on a dwelling or a mortgage on such property which is
used for the performance of commercial activity;
d) all exposures with legal persons that are not secured with
a mortgage on a dwelling or a mortgage on such property which is
used for the performance of commercial activity;
3) all exposures in other Member States in conformity with the
requirements of Section 35.18, Paragraph five and
Section 35.20 of this Law;
4) the types of exposures referred to in Clause 2, Sub-clauses
"a", "b", "c", and "d" of this Paragraph or their sub-types in
other Member States, if the Financial and Capital Market
Commission takes the decision to recognise a systemic risk buffer
rate determined in another Member State in accordance with
Section 35.21 of this Law;
5) exposures in foreign countries.
(2) The Financial and Capital Market Commission shall
determine the systemic risk buffer rate at such amount, which may
be calibrated in steps of 0.5 percentage point.
(3) The Financial and Capital Market Commission may determine
different systemic risk buffer rates for different sub-categories
of credit institutions and types and sub-types of exposures.
(4) The Financial and Capital Market Commission shall ensure
that determination of the systemic risk buffer requirement shall
not have disproportionate adverse effect on the financial system
of other Member States or of the European Union and shall not
result in obstacles to the functioning of the internal market of
the European Union.
(5) The Financial and Capital Market Commission shall, at
least once in two years, review the determined systemic risk
buffer rate.
[29 April 2021]
Section 35.18 (1) Prior to publishing the
decision on determination of the systemic risk buffer rate in
accordance with Section 35.20 of this Law, the
Financial and Capital Market Commission shall notify thereof:
1) the European Systemic Risk Board;
2) if the determined systemic risk buffer rate is applicable
to one or several credit institutions which are subsidiaries
registered in the Republic of Latvia by another parent company in
a Member State - the supervisory authorities and the responsible
institutions of such Member State.
(2) The notification provided in accordance with Paragraph one
of this Section shall include:
1) detailed information on macroprudential or systemic risks
in the Republic of Latvia due to which the systemic risk buffer
rate is determined;
2) detailed information on reasons due to which the scope of
the risks referred to in Clause 1 of this Paragraph threatens the
stability of the financial system of the Republic of Latvia and
which justify the systemic risk buffer rate to be determined;
3) a justification of why it is considered that determination
of the systemic risk buffer requirement may be an effective and
commensurate tool for prevention or mitigation of the risks
referred to in Clause 1 of this Paragraph;
4) an assessment performed on the basis of available
information on the potential positive or negative impact of
determination of the systemic risk buffer requirement on the
internal market of the European Union;
5) the systemic risk buffer rate (rates) to be determined and
the exposures and institutions to which such rate (rates) is
(are) attributable;
6) if the systemic risk buffer rate is attributable to all
exposures - a justification why the systemic buffer does not
overlap with the buffer of other systemically important
institution determined in accordance with Section
35.15 of this Law.
(3) [29 April 2021]
(31) If, upon determining or repeatedly determining
the systemic risk buffer rate which is attributable to one or
several types or sub-types of exposures referred to in Section
35.17, Paragraph one of this Law, the total systemic
risk buffer rate does not exceed 3 per cent for none of exposures
included therein, the Financial and Capital Market Commission
shall, one month prior to publishing the decision on
determination of the systemic risk buffer rate in accordance with
Section 35.20 of this Law, provide the notification
referred to in Paragraph two of this Section to the European
Systemic Risk Board. The total systemic risk buffer rate to be
calculated in this Paragraph shall not include the systemic risk
buffer rates determined in another Member State and recognised in
accordance with Section 35.21 of this Law.
(32) If, upon determining or repeatedly determining
the systemic risk buffer rate which is attributable to one or
several types or sub-types of exposures referred to in Section
35.17, Paragraph one of this Law, the total systemic
risk buffer rate exceeds 3 per cent but does not exceed 5 per
cent for any exposure to which the systemic risk buffer rate is
attributable, the following procedures are conformed to:
1) the Financial and Capital Market Commission shall, one
month prior to publishing the decision on determination of the
systemic risk buffer rate in accordance with Section
35.20 of this Law, provide the notification referred
to in Paragraph two of this Section to the European Systemic Risk
Board and include therein a request for the European Commission
to provide an opinion. If the European Commission does not
support determination of the systemic risk buffer rate indicated
in the notification of the Financial and Capital Market
Commission, the Financial and Capital Market Commission shall not
publish the notification of determination of the systemic risk
buffer rate or also shall publish a notification of determination
of the systemic risk buffer rate and provide a justification of
why it has not taken into account the opinion of the European
Commission;
2) if the total systemic risk buffer rate exceeds 3 per cent
but does not exceed 5 per cent for any individual exposure to
which the systemic risk buffer rate is attributable to any of
credit institutions which is a subsidiary registered in the
Republic of Latvia by another parent company in a Member State,
the Financial and Capital Market Commission shall include a
request for the European Commission and the European Systemic
Risk Board to provide a recommendation in the notification to be
provided in accordance with Paragraph two of this Section. If an
agreement regarding the systemic risk buffer rate (rates) to be
determined has not been reached between the Financial and Capital
Market Commission and the institution of another Member State
which is responsible for determination of the systemic risk rate
and a recommendation from both the European Commission and the
European Systemic Risk Board has been received not to attribute
the systemic risk buffer rate (rates) to a credit institution
which is a subsidiary registered in the Republic of Latvia by
another parent company in a Member State, the Financial and
Capital Market Commission shall take the decision not to
attribute the systemic risk buffer rate (rates) to a credit
institution which is a subsidiary registered in the Republic of
Latvia by another parent company in a Member State, or shall
request the European Banking Authority to get involved in the
examination of the issue in accordance with EU Regulation No
1093/2010.
(33) If, upon determining or repeatedly determining
the systemic risk buffer rate which is attributable to one or
several types or sub-types of exposures referred to in Section
35.17, Paragraph one of this Law, the total systemic
risk buffer rate exceeds 5 per cent for any of exposures included
therein to which the systemic risk buffer rate is attributable,
the Financial and Capital Market Commission shall, prior to
publishing the decision on determination of the systemic risk
buffer rate in accordance with Section 35.20 of this
Law, provide the notification referred to in Paragraph two of
this Section to the European Systemic Risk Board and include a
request therein for the European Commission to provide a
permit.
(4) [29 April 2021]
(5) If the systemic risk buffer rate is attributable to
exposures which have been concluded with residents of another
Member State, the Financial and Capital Market Commission shall
determine an equal systemic risk buffer rate for all exposures in
the European Union, except for the case when the systemic risk
buffer rate is determined in order to recognise the systemic risk
buffer rate determined in another Member State in accordance with
Section 35.21 of this Law.
(6) If the systemic risk buffer rate to be determined is less
than or equal to a pre-determined systemic risk buffer rate, the
requirements of Paragraphs 3.1, 3.2,
3.3, and four of this Section are not
attributable.
[24 April 2014; 29 April 2021]
Section 35.19
[29 April 2021]
Section 35.20 (1) The Financial and Capital
Market Commission shall inform of the determined or repeatedly
determined systemic risk buffer rate (rates) by publishing the
relevant notification on its website. The notification shall
contain at least the following information:
1) the determined systemic risk buffer rate;
2) the names of the credit institutions which are obliged to
conform to the systemic risk buffer requirement;
3) the exposures to which the systemic risk buffer rate
(rates) is (are) attributable;
4) the justification for the determination or repeated
determination of the systemic risk buffer rate (rates);
5) the date as of which credit institutions shall conform to
the newly determined or changed systemic risk buffer rate;
6) countries to the transactions with the residents of which
the determined systemic risk buffer rate applies.
(2) If publishing of the information referred to in Paragraph
one, Clause 4 of this Section threatens financial stability, the
Financial and Capital Market Commission shall not include such
information in the notification.
[24 April 2014; 11 June 2015; 29 April 2021]
Section 35.21 (1) The Financial and Capital
Market Commission may recognise a systemic risk buffer rate
determined in another Member State and determine a requirement
for a credit institution to conform to such systemic risk buffer
rate determined in another Member State with regard to
transactions with residents of that Member State.
(2) If the Financial and Capital Market Commission recognises
a systemic risk buffer rate determined in another Member State,
it shall inform the European Systemic Risk Board thereof.
(3) Upon taking the decision to recognise a systemic risk
buffer rate which is determined in another Member State, the
Financial and Capital Market Commission shall take into account
the information provided by the responsible authority of the
respective Member State.
(31) If the Financial and Capital Market Commission
determines that the recognised systemic risk buffer rate
determined in another Member State is attributable to the same
risks for the mitigation of which another systemic risk buffer
rate has already been determined, a credit institution shall
include the highest of these rates in the calculation of the
combined buffer requirement.
(32) If the Financial and Capital Market Commission
determines that the recognised systemic risk buffer rate
determined in another Member State is not attributable to the
same risks for the mitigation of which another systemic risk
buffer rate has already been determined, a credit institution
shall include both these rates in the calculation of the combined
buffer requirement.
(4) Upon determining the systemic risk buffer rate in
accordance with Section 35.17 of this Law, the
Financial and Capital Market Commission may request the European
Systemic Risk Board to issue a recommendation in accordance with
Regulation (EU) No 1092/2010 of the European Parliament and of
the Council of 24 November 2010 on European Union
macro-prudential oversight of the financial system and
establishing a European Systemic Risk Board for one of several
Member States to recognise the determined systemic risk buffer
rate.
[24 April 2014; 29 April 2021]
Section 35.22 (1) The combined buffer
requirement of a global systemically important institution shall
be determined as a sum of the following capital buffers:
1) a capital conservation buffer which is calculated in
accordance with Section 35.3, Paragraph one of this
Law;
2) a countercyclical capital buffer which is calculated in
accordance with Section 35.4, Paragraph one of this
Law;
3) systemic risk buffer rate which is calculated in accordance
with Section 35.17 of this Law.
4) the largest of the following capital buffers: a capital
buffer of a global systemically important institution which is
calculated in accordance with Section 35.12, Paragraph
two of this Law, and a capital buffer of other systemically
important institution which is calculated, taking into account
the requirements of Section 35.15, Paragraph three or
four of this Law.
(2) [29 April 2021]
[24 April 2014; 29 April 2021]
Section 35.23 (1) The combined buffer
requirement of other systemically important institution on the
consolidated basis shall be determined as a sum of the following
capital buffers:
1) a capital conservation buffer which is calculated in
accordance with Section 35.3, Paragraph one of this
Law;
2) a countercyclical capital buffer which is calculated in
accordance with Section 35.4, Paragraph one of this
Law;
3) systemic risk buffer rate which is calculated in accordance
with Section 35.17 of this Law.
4) a capital buffer of other systemically important
institution which is calculated, taking into account the
requirements of Section 35.15, Paragraph three or four
of this Law.
(2) [29 April 2021]
[24 April 2014; 29 April 2021]
Section 35.24 (1) [29 April 2021]
(2) [29 April 2021]
(3) The calculation of the combined buffer requirement for
other systemically important institution - a subsidiary of a
global systemically important institution - shall include the
highest of the capital reserves: the capital reserve of a global
systemically important institution or the capital reserve of
other systemically important institution.
[24 April 2014; 29 April 2021]
Section 35.25 If a credit institution is not
a global systemically important institution, other systemically
important institution, or a subsidiary of a global systemically
important institution or other systemically important
institution, its combined buffer requirement on an individual,
consolidated, and sub-consolidated basis shall be determined as
the sum of the following capital buffers:
1) a capital conservation buffer which is calculated in
accordance with Section 35.3, Paragraph one of this
Law;
2) a countercyclical capital buffer which is calculated in
accordance with Section 35.4, Paragraph one of this
Law;
3) systemic risk buffer rate which is calculated in accordance
with Section 35.17 of this Law.
[24 April 2014; 29 April 2021]
Section 35.26 A credit institution which
meets the combined buffer requirement which has been determined
in accordance with the requirements of Sections 35.22,
35.23, 35.24, and 35.25 of this
Law is prohibited to make distribution of the items of Common
Equity Tier 1 if as a result the Common Equity Tier 1 capital is
reduced to such extent where the credit institution no longer
meets the combined buffer requirement.
[24 April 2014]
Section 35.27 (1) A credit institution which
fails to meet the combined buffer requirement which has been
determined in accordance with Sections 35.22,
35.23, 35.24 and 35.25 of this
Law shall calculate the maximum distributable amount and notify
the Financial and Capital Market Commission thereof. Prior to the
calculation of the maximum distributable amount a credit
institution is prohibited to:
1) distribute the items of Common Equity Tier 1, which for the
purposes of this Law shall include:
a) payment of dividends in monetary form;
b) distribution of partly or fully paid-up premium shares
(stocks which are allocated to stockholders free of charge) or of
other capital instruments indicated in point (a) of Article 26(1)
of EU Regulation No 575/2013;
c) disposal or acquisition of own shares or other capital
instruments set out in point (a) of Article 26(1) of EU
Regulation No 575/2013;
d) repayment of amount paid in relation to capital instruments
set out in point (a) of Article 26(1) of EU Regulation No
575/2013;
e) distribution of the items set out in points (b), (c), (d),
and (e) of Article 26(1) of EU Regulation No 575/2013;
2) undertake obligations to pay the variable component of
remuneration or discretionary pension benefits (for the purposes
of EU Regulation No 575/2013) or pay the variable component of
remuneration if the credit institution undertook the payment
obligations at the time when it failed to meet the combined
buffer requirement laid down in Sections 35.22,
35.23, 35.24, and 35.25 of this
Law;
3) pay interest or dividends on Additional Tier 1
instruments.
(2) The procedures for the calculation of the maximum
distributable amount shall be determined by the Financial and
Capital Market Commission.
(3) A credit institution which fails to meet the combined
buffer requirement referred to in Sections 35.22,
35.23, 35.24, and 35.25 of this
Law is prohibited to perform any activity referred to in
Paragraph one, Clauses 1, 2, and 3 of this Section with regard to
an amount which exceeds the maximum distributable amount
calculated in accordance with Paragraph two of this Section.
(4) The restrictions laid down in this Section, as well as in
Section 35.26 of this Law shall only apply to the
payments as a result of which Common Equity Tier 1 capital or
profit is reduced and the postponement or non-payment of which do
not result in failure of obligations or a basis for the
initiation of insolvency proceedings of a credit institution.
(5) If a credit institution which fails to meet the combined
buffer requirement referred to in Sections 35.22,
35.23, 35.24, and 35.25 of this
Law is planning to distribute profits or perform any of the
actions referred to in Paragraph one, Clauses 1, 2, and 3 of this
Section, it shall notify the Financial and Capital Market
Commission thereof and provide information on:
1) the amount of own funds of the credit institution,
separately indicating the amounts of Common Equity Tier 1
capital, Additional Tier 1 capital and Tier 2 capital;
2) the amount of the interim profits and year-end profits of
the credit institution;
3) the maximum distributable amount which has been calculated
in accordance with the procedures stipulated by the Financial and
Capital Market Commission;
4) the amount of profits which a credit institution plans to
distribute among such payments as dividends, buyback of shares,
interest or dividends on Additional Tier 1 instruments, as well
as the variable component of remuneration or discretionary
pension benefits (for the purposes of EU Regulation No 575/2013)
either by undertaking new payment obligations or by making of
payments in accordance with payment obligations which the credit
institution undertook at the time when it failed to meet the
combined buffer requirement laid down in Sections
35.22, 35.23, 35.24, and
35.25 of this Law.
(6) A credit institution fails to meet the combined buffer
requirement determined in Sections 35.22,
35.23, 35.24, and 35.25 of this
Law, if its own funds are insufficient in terms of the amount and
structure in order to concurrently meet the combined buffer
requirement determined in Sections 35.22,
35.23, 35.24, and 35.25 of this
Law and each of the following requirements:
1) the own funds requirement in accordance with point (a) of
Article 92(1) of EU Regulation No 575/2013 and the additional own
funds requirement addressing risks other than the risk of
excessive leverage in accordance with Section 101.3,
Paragraph 4.4, Clause 1 of this Law;
2) the own funds requirement in accordance with point (b) of
Article 92(1) of EU Regulation No 575/2013 and the additional own
funds requirement addressing risks other than the risk of
excessive leverage in accordance with Section 101.3,
Paragraph 4.4, Clause 1 of this Law;
3) the own funds requirement in accordance with point (c) of
Article 92(1) of EU Regulation No 575/2013 and the additional own
funds requirement addressing risks other than the risk of
excessive leverage in accordance with Section 101.3,
Paragraph 4.4, Clause 1 of this Law.
[24 April 2014; 29 April 2021]
Section 35.28 A credit institution shall
ensure that the amount of profits and the maximum distributable
amount are accurately calculated and confirm the accuracy of the
calculations of the amount of profit and the maximum
distributable amount for the Financial and Capital Market
Commission upon its request.
[24 April 2014]
Section 35.29 A credit institution which
fails to conform to the combined buffer requirement laid down in
Sections 35.22, 35.23, 35.24 and
35.25 of this Law shall work out a capital
conservation plan in accordance with the requirements of Section
35.30 of this Law and submit it to the Financial and
Capital Market Commission not later than within five working days
after the moment of identification of the failure to meet the
abovementioned requirement, except for the case where the
Financial and Capital Market Commission extends the term of
drawing up and submission of the abovementioned plan. The
Financial and Capital Market Commission may extend the term of
drawing up and submission of the abovementioned plan for up to
ten days by taking into account the individual circumstances of
the credit institution, the volume of the business activities,
and the complexity thereof.
[24 April 2014]
Section 35.30 A capital conservation plan
shall include:
1) income and expenditure estimates of the credit institution,
as well as balance sheet forecast of the credit institution;
2) measures for increase of the capital ratios of the credit
institution;
3) the credit institution's own funds increase plan and
timeframe in order to completely ensure conformity with the
combined buffer requirement laid down in Sections
35.22, 35.23, 35.24 and
35.25 of this Law;
4) any other information upon request of the Financial and
Capital Market Commission which is necessary for it to conform to
the requirements of Section 35.31 of this Law.
[24 April 2014]
Section 35.31 The Financial and Capital
Market Commission shall assess the capital conservation plan
drawn up by the credit institution. The Financial and Capital
Market Commission shall approve the abovementioned plan only in
the event if it considers that implementation of such plan is
most likely to maintain or ensure sufficient capital for the
credit institution to be able to meet the combined buffer
requirement set out in Sections 35.22,
35.23, 35.24, and 35.25 of this
Law within such period of time which the Financial and Capital
Market Commission considers suitable.
[24 April 2014]
Section 35.32 If the Financial and Capital
Market Commission does not confirm the capital conservation plan
drawn up and submitted by the credit institution in accordance
with the requirements of Section 35.31 of this Law, it
shall:
1) require the credit institution to increase own funds to a
certain level within certain periods of time;
2) determine stricter distribution restrictions than laid down
in Sections 35.26 and 35.27 of this
Law.
[24 April 2014]
Section 35.33 (1) The Common Equity Tier 1
capital that is maintained by a credit institution to meet the
combined buffer requirement laid down in accordance with the
requirements of Sections 35.22, 35.23,
35.24, and 35.25 of this Law shall not be
used to meet:
1) any of the own funds requirements laid down in points (a),
(b), and (c) of Article 92(1) of Regulation (EU) No 575/2013;
2) the additional own funds requirement laid down in
accordance with Section 101.16 of this Law to address
risks other than the risk of excessive leverage;
3) the guidance on additional own funds communicated in
accordance with Section 101.17, Paragraph three of
this Law to address risks other than the risk of excessive
leverage.
(2) The Common Equity Tier 1 capital that is maintained by a
credit institution to meet one of its buffers which forms the
combined buffer requirement for it in accordance with Sections
35.22, 35.23, 35.24, and
35.25 of this Law may not be used to meet other
buffers forming the abovementioned combined buffer
requirement.
(3) The Common Equity Tier 1 capital that is maintained by a
credit institution to meet the combined buffer requirement laid
down in accordance with the requirements of Sections
35.22, 35.23, 35.24, and
35.25 of this Law may not be used to meet the
risk-based requirements laid down in Articles 92a and 92b of
Regulation (EU) No 575/2013 and in Sections 60 and
60.1 of the Law on Recovery of Activities and
Resolution of Credit Institutions and Investment Firms.
[29 April 2021]
Section 35.34 [Section shall come into
force on 1 January 2023 and shall be included in the wording of
this Law as of 1 January 2023. See Paragraph 103 of Transitional
Provisions]
Section 35.35 [Section shall come into
force on 1 January 2023 and shall be included in the wording of
this Law as of 1 January 2023. See Paragraph 103 of Transitional
Provisions]
Section 35.36 [Section shall come into
force on 1 January 2023 and shall be included in the wording of
this Law as of 1 January 2023. See Paragraph 103 of Transitional
Provisions]
Section 36. [22 February 2007]
Section 36.1 [22 February 2007]
Section 36.2 (1) In addition to the own
funds requirements laid down in EU Regulation No 575/2013, a
credit institution shall assess the capital necessary for
covering the inherent and potential risks for activities and
ensure that the capital necessary for covering the inherent and
potential risks for activities is sufficient, as well as
determine the elements and structure of such capital.
(2) A credit institution shall develop strategy and procedures
being appropriate, comprehensive, substantiated and efficient for
the nature, volume and complexity of its activities and shall
implement necessary measures for continuous capital assessment
and the maintenance of adequate capital.
(21) In accordance with the strategy, procedures,
and measures referred to in Paragraph two of this Section, a
credit institution shall determine its capital at the adequate
level of own funds which is sufficient for covering any such
risks to which the credit institution is exposed and is able to
cover the potential losses pointed to by the results of the
stress testing performed by the credit institution and the
Financial and Capital Market Commission in accordance with
Section 101.3, Paragraph 4.2 of this
Law.
(3) A credit institution shall regularly review the strategy
and procedures referred to in Paragraph two of this Section in
order to ensure that they remain comprehensive and commensurate
to the type, scope and complexity of the activities of the credit
institution.
[22 February 2007; 23 December 2010; 22 March 2012; 24
April 2014; 29 April 2021]
Section 36.3 (1) [24 April 2014]
(2) [24 April 2014]
(3) A credit institution shall make public information on its
website in accordance with Part Eight of EU Regulation No
575/2013 or choose another suitable information carrier or place
for the publication thereof.
(4) The Financial and Capital Market Commission is entitled to
determine a requirement whereby the information referred to in
Paragraph three of this Section is made public more frequently
than on an annual basis, and set forth the publication
timeframes.
(5) A credit institution which is a parent company shall make
public on an annual basis the information regarding legal
structure of the group, as well as organisational structure of
governance and operation thereof, which ensures conformity with
the requirements of Section 14, Paragraph one, Clause 2, Section
34.1 and Section 50.9, Paragraph two of
this Law.
[22 February 2007; 23 December 2010; 24 April 2014; 11 June
2015; 29 April 2021]
Section 36.4 [24 April 2014]
Section 37. (1) A credit institution shall place its
assets in such a way as to ensure that the legally justified
claims of its creditors may be satisfied at any time.
(2) The regulatory provisions for ensuring such claims in
relation to banks registered in the Republic of Latvia (liquidity
requirements) shall be determined by the Financial and Capital
Market Commission.
(21) If liquidity problems have been detected for a
credit institution or there are grounds for assuming that such
might arise, the Financial and Capital Market Commission as the
supervisory authority of the state of domicile shall notify the
supervisory authorities of all states involved about it by
appending the information on the non-compliance remedy plan and
the implementation measures thereof, as well as all supervision
measures performed in relation thereto.
(3) [23 December 2010]
(4) [23 December 2010]
(5) [23 December 2010]
[28 October 2004; 22 February 2007; 23 December 2010; 24
April 2014; 21 July 2017]
Section 38. [1 June 2000]
Section 39. [24 April 2014]
Section 40. [23 December 2010]
Section 41. [21 May 1998]
Section 42. [24 April 2014]
Section 43. (1) Exposures with stockholders
(shareholders) of a credit institution who have a qualifying
holding in the credit institution and the spouses, parents, and
children of these stockholders (shareholders) - natural persons,
members of the council and board of the credit institution, the
head of the internal audit service, the risk manager, the person
responsible for the conformity control, and the company
controller, the spouses, parents, and children of these persons,
as well as commercial companies in which the abovementioned
persons have a qualifying holding shall not exceed in total 20
per cent of the own funds of the credit institution which are
applied for the purpose of determination of restrictions on large
exposures in accordance with EU Regulation No 575/2013.
(2) Credits to the persons referred to in Paragraph one of
this Section, which each individually or all in total exceed 0.1
per cent of the own funds of the credit institution which are
applied for the purpose of determination of restrictions on large
exposures in accordance with EU Regulation No 575/2013 or EUR 50
000, depending on which of these amounts is smaller, shall be
granted with a decision unanimously taken by the board of the
credit institution.
(3) The procedures for the determination of the amount of
exposures with the persons referred to in Paragraph one of this
Section shall be determined by the Financial and Capital Market
Commission.
[24 April 2014; 29 April 2021]
Section 44. [24 April 2014]
Section 45. [24 April 2014]
Section 45.1 A credit institution or a
financial holding company prior to the acquisition of a holding
in the equity capital of a commercial company registered in a
foreign country, as a result of which the commercial company in
accordance with this Law is subject to consolidated supervision,
shall ascertain that the bank will be able to obtain the
necessary information for consolidated supervision from the
relevant commercial company.
[22 February 2007; 23 December 2010 / Amendments in
relation to replacement of the word "bank" with the words "credit
institution" shall come into force on 30 April 2011. See
Paragraph 39 of Transitional Provisions]
Section 46. [24 October 2002]
Section 47. [22 February 2007]
Section 48. A credit institution may not grant,
directly or indirectly, credit for the acquisition of the stocks
and other instruments of own funds issued by itself or by its
parent or subsidiary, as well as accept the own stocks (shares)
as credit security.
[24 October 2002; 23 December 2010; 24 April 2014]
Section 49. The open foreign exchange position of a
credit institution may not exceed:
1) in a single foreign currency - 10 per cent of own funds
which are applicable for determination of restrictions on large
exposures in accordance with EU Regulation No 575/2013;
2) in total in all foreign currencies - 20 per cent of own
funds which are applicable for determination of restrictions on
large exposures in accordance with EU Regulation No 575/2013.
[24 April 2014]
Section 49.1 (1) A credit institution which
has received a permission to use internal approaches for
calculation of risk-weighted values on exposures or own funds
requirements, except the permission of calculation of own funds
requirement for operational risk, shall calculate, in addition to
what is laid down in EU Regulation No 575/2013, the risk-weighted
values or own funds requirements on the exposures and financial
instrument items included in the benchmark portfolio or
portfolios of the European Banking Authority.
(2) The Financial and Capital Market Commission is entitled,
after consultations with the European Banking Authority, to
determine a benchmark portfolio or portfolios which are different
from those determined by the European Banking Authority.
(3) A credit institution shall prepare and at least once a
year submit to the Financial and Capital Market Commission a
report on calculation of the risk-weighted value or own funds
requirement for exposures and financial instrument items included
in a benchmark portfolio determined by the European Banking
Authority and an explanation of the methodology used for the
calculation referred to in Paragraph one of this Section.
(4) If the Financial and Capital Market Commission has
determined a benchmark portfolio or portfolios which are
different from those determined by the European Banking
Authority, a credit institution shall prepare and at least once a
year submit to the Financial and Capital Market Commission a
separate report on calculation of the risk-weighted value or own
funds requirement for exposures and financial instrument items
included in the benchmark portfolio or portfolios determined by
the Financial and Capital Market Commission.
[24 April 2014]
Section 49.2 The Financial and Capital
Market Commission is entitled to request that a credit
institution uses the standardised methodology specified in the
directly applicable legal acts of the European Union for the
evaluation of the interest rate risk of the non-trading book
where it considers that the internal systems implemented by the
credit institution for the evaluation of the interest rate risk
of the non-trading book are not satisfactory.
[29 April 2021 / Section shall come into force on 28 June
2021. See Paragraph 102 of Transitional Provisions]
Section 49.3 The Financial and Capital
Market Commission is entitled to request that a small and
non-complex credit institution uses the standardised methodology
specified in the directly applicable legal acts of the European
Union for the evaluation of the interest rate risk of the
non-trading book where the Financial and Capital Market
Commission establishes that the simplified standardised
methodology used which has been specified in the directly
applicable legal acts of the European Union is not adequate to
capture the interest rate risk of the non-trading book.
[29 April 2021 / Section shall come into force on 28 June
2021. See Paragraph 102 of Transitional Provisions]
Section 50. (1) The Financial and Capital Market
Commission shall determine the option of choice laid down in EU
Regulation No 575/2013 with regard to determination of prudential
requirements and transition periods concerning the application of
the provisions of this Regulation.
(2) For the purpose of ensuring the activities of credit
institutions in accordance with the requirements of this Law and
directly applicable legal acts of the European Union, the
Financial and Capital Market Commission has the right to set
additional requirements governing the activities of credit
institutions in the areas not governed in accordance with EU
Regulation No 575/2013 in relation to the specific risks inherent
to the financial and capital market of Latvia and activities of
credit institutions, in order to reduce exposure in the
activities of credit institutions and to protect the interests of
creditors, as well as to determine the requirements arising from
the decisions, guidelines, and recommendations adopted by the
European Central Bank or the European Banking Authority in order
to ensure a uniform, efficient, and constructive supervision
practice in Member States by taking into account the nature of
cross-border activities of the European financial supervision
system.
(3) The Financial and Capital Market Commission is entitled to
determine provisions of reporting related to certain events,
preparation and submission of statements, as well as the
procedures for the preparation and provision of information
necessary for the supervision of credit institutions and for the
receipt of the necessary permissions, if the European Commission
has not determined them.
(4) The Financial and Capital Market Commission shall be the
institution responsible for the application of Article 458 of EU
Regulation No 575/2013.
(5) The Financial and Capital Market Commission shall be the
institution responsible for the application of Articles 124 and
164 of EU Regulation No 575/2013.
[24 April 2014; 26 October 2017; 29 April 2021]
Section 50.1 [28 October 2004]
Section 50.2 [22 February 2007]
Section 50.3 [22 February 2007]
Section 50.4 [22 February 2007]
Section 50.5 [22 February 2007]
Section 50.6 [22 February 2007]
Section 50.7 [22 February 2007]
Section 50.8 (1) A credit institution which
is neither a parent company registered in the Republic of Latvia
and subject to consolidated supervision, nor subsidiary thereof,
as well as any credit institution which is not subject to the
consolidated supervision in accordance with the requirements of
Article 19 of EU Regulation No 575/2013, shall conform to the
requirements of Section 36.2 of this Law on an
individual basis.
(2) A parent credit institution of the Republic of Latvia
shall conform to the requirements of Section 36.2 of
this Law on a consolidated basis.
(3) [29 April 2021]
(4) If a credit institution which is a subsidiary of a parent
credit institution of the Republic of Latvia, a parent financial
holding company of the Republic of Latvia or a parent mixed
financial holding company of the Republic of Latvia, or its
parent financial holding company or its parent mixed financial
holding company has a subsidiary registered in a foreign country,
which is an institution, a financial institution or an asset
management company (as defined in Article 4(1)(19) of EU
Regulation No 575/2013) or which has holding of the
abovementioned institutions or companies, such credit institution
shall conform to the requirements of Section 36.2 of
this Law on a sub-consolidated basis.
[24 April 2014; 29 April 2021]
Section 50.9 (1) A credit institution which
is not released from conformity with regulatory requirements on
an individual basis in accordance with Article 7 of EU Regulation
No 575/2013, shall conform to the requirements of Section
34.1, 34.2, 34.3, and
49.1 of this Law on an individual basis.
(2) A credit institution which is subjected to consolidated
supervision in accordance with Part One, Title II of EU
Regulation No 575/2013 shall conform to the requirements of
Sections 34.1, 34.2, 34.3, and
49.1 of this Law on a consolidation group or
sub-consolidated basis and ensure that its internal control
system is consequent, well-integrated, and implemented in all
subsidiaries, inter alia, in those which are not part of the
consolidation group in accordance with Part One, Title II of EU
Regulation No 575/2013, and also ensure preparation of all data
and information necessary for supervision. The requirements of
Sections 34.1, 34.2, 34.3, and
49.1 of this Law shall not be binding on subsidiaries
for which the respective specific requirements for their sector
of activity have been laid down on an individual level. With a
permission of the Financial and Capital Market Commission, a
credit institution need not conform to the requirements laid down
in Sections 34.1, 34.2, 34.3,
and 49.1 of this Law in its foreign subsidiaries which
are not included in the consolidation group in accordance with
Part One, Title II of EU Regulation No 575/2013 if the credit
institution may prove that these requirements do not conform to
the legal acts of the country where the subsidiary is
registered.
(3) A credit institution need not conform to the remuneration
requirements laid down in Section 34.3, Paragraphs two
and seven of this Law in subsidiaries in a Member State to which
remuneration requirements specific for the sector are binding in
accordance with other directly applicable legal acts of the
European Union and the legal acts of a Member State which have
been adopted upon introduction of the legal acts of the European
Union, and in foreign subsidiaries to which remuneration
requirements specific for the sector would be binding in
accordance with other directly applicable legal acts of the
European Union and the legal acts of a Member State which have
been adopted upon introduction of the legal acts of the European
Union in case if they were registered in the European Union.
(4) The provisions of Paragraph three of this Section shall
not apply to officials or employees in a subsidiary which is an
asset management company or a company which has the right to
perform such investment services and activities as the
enforcement of orders on behalf of clients, the performance of
transactions on its own behalf, the portfolio management, the
initial placement of financial instruments or placement of
financial instruments with undertaking of liabilities of buying
out of financial instruments and placement of financial
instruments without undertaking of liabilities of buying out of
financial instruments, if the professional activity of such
officials or employees has a significant influence on the joint
risk profile or commercial activity of the consolidation
group.
[29 April 2021]
Section 51. [24 April 2014]
Section 52. [24 April 2014]
Section 53. [21 May 1998]
Section 54. [24 April 2014]
Section 55. A credit institution shall assess the
quality of the assets thereof in accordance with this Law and the
regulatory provisions of the Financial and Capital Market
Commission. The Financial and Capital Market Commission shall
determine the requirements for the assessment of the quality of
assets and creation of accruals.
[16 July 2009; 24 April 2014]
Section 56. [22 February 2007]
Section 56.1 [27 May 2021]
Section 57. (1) A credit institution shall obtain the
permission of the Financial and Capital Market Commission if the
credit institution is reorganised.
(11) The Financial and Capital Market Commission
shall determine the documents to be submitted and the procedures
by which it shall assess the conformity of the members of the
council and the board, the head of the internal audit service,
the risk manager, the person responsible for the conformity
control of the operation, the person responsible for the
fulfilment of the requirements for the prevention of money
laundering and terrorism and proliferation financing of the
credit institution, and the head of a branch of a foreign credit
institution or a branch of a credit institution in another Member
State with the requirements of this Law. The Financial and
Capital Market Commission shall determine the procedures by which
credit institutions shall assess the persons who perform the
principal functions.
(12) In order to ascertain the conformity of the
members of the council and the board, the head of the internal
audit service, the risk manager, the person responsible for the
conformity control of the operation, the person responsible for
the fulfilment of the requirements for the prevention of money
laundering and terrorism and proliferation financing, and the
head of a branch of a foreign credit institution or a branch of a
credit institution in another Member State with the requirements
of this Law, the Financial and Capital Market Commission has the
right to summon the relevant persons for discussions.
(13) The Financial and Capital Market Commission,
within 30 working days from the day when it has received all the
necessary documents, has the right to prohibit members of the
council and the board, the head of the internal audit service,
the risk manager, the person responsible for the conformity
control of the operation, the person responsible for the
fulfilment of the requirements for the prevention of money
laundering and terrorism and proliferation financing of a credit
institution, and the head of a branch of a foreign credit
institution or a branch of a credit institution in another Member
State from commencing the fulfilment of their duties if the
aforementioned persons do not meet the requirements of this Law
or the Financial and Capital Market Commission cannot verify
their conformity to the requirements laid down in this Law.
(14) If such information comes at the disposal of
the Financial and Capital Market Commission which was not known
to it, upon performing the assessment in accordance with
Paragraph 1.3 of this Section, and which may affect
the conformity of the person in office referred to in Paragraph
1.1 of this Section with the requirements of this Law,
or in cases when the Financial and Capital Market Commission has
established that a credit institution has violated the
requirements of the laws and regulations governing its operation,
the Financial and Capital Market Commission is entitled to
re-evaluate the conformity of the persons referred to in
Paragraph 1.1 of this Section on the basis of new
facts or circumstances.
(2) The credit institution shall, not later than 15 days
before taking the relevant decision, notify the Financial and
Capital Market Commission in writing of the intention to change
the name of the credit institution. If, within seven days after
receipt of notification of the credit institution, the Financial
and Capital Market Commission has not provided a reasoned
objection against the change of the name of the credit
institution, it shall be considered that the Financial and
Capital Market Commission has given permission to the change of
the name of the credit institution.
(3) [24 April 2014]
[11 April 2002; 11 December 2003; 28 October 2004; 9 June
2005; 29 May 2008; 24 April 2014; 11 June 2015; 2 June 2016; 21
July 2017; 13 June 2019; 29 April 2021]
Section 58. If a credit institution is divided into two
or more credit institutions, the own funds of the newly founded
credit institutions may not be less than the minimum initial
capital laid down in the law.
[28 October 2004]
Section 59. The own funds of a credit institution
formed by a merger of credit institutions may not be less than
the minimum initial capital laid down in the law.
[28 October 2004]
Section 59.1 (1) In case of reorganisation,
Section 345 of the Commercial Law imposes an obligation on each
credit institution involved in reorganisation to publish in the
official gazette Latvijas Vēstnesis a notice that the
decision to reorganise has been taken, and to send the notice to
all known creditors which had the right of action against the
credit institution up to moment when the decision referred to in
Section 343 of the Commercial Law on reorganisation was taken.
The aforementioned notice need not be sent to creditors whose
right of action results from the credit institution providing
such creditors with financial services.
(2) The provisions of Paragraph one of this Section shall not
apply to reorganisation measures, which are carried out in
accordance with Chapter XVI of this Law.
[9 June 2005; 16 May 2013]
Section 59.2 (1) For the transition of the
body of property subject to separation, the body of assets or
liabilities or the body of standard contracts entered into with
the credit institution customers of a credit institution
undertaking or a part thereof, including a branch, (hereinafter -
the credit institution undertaking) into the ownership or use of
another person (hereinafter - the transition of a credit
institution undertaking), the credit institution shall require an
authorisation of the Financial and Capital Market Commission,
except for the cases provided for in the Covered Bonds Law. If
the transition of a credit institution undertaking takes place on
the basis of the decision of the authorised person referred to in
Section 59.3, Paragraph one of this Law on submission
of a proposal to the Financial and Capital Market Commission,
then, in order to acquire permission, the credit institution
shall submit a proposal for the transition of the credit
institution undertaking to the Financial and Capital Market
Commission to which the assessment of the assets and liabilities
included in the credit institution undertaking has been appended
in accordance with the provisions of the Law on Recovery of
Activities and Resolution of Credit Institutions and Investment
Firms. The transition of a credit institution undertaking, for
which an authorisation of the Financial and Capital Market
Commission has not received, shall be considered null and
void.
(11) The provision of Section 20, Paragraph one of
the Commercial Law regarding the transferor of the undertaking
and the acquirer of the undertaking being solidarily liable shall
not apply to the transition of a credit institution undertaking -
agreements regarding financial services.
(2) The transition of a credit institution undertaking after
receipt of an authorisation of the Financial and Capital Market
Commission shall not require receiving of a consent from
creditors of the credit institution involved in the transition of
a credit institution undertaking or other persons, including a
consent for the validity of the liabilities included in the
composition of the credit institution undertaking or a part
thereof among such persons and the acquirer of the undertaking,
as well as for the validity of any auxiliary liabilities existing
at the time of transfer of the undertaking, unless it has been
otherwise laid down in the proposal for the transition of a
credit institution undertaking.
(21) In case of transition of a credit institution
undertaking the provision of information to the acquirer of the
credit institution undertaking regarding creditors or debtors of
the credit institution or other persons, the agreements entered
into with which constitute the credit institution undertaking or
the part thereof to be transferred, shall not be considered a
failure to conform to the requirements laid down in the law.
(3) The transition of a credit institution undertaking in
relation to the property of the credit institution located
outside the Republic of Latvia shall be valid irrespective of the
law of another state applicable to such property or individual
objects, rights or liabilities contained therein.
(4) Appealing of an administrative act issued by the Financial
and Capital Market Commission regarding an authorisation for
transition of a credit institution undertaking shall not suspend
the execution thereof.
[12 February 2009; 22 October 2009; 11 March 2010; 11 June
2015; 27 May 2021]
Section 59.3 (1) If the Financial and
Capital Market Commission in accordance with Section 113,
Paragraph one, Clause 6 of this Law has appointed an authorised
person who has received the authorisation referred to in Section
117, Paragraph one, Clause 3 of this Law, the appointed
authorised person shall decide on submission of a proposal to the
Financial and Capital Market Commission regarding transition of a
credit institution undertaking. The provision of Section 20,
Paragraph one of the Commercial Law regarding the transferor of
the undertaking and the acquirer of the undertaking being
solidarily liable shall not be applicable to the acquirer of the
credit institution undertaking. In case of such transition the
Financial and Capital Market Commission shall permit the
transition of a credit institution undertaking to be carried out,
if the transaction is carried out in the interests of security
and stability of the national economy or the sector of credit
institutions, or of the depositors of the credit institution, and
the provisions of Section 170 of the Commercial Law regarding
bringing of an action for the benefit of the company are not
applicable to such transition.
(2) The transition of a credit institution undertaking which
has been carried out by a decision of the authorised person
appointed by the Financial and Capital Market Commission shall
not be considered null and void.
[12 February 2009]
Section 59.4 (1) The decision on transition
of a credit institution undertaking during liquidation
proceedings of a credit institution shall be taken by the
liquidator.
(2) The decision on transition of a credit institution
undertaking during insolvency proceedings of a credit institution
shall be taken by the administrator, and the provision of Section
20, Paragraph one of the Commercial Law on the transferor of the
undertaking and the acquirer of the undertaking being solidarily
liable shall not apply to the acquirer of the credit institution
undertaking.
[12 February 2009]
Section 59.5 [Invalidated by the judgment of
the Constitutional Court of 19 October 2011 which shall enter
into effect on 19 October 2011. Excluded by the law of 22 March
2012 which shall come into force on 25 April 2012]
Section 59.6 (1) If a credit institution in
accordance with the laws and regulations regarding aid for
commercial activity receives such aid, the credit institution is
prohibited to carry out the subordinate liabilities, including
prohibited to repay a loan, to calculate, to accumulate or to pay
out interest for such loan and other charges, from granting aid
for commercial activity until the end of provision of aid for
commercial activity.
(2) If the Financial and Capital Market Commission has
determined deposit restrictions for a credit institution, the
credit institution is prohibited to carry out the subordinate
liabilities, including prohibited to repay a loan, to calculate,
to accumulate or to pay out interest for such loan and other
charges, from the day of determination of such restrictions until
the day of revocation of such restrictions.
(3) If the subordinate liabilities arise for a credit
institution after the day when aid for commercial activity was
granted or deposit restrictions were determined, then the
prohibition laid down in Paragraphs one and two of this Section
for carrying out the liabilities shall not apply.
[22 October 2009; 23 December 2010 / Amendments in relation
to replacement of the word "bank" with the words "credit
institution" shall come into force on 30 April 2011. See
Paragraph 39 of Transitional Provisions]
Section 59.7 [24 April 2014]
Section 59.8 (1) The Financial and Capital
Market Commission shall request that the credit institution,
which receives aid for commercial activity, reviews its
remuneration system, where applicable, also imposing restrictions
on remuneration of the credit institution, members of the council
and the board, in a manner which ensures efficient risk
management and long-term development.
(2) A credit institution which receives aid for commercial
activity shall determine percentage restrictions for the amount
of the net revenue thereof which may be used for work
remuneration subject to the performance results in order to
ensure the maintenance of own funds corresponding for stable
operation of the credit institution and timely termination of the
aid for commercial activity.
(3) A credit institution which receives aid for commercial
activity shall not provide for work remuneration subject to the
performance results for members of its council and the board. The
council of such credit institution, after assessment on a
case-by-case basis, by way of exception, may take the decision to
determine such remuneration for the members of the board and the
meeting of stockholders - for the members of the council.
[23 December 2010; 22 March 2012; 24 April 2014]
Chapter V
Relationships between Credit Institutions and Customers
Section 60. Relationships between credit institutions
and customers shall be governed by laws and regulations, and also
by contracts concluded between the credit institution and the
customer, including by using means of distance communication.
[28 February 2019]
Section 61. (1) It is the obligation of a credit
institution to guarantee the confidentiality of the identity,
accounts, deposits and transactions of customers.
(2) In accordance with the regulatory directives and
regulations of Latvijas Banka, a credit institution shall submit
to Latvijas Banka, for the carrying out of macroeconomic
analysis, the necessary statistical information regarding
payments that have been made between residents and
non-residents.
(3) Latvijas Banka has the right to submit the compiled
information referred to in Paragraph two of this Section to the
Central Statistical Bureau.
(4) [28 October 2004]
[21 May 1998; 1 June 2000; 24 October 2002; 11 December
2003; 28 October 2004]
Section 62. (1) Information on the accounts of and the
transactions carried out by natural persons shall be provided to
such persons themselves and to their lawful representatives.
(2) Information on the accounts and activities made by legal
persons shall be provided to authorised representatives of such
legal persons and to their highest institutions upon request of
the heads of such institutions.
(3) [26 May 2005]
(4) Information on a customer, his or her accounts and
transactions carried out shall be provided to a third party in
accordance with a written contract, if the customer has
unequivocally consented to the provision of such information to
the third party.
(41) Information on a customer's credit payment
schedule, fulfilment of credit obligations, including payments
made and the amount of outstanding principal debt, shall be
provided to the customer's guarantor or pledger upon a written
request.
(42) Information on a customer, his or her accounts
and transactions carried out shall be provided by the credit
institution also to the heir, trustee of the entirety of
property, or executor of the will of a customer - a natural
person -, on the basis of a substantiated submission thereof for
ensuring the rights and lawful interests, and it shall apply to
information for a time period not exceeding five years prior to
the death of the customer.
(5) Information on a customer and his or her transactions,
which the credit institution acquires in providing financial
services in accordance with an entered into contract, is
non-disclosable information, which does not contain official
secrets.
(6) Information on a customer, his or her financial instrument
accounts and money accounts, which are related to financial
instrument accounting, as well as on transactions carried out
with financial instruments included in regulated markets shall be
provided to the organisers of regulated markets on the basis of
their request if such information is necessary to the market
organisers in order to ensure the carrying out of the supervisory
functions granted for the prevention of the utilisation of
insider information and market manipulation.
(7) Information on the accounts of a natural and legal person
and the operations (transactions) of credit institutions carried
out shall be provided to the administrator of insolvency
proceedings of such persons for the fulfilment of his or her
duties, on the basis of a substantiated request.
(8) Information on the customer, his or her accounts and
transactions carried out shall be provided to a credit
institution, financial institution, financial holding company and
mixed financial holding company registered in the Member State,
which is in the same consolidation group as the credit
institution providing the information, consolidated supervision
of which is carried out by the consolidated supervisor of the
Member State, if the information is necessary:
1) for identification, assessment, monitoring, and supervision
of the inherent and potential risks for activities of commercial
companies belonging to the relevant consolidation group;
2) for the calculation of and compliance with the requirements
governing activities of commercial companies belonging to the
relevant consolidation group.
(9) Information on the customer, his or her accounts and
transactions carried out in accordance with a written agreement
shall be provided:
1) to the outsourced services provider if such information is
necessary for the receipt of an outsourcing service;
2) to the person who provides such service to a credit
institution, which is related to:
a) identification, assessment, management, and supervision of
the inherent and potential risks for activities of the credit
institution;
b) calculation of and compliance with the requirements
governing activities of the credit institution.
(91) The credit institution shall provide
information to other persons on the customer, his or her
accounts, and transactions carried out if it is provided for in
the Law on the Prevention of Money Laundering and Terrorism and
Proliferation Financing.
(92) The credit institution shall provide
information to other persons on the customer, his or her
accounts, and transactions carried out if it is provided for in
the Law on Payment Services and Electronic Money.
(10) Prior to provision of information in the cases laid down
in Paragraph eight of this Section, the credit institution shall
ascertain that the relevant information is protected against
disclosure.
(11) In cases when a customer of a credit institution has
publicly distributed details on his or her cooperation with the
credit institution which does not conform to the information at
the disposal of the credit institution or, within the scope of
journalistic activity, has publicly distributed information on
the cooperation of the credit institution with the customer in
mass media registered in Latvia or another state, the credit
institution is entitled to publicly disclose the non-disclosable
details at the disposal thereof on the relevant person, providing
an explanatory reply in relation to the details or information
distributed (hereinafter - the explanatory reply) in a form
chosen by it, if all of the following conditions are conformed
to:
1) without the provision of the explanatory reply by the
credit institution, the relevant details or information may
endanger stable operation of the credit institution or harm the
reputation of the credit institution;
2) before the credit institution provides the explanatory
reply, it shall inform the Financial and Capital Market
Commission of the content of the explanatory reply;
3) the decision to provide the explanatory reply is taken by
the board of the credit institution or its authorised member of
the board;
4) the explanatory reply shall disclose personal data or
information on transactions without exceeding the extent to which
they have already been publicly distributed;
5) the explanatory reply is provided insofar as it applies to
the issues in relation to which the relevant details or
information have been publicly distributed in the relevant mass
medium and to the extent which is necessary to ensure objective
information on the particular situation to the society;
6) the restriction specified in the Law on the Prevention of
Money Laundering and Terrorism and Proliferation Financing to
disclose information on provision of a report on a suspicious
transaction is not violated.
(12) In addition to that specified in Paragraph eleven,
Clauses 4 and 5 of this Section on the provision of objective
information on the particular situation to the society, the
explanatory reply may include information on the cooperation
fact, its commencement and termination date, and the financial
services used by the customer, and also on the risk mitigating
measures taken by the credit institution, if such were
applied.
(13) The non-disclosable information at the disposal of a
credit institution may be disclosed to other persons in
accordance with the Covered Bonds Law.
[30 May 1996; 21 May 1998; 11 April 2002; 26 May 2005; 9
June 2005; 16 July 2009; 23 December 2010; 22 March 2012; 24
April 2014; 25 October 2018; 28 February 2019; 13 June 2019; 29
April 2021; 27 May 2021]
Section 63. (1) Non-disclosable information at the
disposal of a credit institution shall be provided to a State
institution, State official or other institution and official in
accordance with the procedures laid down in this Law and to the
following extent:
1) the Financial and Capital Market Commission -
implementation of the supervisory functions laid down in the
law;
2) the Financial Intelligence Unit of Latvia - in accordance
with the procedures and to the extent laid down in the Law on the
Prevention of Money Laundering and Terrorism and Proliferation
Financing;
21) the cooperation coordination group of the
Financial Intelligence Unit of Latvia - in accordance with the
Law on the Prevention of Money Laundering and Terrorism and
Proliferation Financing;
22) the State Revenue Service - bank account
statement of a subject of the Law on the Prevention of Money
Laundering and Terrorism and Proliferation Financing who is being
supervised and controlled by the State Revenue Service or its
customer for a specific period based on a request approved by the
head of the structural unit of the State Revenue Service
responsible for the supervision and control of the subjects of
the Law on the Prevention of Money Laundering and Terrorism and
Proliferation Financing or his or her deputy, if it is required
for the fulfilment of the supervision functions laid down in the
Law on the Prevention of Money Laundering and Terrorism and
Proliferation Financing;
3) courts - within the scope of the matters in the
record-keeping thereof on the basis of a court (judge)
decision;
4) the person directing the proceedings - in accordance with
that laid down in the Criminal Procedure Law;
5) [1 November 2018];
6) the bodies performing operational activities - in
accordance with that laid down in the Operational Activities
Law;
7) the Corruption Prevention and Combating Bureau - in the
cases referred to in Paragraph one, Clauses 4 and 6 of this
Section, as well as on the basis of a request from the director
or a person specially authorised by him or her, which has been
accepted by the Chief Justice of the Supreme Court or his or her
authorised Justice of the Supreme Court if the information is
necessary in order to ensure the control of the restrictions laid
down for State officials in the law On Prevention of Conflict of
Interest in Activities of Public Officials and to ascertain the
cash savings of State officials, income received, transactions
performed or debt obligations, or if the information is
necessary, in order to ensure the control of the norms laid down
in the Political Organisation (Parties) Financing Law, ascertain
the annual financial activities of political organisation
(parties) and the associations thereof, expenditures in the
pre-election period and the veracity and lawfulness of the
financial resources and donations (gifts) received indicated in
the election income and expenditure declaration;
8) bailiffs - on the basis of request to which is appended a
copy of the ruling of such court or other institution or
official, in the implementation of which are performed official
activities, or only on the basis of a request - in cases when
information is necessary for the compilation of an inventory
list, as well as in the making of the inventory of property for
the purpose of dividing common property or in an inheritance
matter;
9) the State Treasury - on the basis of a request by the head
or an employee authorised by him or her regarding the accounts
and transactions of budget financed institutions;
10) the State Audit Office - on the basis of a request which
has been accepted by the Auditor General, regarding legal persons
which have the capacity to act with State or local government
property, or which are financed from the State or local
government resources, or which implement State or local
government procurement and supply;
101) the Data State Inspectorate - for the
fulfilment of the tasks laid down in the laws and regulations
based on a request approved by the Director of the Data State
Inspectorate or his or her deputy;
11) the State Revenue Service - on the basis of a request
which has been accepted by the Director General of the State
Revenue Service, his or her deputy or the head of the tax
administration unit or his or her deputy in accordance with the
laws and regulations of the Republic of Latvia or the
international agreements ratified by the Saeima of the
Republic of Latvia, except the case when the relevant
international agreements provide for the provision of predictably
important information or important information, information
necessary for the tax administration needs in relation to a
specific taxpayer of the country requesting information - the
existence of a bank account, the holder of the bank account, the
person authorised to deal with the bank account, the opening
balance and closing balance of the bank account in the reporting
period, a bank account statement for a specific period of time,
information on other accounts of the account holder in the bank
during a specific time period, as well as information on the
payment card attached to the relevant accounts (the type, number
and user thereof), information on attachment of the relevant
payment card to the bank account, if:
a) the relevant taxpayer does not submit the declarations or
tax calculations provided for in the laws on the specific taxes
to the tax administration;
b) during a tax audit of the relevant taxpayer, violations of
the laws and regulations regarding accounting records or taxes
have been detected;
c) the relevant taxpayer does not make tax payments in
accordance with the requirements of laws on taxes;
111) the State Revenue Service - on the basis of a
request accepted by Director General of the State Revenue
Service, his or her deputy, or the head of the tax administration
unit or his or her deputy, in accordance with the laws and
regulations of the European Union or international agreements
ratified by the Saeima of the Republic of Latvia, if they
provide for the provision of predictably important information or
important information, predictably important information or
important information for the needs of tax administration of a
specific taxpayer of another European Union Member State or
foreign country (a party to the international agreement)
(including on transactions with third parties). For application
of this Clause predictably important information or important
information shall be:
a) the numbers of the bank accounts, including closed bank
accounts, of the relevant person;
b) the numbers of such bank accounts with which the authorised
person has been authorised to act by a particular taxpayer or
with which the authorised person has been authorised to act in
relation to a particular taxpayer or group of taxpayers, their
transactions, transaction partners, or related persons;
c) the holder of the relevant bank account;
d) the persons who are authorised to act with the bank
account, including using the means of remote management of the
accounts;
e) the person who opened the bank account;
f) the opening balance and closing balance of the bank account
during the reporting period;
f) the amount of interest paid for the money present in the
relevant bank account for a specific period of time;
h) the paid amount of taxes on interest over a specific period
of time;
i) bank account statement for a specific period of time;
j) information or documents in relation to a particular
transaction in the account, including a payment order, copies of
cash deposit receipts, cheques, including withdrawn cheques, loan
contracts, and documents certifying other transactions;
k) documents certifying opening of accounts, including a
contract regarding opening of a bank account, copies of signature
sample cards and other similar documents which have been acquired
by a credit institution for the purpose of identification of the
customer;
l) information on other accounts of the account holder in the
bank during a specific period of time, as well as information on
the payment cards attached to the relevant accounts (their type,
number, user);
m) information on attachment of the payment card to the bank
account;
n) information on the user of the relevant payment card;
o) the information and documents indicated in Sub-clauses "a",
"b", "c", "d", "e", "f", "g", "h", "i", "j", "k", "l", "m", and
"n" of this Clause on accounts opened or held by third parties if
such information is predictably important or important for the
tax administration needs of a particular taxpayer or group of
taxpayers;
112) the State Revenue Service - for the provision
of information to the United States of America on the basis of
the Agreement between the Government of the United States of
America and the Government of the Republic of Latvia to Improve
International Tax Compliance and to Implement (FATCA),
within the scope laid down in the Agreement. The Cabinet shall
determine the time periods and procedures for providing the
information;
113) the State Revenue Service - for the provision
of information on financial accounts to another European Union
Member State or any other involved country (within the meaning of
the law On Taxes and Fees) with which the Republic of Latvia or
the European Union has entered into an agreement for automatic
exchange of information on financial accounts to the extent and
in accordance with the procedures specified in the law On Taxes
and Fees and the laws and regulations issued on the basis
thereof;
114) the State Revenue Service - on the
cross-border scheme to be reported - for the performance of tax
control measures and the provision of information to another
European Union Member State and any other country with which the
Republic of Latvia or the European Union has entered into an
agreement for automatic exchange of information on the
cross-border schemes to be reported to the extent and in
accordance with the procedures specified in the law On Taxes and
Fees and the laws and regulations issued on the basis
thereof;
12) [23 November 2016];
13) notaries who examine an inheritance matter, information
that is necessary for ascertaining the entirety of the property
of an estate of a natural person - estate-leaver;
14) the Orphan's and Custody Court on the basis of a request
from the chairperson of the Orphan's and Custody Court,
regarding:
a) the entirety of property of an estate, transactions
performed by and balance on accounts for a child or other person
without the capacity to act, if the parents, guardian or trustee
does not provide the Orphan's and Custody Court with requested
information on the management of the property of the child or
other person without the capacity to act or there are justified
suspicions that information provided by the parents, guardian or
trustee is false;
b) natural persons - estate-leavers - balance on accounts for
the drawing up of a property list (estate inventory list);
15) the State Revenue Service - information on income of a
person from deposits and dividends in accordance with the law On
Personal Income Tax, and also information which is provided by a
credit institution as an account holder to the State Revenue
Service in accordance with the Enterprise Income Tax Law;
16) Latvijas Banka - for the performance of the tasks laid
down in the law;
17) the State Revenue Service - on the basis of a request
accepted by Director General of the State Revenue Service, his or
her deputy or the head of the tax administration unit or his or
her deputy, information on the existence of a personal account
and account balances, if the information is necessary:
a) in order to comply with the request of the authority of
another European Union Member State to provide the information
required for execution of a tax claim (within the meaning of the
law On Taxes and Fees) within the framework of mutual
assistance;
b) in order to comply with a tax claim of another European
Union Member State (within the meaning of the law On Taxes and
Fees) or to ensure compliance therewith. In such case the State
Revenue Service shall append to the request a copy of the single
instrument issued by another European Union Member State, which
allows the execution of the claim in the Member State of the
recipient;
171) the Parliamentary Investigation Commission -
the information necessary for the performance of the tasks
thereof;
18) the State Revenue Service - on suspicious transactions of
a person whose state of residence (registration) is the Republic
of Latvia within the meaning of the law On Taxes and Fees and in
accordance with the procedures and within the amount laid down in
the abovementioned Law;
19) the State Revenue Service - in the cases referred to and
in accordance with the procedures laid down in the law On Taxes
and Fees, the information on the payments made to a payment
beneficiary from accounts opened with the credit institution,
excluding identification data of payers;
20) the Insolvency Control Service - an account statement of a
customer who is or has been an insolvent legal person or an
account statement of the administrator which is opened by the
administrator in his or her own name in insolvency proceedings of
the relevant natural person in accordance with the Insolvency Law
on the basis of a request of the Insolvency Control Service
necessary in order to assess the actions of the administrator of
insolvency proceedings;
21) the information technologies security incidents response
institution - in accordance with the Law on the Security of
Information Technologies upon the initiative of the credit
institution in case of information technologies security
incidents or in case of suspicions of incident, or on the basis
of the request of the information technologies security incidents
response institution;
22) the Competition Council - within the scope of the case
initiated by the Competition Council and on the basis of a
decision of a judge;
23) the Ministry of Finance - within the scope of an
administrative investigation case initiated by the European
Anti-Fraud Office in accordance with the Law on the Aid to be
Provided to the European Anti-Fraud Office;
24) the State Revenue Service - on the basis of a request of
the State Revenue Service or upon initiative of a credit
institution, on residual funds of such legal persons existing in
credit institutions the operation of which has been terminated
and which have been excluded from the corresponding register kept
by the Enterprise Register by presenting the registration number
of the relevant legal person and the amount and currency of
residual funds;
25) the State Revenue Service - on natural persons who are
residents of the Republic of Latvia whose total sum of debit or
credit turnover of the previous year of sight-deposit accounts
and payments accounts (including closed sight-deposit accounts
and payments accounts) within the scope of one credit institution
is EUR 15 000 or more. The credit institution shall provide the
abovementioned information to the extent and in accordance with
the procedures specified in the law On Taxes and Fees and the
laws and regulations issued on the basis thereof;
26) the Consumer Rights Protection Centre - an account
statement of a natural or legal person for a particular period of
time for the performance of the supervisory functions specified
in the Consumer Rights Protection Law, implementing the powers
specified in point (b) of Article 9(3) of Regulation (EU)
2017/2394 of the European Parliament and of the Council of 12
December 2017 on cooperation between national authorities
responsible for the enforcement of consumer protection laws and
repealing Regulation (EC) No 2006/2004. The account statement
shall contain at least the following information:
a) the payment beneficiary and the performer of the
payment;
b) the account number of the payment beneficiary and the
performer of the payment;
c) the date, sum, currency of the payment, the justification
indicated in the payment object, and the status of the
payment.
(2) Except for the cases referred to in Paragraph one, Clauses
1, 21, 112, 113, and 15 of this
Section, the State authority, public official, or another
institution shall request the necessary information in writing by
precisely indicating in the request the name and amount of
information, as well as the justification for the request for
information - the relevant law or regulation, international
agreement, or legal act of the European Union. In the cases
referred to in Paragraph one, Clauses 4 and 6 of this Section,
the person directing the proceedings or the subject of
operational activities shall request information in accordance
with that laid down in Paragraph 3.2 of this
Section.
(3) A credit institutions shall, without delay, but not later
than within 14 days, provide the requested information if the
procedures laid down in Paragraphs one and two of this Section
have been complied with. In the cases referred to in Paragraph
one, Clauses 4 and 6 of this Section, the credit institution
shall provide information in accordance with that laid down in
Paragraph 3.2 of this Section. In the cases referred
to in Paragraph one, Clause 15 of this Section, the credit
institution shall provide information in accordance with such
procedures and within such time periods as laid down in the law
On Personal Income Tax and also in accordance with the procedures
laid down in the laws and regulations which have been issued on
the basis of the Enterprise Income Tax Law regarding the
application of the norms of the abovementioned Law. In the cases
referred to Paragraph one, Clause 11 of this Section the State
Revenue Service shall request information if at least one of the
following conditions exists:
1) it is not possible to obtain the information from the
taxpayer himself or herself, or the information submitted by the
taxpayer is not true;
2) the taxpayer - natural person - has overdue tax payments
and the information is necessary for recovery of the delayed
payments;
3) the State Revenue Service has verified that the request for
information from the competent authority of a foreign country (a
party to an international agreement) to the State Revenue Service
conforms to the laws and regulations issued in accordance with
the law On Taxes and Fees.
(31) A credit institution, on the basis of a
request from the authorities referred to in Paragraph one, Clause
2, 3, 4, or 6 of this Section, shall provide them also with
information on the transaction monitoring in the account of the
customer for the purpose of avoiding, cessation or detection of
committing a criminal offence. The transaction monitoring in the
account of the customer shall mean the process which is carried
out by the credit institution within the time period laid down in
the law, in order to detect and provide data (information) on a
transaction notified or carried out during the relevant time
period and the persons involved in the transaction. The
procedures by which a credit institution shall provide
information on the authorities referred to in Paragraph one,
Clauses 2 and 3 of this Section in case of transaction monitoring
and also the time period for the provision of such information
shall be determined by the Cabinet. If, in case of transaction
monitoring, information is requested by the authorities referred
to in Paragraph one, Clauses 4 and 6 of this Section, a law or
regulation which has been issued on the basis of Paragraph
3.2 of this Section shall be applied.
(32) The procedures by which the authorities
referred to in Paragraph one, Clauses 4 and 6 of this Section
shall request and the credit institution shall provide the
non-disclosable information at the disposal thereof, also
information in case of transaction monitoring, the time period
for the provision of such information, the sample form of the
request, and the structure of the machine-readable data shall be
determined by the Cabinet.
(4) Non-disclosable information shall be provided by credit
institutions to another Member State and foreign country court
and investigatory institutions according to the procedures laid
down in international agreements.
(5) The institution of Latvia corresponding to the control
service for the prevention of money laundering and terrorism and
proliferation financing or to the supervisory authority of credit
institutions of another Member State and foreign country shall
provide non-disclosable information on the basis of a mutual
co-operation agreement or another agreement. The relevant
institution of the Republic of Latvia shall acquire the
non-disclosable information according to the procedures laid down
in Paragraphs one and two of this Section. Such institution prior
to providing information to a Member State or foreign institution
shall ascertain the protection against disclosure of the relevant
information.
(6) Non-disclosable information at the disposal of a credit
institution shall be provided by the credit institution to
another credit institution registered in a Member State or a
foreign country, with which correspondent relationship has been
established, according to the procedures laid down in the Law on
the Prevention of Money Laundering and Terrorism and
Proliferation Financing.
(7) A credit institution is entitled to appeal a request for
information by the State Revenue Service for non-disclosable
information at the disposal of the credit institution to the
Administrative Regional Court in accordance with the procedures
laid down in the Administrative Procedure Law, by submitting an
application within 10 days after receipt of the request for
information. The court shall examine the case as the court of
first instance in the composition of three judges within 20 days
after initiation of the case. If the law determines the term for
execution of any procedural action, but with execution of the
relevant procedural action within this time period, the time
period laid down in the second sentence of this Paragraph would
not be complied with, the court itself shall determine an
appropriate time period for implementation of the relevant
procedural action. The judgment of the Administrative Regional
Court shall not be subject to appeal.
(8) If a credit institution, in accordance with the procedures
laid down in the law, delegates any of the responsibilities
thereof or the provision of a financial service (an essential
part thereof) to the provider of outsourcing services or receives
the service referred to in Section 62, Paragraph nine, Clause 2
of this Law, the requests for information referred to in this
Section shall be submitted to the same credit institution, which
provides non-disclosable information in accordance with the
procedures laid down in the law. The provider of outsourcing
services and the person referred to in Section 62, Paragraph
nine, Clause 2 of this Law does not have the right to disclose
non-disclosable information.
(9) A credit institution is entitled to provide
non-disclosable information to the State Revenue Service in order
to explain its report which has been submitted to the State
Revenue Service on a suspicious transaction in the field of taxes
in accordance with the law On Taxes and Fees. A credit
institution is entitled to provide such information to the State
Revenue Service which contains non-disclosable information in
order to identify transactions conforming to signs of a
suspicious transaction laid down in the law On Taxes and Fees in
cooperation with the State Revenue Service. The information
provided for in this Paragraph shall be provided to such extent
as it is specified in the law On Taxes and Fees for the provision
of information regarding suspicious transactions. The legal
protection mechanisms related to the reporting on suspicious
transactions in the field of taxes provided for the subjects of
the law in the law On Taxes and Fees and Law on the Prevention of
Money Laundering and Terrorism and Proliferation Financing shall
apply to the provision of the information referred to in this
Paragraph.
[26 May 2005; 22 June 2006; 22 February 2007; 17 May 2007;
29 May 2008; 28 January 2010; 11 March 2010; 15 March 2012; 22
March 2012; 14 March 2013; 16 May 2013; 29 January 2015; 8 July
2015; 17 December 2015; 30 November 2015; 23 November 2016; 1
November 2018; 28 February 2019; 13 June 2019; 19 December 2019;
17 June 2020; 17 June 2020; 21 January 2021; 27 May 2021; 10 June
2021]
Section 63.1 (1) A credit institution in the
cases provided for by the law and in international agreements
ratified by the Saeima has no right to inform a customer
or a third person regarding the fact that information in respect
of the customer's account or the transaction (transactions)
therein have been provided to a court or the Office of the
Prosecutor.
(2) If the law or international agreement provides for a
prohibition to inform a customer or a third party of receipt of
the request for information, a court, the Office of the
Prosecutor, an investigating institution or a person performing
investigative field work, in requesting information on the
accounts of and transactions carried out by natural persons and
legal persons, in addition to the information referred to in
Section 63, Paragraph two of this Law shall indicate in the
request this prohibition, as well as the law and international
agreement on the basis of which such prohibition has been laid
down.
[27 May 2004; 26 May 2005; 22 February 2007; 28 January
2010]
Section 63.2 In addition to that laid down
in Section 63, Paragraph one of this Law the information on a
customer, its account, and the individual strong-boxes in use
thereof shall be provided to the State Revenue Service as the
administrator of the Account Register to the extent and in
accordance with procedures laid down in the Account Register Law.
A credit institution has an obligation to provide such
information on the following persons, their sight-deposit,
payment accounts, and the individual strong-boxes in their
use:
1) on a natural person - a resident of the Republic of
Latvia;
2) on a natural person - a non-resident;
3) on a legal person - a resident of the Republic of Latvia
and the permanent representation of a non-resident in Latvia;
4) on a legal person - a non-resident of the Republic of
Latvia.
[23 November 2016; 17 June 2020]
Section 63.3 In addition to that provided
for in Section 63, Paragraph one, and Section 63.2 of
this Law, a credit institution has an obligation to provide the
State Revenue Service with information on the customers - natural
persons who are residents of the Republic of Latvia - the total
last year's debit or credit turnover of whose sight-deposit
accounts and payment accounts (including closed sight-deposit
accounts and payment accounts) within the scope of this credit
institution amounts to or exceeds the amount specified in the law
On Taxes and Fees. The abovementioned information shall be
provided in the amount and within the time period laid down in
the law On Taxes and Fees, and in accordance with the procedures
laid down in the laws and regulations issued on the basis of the
law On Taxes and Fees.
[1 November 2018]
Section 63.4 A photo and video material
(which may reflect individual transaction data in case if a
request for an individual transaction has been submitted) which
has been obtained from an automatic banknote dispenser, using
technical means, is not requested as non-disclosable information,
however, it shall be issued to the body performing operational
activities in an investigatory records case or the person
directing the proceedings in criminal proceedings on the basis of
a request of such officials.
[21 January 2021]
Section 63.5 If exchange of information
between a State authority and a credit institution takes place
electronically, using the State information systems' integrator
controlled by the State Regional Development Agency and in
conformity with the requirements of the laws and regulations
governing the operation of State information systems, the
document which is sent by the State authority to the credit
institution or which is sent by the credit institution to the
State authority, using the abovementioned integrator, shall be in
legal effect also if the relevant document does not have the
detail "signature".
[27 May 2021]
Section 64. (1) Everyone who has, intentionally or
unintentionally, made public or disclosed information regarding
accounts of the clients of a credit institution, or financial
services provided to the clients, to persons who do not have the
right to receive the relevant information, if such information
has been entrusted or become known to him or her as the owner of
the stocks or shares of the credit institution, as the head or a
member of the council, the board of directors and the internal
audit service, as the controller or trusted representative of the
company, as an employee of the credit institution, as an employee
of Latvijas Banka, the Financial and Capital Market Commission or
a State institution, as the representative of sworn auditors, as
the representative of the potential acquirer of the credit
institution undertaking, or as the person referred to in Section
62, Paragraphs four and nine, or Section 110.1,
Paragraph five of this Law, or as the representative of the State
institution, advisory council, working group, association of
persons or as a sworn auditor, shall be held criminally liable in
accordance with the procedures laid down in the law.
(11) A credit institution, upon receipt of the
request referred to in Section 63, Paragraph 3.2 of
this Law, does not have the right to inform thereof the client, a
third party, or employees of the credit institution who are not
related to execution of the relevant request, except for
employees who, in accordance with laws and regulations, are
carrying out activities in relation to such request in the field
of the prevention of money laundering and terrorism and
proliferation financing or for the needs of an internal audit.
The abovementioned information shall be non-disclosable
information which is not an official secret. Any person who has
intentionally or unintentionally made public the information on
the request referred to in Section 63, Paragraph 3.2
of this Law or has disclosed it to persons who do not have the
right to receive the relevant information shall be held
criminally liable in accordance with the procedures laid down in
the law.
(2) Persons who have committed the violations referred to in
this Section shall be punishable also if such violations have
been committed after the persons referred to in Paragraph one of
this Section have terminated contractual relations or the
performance of their duties at, or employment relationship with,
the credit institution, Latvijas Banka, the Financial and Capital
Market Commission, other State institution, advisory council,
working group, association of persons or as a sworn auditor, or
as the representative of the potential acquirer of the credit
institution undertaking.
[26 February 2009; 22 March 2012; 16 May 2013; 17 June 2020
/ Paragraph 1.1 shall come into force on 1 July 2021.
See Paragraph 86 of Transitional Provisions]
Section 65. (1) Attachment of the monetary funds and
other valuables (property) of legal persons which are placed at a
credit institution may occur on the basis of a decision or order
of the State Revenue Service or a bailiff's order.
(11) Property of a legal person, including monetary
funds and other valuables which are placed at a credit
institution, shall be placed under arrest in criminal proceedings
on the basis of a decision taken in accordance with the
procedures laid down in the Criminal Procedure Law.
(12) Suspension of payment transactions (within the
meaning of this Chapter the payment operation shall be a debit
operation as a result of which the balance of the monetary funds
present in the account might reduce) of legal persons shall be
performed on the basis of an order of the State Revenue Service
regarding suspension of payment transactions of a taxpayer in
accordance with the procedures laid down in Section
66.2 of this Law.
(2) Collection of the monetary funds of legal persons which
are placed in a credit institution may be exercised on the basis
of an order of the State Revenue Service or a bailiff's order in
accordance with the procedures laid down in Section
66.2 of this Law, as well as upon an order of an
official appointed or an institution established by the local
government council regarding transfer of the monetary funds.
Collection of other valuables (property) of legal persons which
are placed in credit institutions may be exercised on the basis
of a bailiff's order or the decision of the tax administration to
collect late tax payments, but upon request of the State Revenue
Service - in other cases provided for in laws.
(3) Collection of the budgetary funds of local governments,
which are located at a credit institution, may be exercised by
uncontested procedures upon the request of the State Treasury in
cases provided for by other laws.
(4) A credit institution shall not undertake business
relations with an organiser of gambling or an intermediary
thereof, which is listed in the decision of the Lotteries and
Gambling Supervision Inspection to prohibit to launch or continue
business relations with an organiser of gambling who operates
without a licence laid down in the laws and regulations of the
Republic of Latvia, or an intermediary thereof (hereinafter - the
unlicensed gambling organiser). If a credit institution has
undertaken business relations with an unlicensed gambling
organiser, it shall cease such business relations after receipt
of the abovementioned decision. A credit institution shall not be
liable for the loss that arises from conformity with the decision
of the Lotteries and Gambling Supervision Inspection.
[7 March 1996; 30 October 1997; 24 October 2002; 24 April
2014; 23 November 2016; 28 February 2019 / Amendments to
Paragraph 1.2 regarding the replacement of the words
"Suspension of payment transactions in whole or in part" with the
words "Suspension of payment transactions (within the meaning of
this Chapter the payment operation shall be a debit operation as
a result of which the balance of the monetary funds present in
the account might reduce)" and the words " in whole or in part of
a taxpayer" with the words "of a taxpayer" shall come into force
on 13 June 2019. See Paragraph 80 of Transitional
Provisions]
Section 66. (1) Attachment of the monetary funds and
other valuables (property) of natural persons which are placed at
a credit institution may occur on the basis of a decision or
order of the State Revenue Service or a bailiff's order.
(2) Property of a natural person, including monetary funds and
other valuables which are placed at a credit institution, shall
be placed under arrest in criminal proceedings on the basis of a
decision taken in accordance with the procedures laid down in the
Criminal Procedure Law.
(3) Collection of the monetary funds of natural persons which
are placed in a credit institution may be exercised on the basis
of an order of the State Revenue Service or a bailiff's order in
accordance with the procedures laid down in Section
66.2 of this Law, as well as upon an order of an
official appointed or an institution established by the local
government council regarding transfer of the monetary funds.
Collection of other valuables (property) of natural persons which
are placed at credit institutions may be exercised on the basis
of a bailiff's order or the decision of the tax administration to
collect late tax payments.
(4) Suspension of payment transactions of natural persons
shall be performed on the basis of an order of the State Revenue
Service regarding suspension of payment transactions of a
taxpayer in accordance with the procedures laid down in Section
66.2 of this Law.
[23 November 2016; 28 February 2019 / Amendments to
Paragraph four regarding the deletion of the words "in whole or
in part" shall come into force on 13 June 2019. See Paragraph 80
of Transitional Provisions]
Section 66.1 (1) The State Revenue Service
shall notify the following orders to be enforced mandatorily in
accordance with the procedures laid down in Section
66.2 of this Law to a credit institution:
1) an order regarding suspension of payment transactions of a
taxpayer;
2) an order regarding seizure of monetary funds;
3) an order regarding transfer of monetary funds;
4) an order regarding the enforceable activity or adjustment
of the amount of funds determined with the order referred to in
Clauses 1, 2, and 3 of this Paragraph, or regarding cancellation
of a previously notified order.
(2) Bailiffs shall notify the following orders to be enforced
mandatorily in accordance with the procedures laid down in
Section 66.2 of this Law to a credit institution:
1) an order regarding seizure of monetary funds;
2) an order regarding transfer of monetary funds;
3) an order regarding the enforceable activity or adjustment
of the amount of monetary funds laid down by the order provided
for in Clauses 1 and 2 of this Paragraph, or regarding
cancellation of a previously notified order.
[23 November 2016; 28 February 2019 / Amendments to
Paragraph one, Clause 1 regarding the deletion of the words "in
whole or in part" shall come into force on 13 June 2019. See
Paragraph 80 of Transitional Provisions]
Section 66.2 (1) A credit institution has
the obligation to accept the order laid down in Section
66.1 of this Law for enforcement, to enforce it in
accordance with the procedures and within the time period laid
down in this Section and to provide a notification of enforcement
to the giver of the order by complying with that laid down in
Paragraphs two and four of this Section.
(2) A credit institution shall accept the orders laid down in
Section 66.1 of this Law for enforcement and provide
the notifications of enforcement of orders (hereinafter - the
data exchange) in one of the following ways of the data
exchange:
1) electronically using the State information system
integrator managed by the State Regional Development Agency;
2) [1 July 2019; see Paragraph 69 of Transitional
Provisions];
3) [1 July 2019; see Paragraph 69 of Transitional
Provisions].
(3) A credit institution has the obligation to accept for
enforcement the order laid down in Section 66.1 of
this Law which has been notified during the previous working day
not later than until the end of the current working day (23.59
o'clock). The credit institution shall, without delay, suspend
the payment transactions and the enforcement of the orders laid
down in Section 66.1, Paragraph one, Clauses 2, 3, and
4, and Paragraph two of this Law after acceptance of the order
laid down in Section 66.1, Paragraph one, Clause 1 of
this Law for enforcement within the amount indicated in the
order. The credit institution shall, without delay, place an
attachment on the monetary funds present in the accounts of the
person after acceptance of the order laid down in Section
66.1, Paragraph one, Clause 2 and Paragraph two,
Clause 1 of this Law for enforcement within the amount indicated
in the order or, if the monetary funds are insufficient - as soon
as they are received in accounts of the person until reaching the
sum indicated in the order.
(4) A credit institution which, using the type of the data
exchange laid down in Paragraph two, Clauses 1 and 2 of this
Section, has accepted the order laid down in Section
66.1, Paragraph one, Clause 2 and Paragraph two,
Clause 1 of this Law for enforcement shall, within three working
days after acceptance of the relevant order for enforcement
notify the giver of the order of enforcement of the order,
sending a notification of enforcement. The personal
identification data (on a natural person - the given name,
surname, and personal identity number or date of birth; on a
legal person - the name and registration number), the number of
the order enforced, and the amount of the sum attached shall be
indicated in the notification of enforcement.
(41) The order laid down in Section
66.1, Paragraph one, Clause 2 or Paragraph two, Clause
1 of this Law and accepted for enforcement shall be continued to
be enforced until the moment when the enforcement of the order
laid down in Paragraph one, Clause 3 or Paragraph two, Clause 2
of the abovementioned Section has been commenced. If the giver of
the order has failed to notify a credit institution of the order
laid down in Section 66.1, Paragraph one, Clause 3 or
Paragraph two, Clause 2 of this Law within five working days
following the day when the credit institution has notified of the
enforcement of the order in accordance with Paragraph four of
this Section, the credit institution shall terminate the
enforcement of the order laid down in Section 66.1,
Paragraph one, Clause 2 or Paragraph two, Clause 1 of this Law,
discharging the monetary funds.
(5) A credit institution has the obligation, without delay
after acceptance of the order laid down in Section
66.1, Paragraph one, Clause 3 and Paragraph two,
Clause 2 of this Law for enforcement, to transfer the monetary
funds to the giver of the order to the account indicated in the
order. The monetary funds shall be transferred in such amount as
is not less than that indicated in the notification of
enforcement of the order, except for the case when a reduced
amount of the monetary funds to be transferred has been indicated
in the order regarding transfer of monetary funds. If after the
monetary funds have been transferred in the amount laid down in
this Paragraph the order laid down in Section 66.1,
Paragraph one, Clause 3 and Paragraph two, Clause 2 of this Law
has not been enforced in full, the credit institution shall place
an attachment on the monetary funds as soon as they are received
in the accounts of the person and shall transfer them to the
account indicated in the order without delay.
(6) A credit institution shall, until enforcement of the
orders laid down in Section 66.1, Paragraphs one and
two of this Law in full or their revocation, not provide payment
services to the customer (its authorised person) and shall not
carry out other tasks which are related to transferring the
monetary funds present in the account of the person or dispensing
them from the account of the person, except for the transfer of
the monetary funds laid down in this Section.
(7) Upon receipt of several orders, a credit institution shall
accept them for enforcement and enforce them in order of their
notification, except for the order laid down in Section
66.1, Paragraph one, Clause 1 of this Law which in
accordance with the second sentence of Paragraph three of this
Section shall be enforced without delay following the acceptance
for enforcement and irrespective of receipt or adjustments of
other orders. An order which has been sent by using the type of
the data exchange laid down in Paragraph two, Clause 1 of this
Section shall be deemed notified at the time when it has been
inserted in the State information system integrator managed by
the State Regional Development Agency and may be accepted for
enforcement according to the sequence of unique numbers assigned.
The order laid down in Section 66.1, Paragraph one,
Clause 4 and Paragraph two, Clause 3 of this Law (hereinafter -
the order regarding adjustment of the amount of funds) shall be
accepted for enforcement in the sequence of the unique numbers
assigned and enforced in order which was laid down for
enforcement of the initial order (order to be replaced). If the
order regarding adjustment of the amount of funds increases the
amount of the sum of money indicated in the initial order (order
to be replaced), the increase shall be drawn up and accepted for
enforcement as a new order regarding transfer of monetary funds,
except for the cases when the order has been issued in
enforcement cases regarding the recovery of maintenance for a
child or parent, or to the Maintenance Guarantee Fund.
(8) The Cabinet shall determine the procedures by which credit
institutions, when enforcing the order laid down in Section
66.1, Paragraphs one and two of this Law, commence and
perform the data exchange by using the type of the data exchange
laid down in Paragraph two, Clause 1 of this Section.
[23 November 2016; 28 February 2019 / The second sentence
of Paragraph eight (in relation to delegation to the Cabinet to
determine the procedures by which a credit institution, when
enforcing the order laid down in Section 66.1,
Paragraph one of this Law, commences and performs the data
exchange by using the type of the data exchange laid down in
Paragraph two, Clause 2 of this Section) is repealed from 1 July
2019. See Paragraph 69 of Transitional Provisions]
Section 67. (1) The types of deposits are as
follows:
1) demand deposits - for an indefinite period with an
obligation to pay at demand;
2) time deposits:
a) for a definite period;
b) for an indefinite period, to be paid upon a customer's
prior notice regarding withdrawal.
(2) Time deposits which have been deposited for an indefinite
period may be withdrawn not earlier than one month after the
moment of the acceptance of the deposit. An application for
withdrawal of the deposit shall be submitted 10 days before the
withdrawal of the deposit, unless provided otherwise by the
contract.
Section 68. Time deposits for which the time of payment
has become applicable and the contract in respect of which has
not been extended or concluded anew shall be regarded as demand
deposits, unless provided otherwise by the contract.
Section 69. The amount of the interest rate, the time
period for the calculation of interest, and the procedures for
the payment of interest shall be determined in the contract upon
mutual agreement of the credit institution and the customer.
[7 May 2015]
Section 70. [7 May 2015]
Section 71. (1) Customer shall lose the right of action
against a credit institution, if no transactions have been made
with this deposit for a period of 60 years.
(2) The limitation period shall start:
1) with respect to time deposits for a definite time period -
from the last day of payment from the deposit;
2) with respect to demand deposits and time deposits for an
indefinite period - from the day when the last transaction with
such deposit was performed on behalf of the customer.
[21 May 1998; 28 October 2004; 23 December 2010 / Amendment
in relation to replacement of the word "bank" with the words
"credit institution" shall come into force on 30 April 2011. See
Paragraph 39 of Transitional Provisions]
Section 72. Deposits, in respect of which the
limitation period has become applicable, shall be credited as
income to the credit institution.
[28 October 2004; 23 December 2010 / Amendment in relation
to replacement of the word "bank" with the words "credit
institution" shall come into force on 30 April 2011. See
Paragraph 39 of Transitional Provisions]
Section 72.1 [23 December 2010] Amendment
regarding the deletion of Section shall come into force on 30
April 2011. See Paragraph 39 of Transitional Provisions]
Section 72.2 When establishing or selling
packaged private investment products to customers which are
private investors, a credit institution shall conform to the
requirements of Regulation (EU) No 1286/2014 of the European
Parliament and of the Council of 26 November 2014 on key
information documents for packaged retail and insurance-based
investment products (PRIIPs) (hereinafter - EU Regulation No
1286/2014).
[21 July 2017; 19 December 2019]
Section 73. When requesting a credit or entering into
other contractual relationship with a credit institution, or
submitting a report on fulfilment of obligations, the customer
has the obligation to provide, upon a request of the credit
institution, complete and accurate information on his or her
financial situation and property, including all encumbrances on
the property, as well as other information which is necessary for
the credit institution to ascertain whether the customer is
related to the credit institution or constitutes a group of
mutually connected customer for the credit institution.
[11 December 2003]
Section 74. [21 May 1998 / See the norm governing the
time of coming into force of the Law of 21 May 1998]
Section 74.1 (1) A credit institution shall
ensure that the procedure of examination of customer submissions
and complaints (disputes) regarding provision of the financial
services thereof is efficient. Written information on the
procedure for the examination of the abovementioned submissions
and complaints (disputes) shall be freely available at the credit
institution and in electronic form on the website of the credit
institution.
(2) A credit institution shall provide a written answer to
written submissions and complaints (disputes) regarding provision
of financial services within 30 days from the day of receipt of
the submission or complaint (dispute). If due to objective
reasons it is not possible to conform to this time period, the
credit institution is entitled to extend it, notifying the
submitter thereof in writing.
[23 December 2010; 24 April 2014; 29 April 2021]
Section 74.2 A credit institution shall, not
later than within five days after receipt of a submission from a
customer, inform the Financial and Capital Market Commission of a
dispute between the customer and the credit institution with
regard to the transfer of non-cash means of payment which exceeds
EUR 285 000.
[22 February 2007; 19 September 2013]
Section 74.3 [23 November 2016]
Chapter VI
Accounting and Annual Financial Statement
Section 75. A credit institution shall keep accounts in
accordance with the law On Accounting and the regulatory
provisions of the Financial and Capital Market Commission, which
must be in conformity with the laws of the Republic of Latvia and
internationally accepted accounting standards.
[1 June 2000; 11 December 2003; 16 July 2009]
Section 76. The Financial and Capital Market Commission
is entitled to request consolidated accounts from a credit
institution and commercial companies related thereto the
procedures for the preparation and submission of which shall be
determined by the Financial and Capital Market Commission.
[1 June 2000; 11 December 2003; 28 October 2004; 30
November 2015]
Section 77. A credit institution shall prepare an
annual account for each year of activities in which the financial
reports, as well as the management report and a notification of
the liability of the management is included.
[16 July 2009]
Section 78. The accounting year shall coincide with the
calendar year. The first reporting period may be shorter than the
calendar year, but it shall not be longer than 18 months.
[21 May 1998]
Section 79. The annual financial statement shall be
prepared in accordance with this Law and the regulatory
provisions of the Financial and Capital Market Commission issued
on the basis of this Law. The annual financial statement must
present a true and clear view of the assets and liabilities of
the credit institution, its financial situation and profit or
losses.
[1 June 2000; 11 December 2003; 16 July 2009]
Section 80. If a true and clear view of the credit
institution cannot be gained in accordance with the requirements
of Section 79 of this Law, the annual financial statement shall
include the relevant additional information.
Section 81. [29 May 2008]
Section 82. [29 May 2008]
Section 83. [21 July 2017]
Section 84. [21 July 2017]
Section 85. (1) A sworn auditor shall verify the annual
financial statement of a credit institution. If such verification
has not been carried out, the meeting of the stockholders
(shareholders) of the credit institution is not allowed to
approve the annual financial statement.
(2) If the report of the sworn auditors contains notes,
dividends may be paid only after co-ordination with the Financial
and Capital Market Commission.
(3) A credit institution shall, one month prior to the planned
disbursement of dividends, notify the Financial and Capital
Market Commission thereof. The Financial and Capital Market
Commission has the right to prohibit the credit institution to
pay dividends if as a result of the payment of dividends the
credit institution fails to conform to such indicators and
restrictions laid down in this Law, the Law on Recovery of
Activities and Resolution of Credit Institutions and Investment
Firms, and the directly applicable EU legal acts the scope
(degree) of which is affected by the payment of dividends.
[1 June 2000; 11 April 2002; 11 December 2003; 28 October
2004; 24 April 2014; 29 April 2021]
Section 86. (1) The annual statement prepared by the
credit institution shall be audited and the auditor's report on
the results of the audit carried out shall be provided by a sworn
auditor in accordance with the Law on Audit Services.
(2) In addition to that laid down in Section 88, Paragraph
five of this Law, the Financial and Capital Market Commission has
the right to request that a credit institution removes the sworn
auditor selected for the annual report examination if, in
performing supervision of credit institutions, the Financial and
Capital Market Commission establishes that the qualifications or
professional experience of the sworn auditor is inadequate for
the performance of a qualitative examination, or it is
established that the auditor does not conform to the
international auditing standards recognised in Latvia or ethical
norms. The Financial and Capital Market Commission shall inform
the Ministry of Finance of the decision taken.
[22 February 2007; 23 December 2010; 21 July 2017; 29 April
2021]
Section 87. In verifying the annual financial
statement, sworn auditors have the right to become acquainted
with the assets, accounting entries, documents certifying such
entries, and other information of the credit institution. The
board, the managing director, and employees of the credit
institution have the obligation to provide all the necessary
information to sworn auditors.
[11 April 2002]
Section 88. (1) A credit institution has the obligation
to inform the Financial and Capital Market Commission of all
circumstances which may substantially affect further activities
of the credit institution.
(2) A sworn auditor shall verify whether the credit
institution conforms to the requirement referred to in Paragraph
one of this Section. The sworn auditor shall, without delay,
submit a written report to the Financial and Capital Market
Commission on the violations of regulatory and administrative
acts governing the conditions for the granting of a licence or
the activities of a credit institution and other facts
established during the provision of the audit services or the
performance of another assurance engagement specified in laws and
regulations, due to which the fulfilment of the liabilities or
ongoing functioning of this credit institution are threatened or
due to which the sworn auditor refuses to provide an opinion or
provides an opinion with reservations or a negative opinion. Such
report shall be concurrently also submitted to the board of the
credit institution, unless there are compelling reasons to do
so.
(3) A sworn auditor has the obligation to submit, without
delay, a written report to the Financial and Capital Market
Commission regarding the facts referred to in Paragraph two of
this Section which are discovered in providing audit services to
a customer with whom the credit institution is associated in
relations of holdings or close links in a control way, or in
fulfilling another assurance engagement specified in laws and
regulations.
(31) The Financial and Capital Market Commission is
entitled to request from a sworn auditor the information and work
documents necessary for the performance of the tasks thereof.
(4) Provision of the information referred to in Paragraphs
two, three, and 3.1 of this Section to the Financial
and Capital Market Commission shall not be considered disclosure
of non-disclosable information, and civil liability shall not be
established for the conduct of the sworn auditor.
(5) The Financial and Capital Market Commission is entitled to
request that a credit institution removes the sworn auditor
selected for the examination of an annual statement if the sworn
auditor does not conform to the requirements referred to in
Paragraphs two and three of this Section. The Financial and
Capital Market Commission shall inform the Ministry of Finance of
the decision taken.
[11 April 2002; 11 December 2003; 22 February 2007; 24
April 2014; 29 April 2021]
Section 89. [16 July 2009]
Section 89.1 (1) A credit institution shall,
not later than within 10 days after approval of the annual
account and not later than four months after the end of the
accounting year, submit to the State Revenue Service a copy of
the annual account and of a report of the sworn auditor together
with an extract from the minutes of the meeting of stockholders
on approval of the annual account. The credit institution which
prepares the consolidated annual account, in addition to the
provisions laid down in the first sentence of this Paragraph
shall, not later than within 10 days after approval of the
consolidated annual account and not later than four months after
the end of the accounting year, also submit to the State Revenue
Service a copy of the consolidated annual account and of a report
of the sworn auditor together with an extract from the minutes of
the meeting of stockholders on approval of the consolidated
annual account. The credit institution shall submit the documents
referred to in this Paragraph in printed form or in electronic
form.
(2) The State Revenue Service shall, not later than within
five working days, hand over the documents referred to in
Paragraph one of this Section, if they have been submitted in
electronic form, or electronic copies of such documents, if they
have been submitted in printed form, to the Enterprise Register
by electronic means. The Enterprise Register shall ensure public
access to the received documents. The procedures for handing over
and certification of electronic documents shall be determined by
an interdepartmental agreement entered into by the State Revenue
Service and the Enterprise Register.
(3) After receipt of the documents referred to in Paragraph
two of this Section, the Enterprise Register shall publish them
on the website of the Enterprise Register.
[29 May 2008; 28 January 2010; 16 May 2013; 30 November
2015; 23 September 2021]
Section 89.2 A credit institution shall
submit the annual account and the consolidated annual account, if
it prepares the consolidated annual account, together with a
report of the sworn auditor to the Financial and Capital Market
Commission not later than on 1 April of the year following the
reporting year. The credit institution shall submit the documents
referred to in this Paragraph in paper form or in
electronically.
[30 November 2015 / See Paragraph 64 of Transitional
Provisions]
Section 90. (1) A credit institution shall submit a
report of a sworn auditor addressed to the management of the
credit institution to the Financial and Capital Market Commission
within 10 days after receipt of such report, but not later than
on 1 April of the year following the reporting year.
(2) The Financial and Capital Market Commission is entitled to
request that the credit institution additionally submits the
expanded report prepared by the sworn auditor with comments on
the applicability of the internal control system, analysis of the
operational risks of the credit institution and assessment of
conformity with the requirements of laws and regulations and
regulatory provisions and decisions of the Financial and Capital
Market Commission.
[11 April 2002; 11 December 2003; 28 October 2004; 17 May
2007; 30 November 2015; 23 September 2021 / Amendment regarding
the replacement of the words "Financial and Capital Market
Commission" with the words "Latvijas Banka", and also amendment
regarding the replacement of the words "regulatory provisions"
with the word "provisions" shall come into force on 1 January
2023 and shall be included in the wording of the Law as of 1
January 2023. See Paragraph 110 of Transitional
Provisions]
Section 91. (1) A credit institution itself shall
ensure that the annual account and the consolidated annual
account, if its prepared the consolidated annual account,
together with a report of the sworn auditor is made public not
later than on 1 April of the year following the accounting
year.
(2) If until the time period referred to in Paragraph one of
this Section the annual account or the consolidated annual
account is not approved in a meeting of stockholders
(shareholders), it shall be indicated upon publishing the revised
annual account or the consolidated annual account, if the credit
institution prepares the consolidated annual account.
[30 November 2015 / See Paragraph 64 of Transitional
Provisions]
Section 91.1 The accounts referred to in
Section 89.2 and Section 91, Paragraph one of this Law
shall be such the reports of the sworn auditor appended to which
contain opinions of the auditor.
[30 November 2015 / See Paragraph 64 of Transitional
Provisions]
Section 92. [29 May 2008]
Section 93. [11 April 2002]
Section 94. [29 May 2008]
Section 95. (1) [29 May 2008]
(2) The annual account of a foreign credit institution or a
credit institution of another Member State shall be examined in
accordance with the international auditing standards.
[21 May 1998; 1 June 2000; 11 April 2002; 11 December 2003;
28 October 2004; 29 May 2008]
Section 96. A branch of a foreign credit institution or
of a credit institution of another Member State shall ensure that
the annual account of the foreign credit institution or credit
institution of another Member State is made public not later than
seven months after the end of the accounting year. At least the
account representing the financial situation at the end of the
accounting period, the account on the results of financial
activities during the accounting period and the opinion of the
sworn auditor shall be translated in Latvian. The branch of a
foreign credit institution or a credit institution of another
Member State may either publish the relevant information on its
website or choose another appropriate information medium or place
for making the information public.
[29 May 2008; 16 July 2009; 24 April 2014; 11 June 2015; 29
April 2021]
Section 97. [29 May 2008]
Section 98. A credit institution shall prepare
record-keeping documents and other documents, register, and store
them in accordance with the documentation standard laid down in
the State, and the Law on Archives.
[16 July 2009; 22 March 2012]
Chapter VII
Supervision of the Activities of Credit Institutions
Section 99. [1 June 2000]
Section 99.1 (1) In order achieve the
security, stability and development of the sector of credit
institutions of Latvia, the Financial and Capital Market
Commission shall carry out supervision of credit institutions.
During the supervision process before decision-making the
Financial and Capital Market Commission, taking into account the
information at the disposal thereof, shall assess the potential
impact of the relevant decisions on stability of the financial
system of another Member State.
(2) The Financial and Capital Market Commission has the
obligation to take measures without delay in accordance with the
specifications of this Law in order to prevent deficiencies in
the activities of credit institutions and the sector of credit
institution, which threaten or may threaten stable operation of a
credit institution or the whole sector of credit institutions,
interfere with appropriate carrying out of transactions, the
provision of financial services or may cause significant losses
to the whole national economy.
(3) An administrative act of the Financial and Capital Market
Commission, which has been issued in accordance with this Law,
may be appealed to the Administrative District Court. The court
shall examine the case as the court of first instance. The case
shall be reviewed in the composition of three judges. A judgement
of the Administrative Regional Court may be appealed by
submitting a cassation complaint.
[11 April 2002; 11 December 2003; 22 February 2007; 23
October 2008; 16 July 2009]
Section 100. (1) The Financial and Capital Market
Commission shall supervise credit institutions unless the laws
provide otherwise. The rights and obligations of the Financial
and Capital Market Commission in supervision of credit
institutions within the scope of the uniform supervision
mechanism shall be determined by EU Regulation No 1024/2013.
(2) The Financial and Capital Market Commission, in accordance
with this Law and other laws, shall carry out the supervision of
branches of credit institutions in foreign countries if it is not
laid down otherwise in the laws and regulations of the relevant
foreign country.
[28 October 2004; 24 April 2014; 11 June 2015]
Section 100.1 (1) A credit institution shall
pay to the Financial and Capital Market Commission for funding of
the functions up to 0.033 per cent including from the average
amount of assets of the credit institution per quarter.
(2) The Financial and Capital Market Commission shall issue
regulatory provisions regarding the procedures for the
calculation of the payments referred to in Paragraph one of this
Section and submission of reports.
(3) The payments referred to in Paragraph one of this Section
shall be made until the thirtieth date of the month following the
quarter.
(4) For delayed transfer or transfer at less than full amount
of the payments referred to in this Section the late charge shall
be calculated for each delayed day of payment as 0.05 per cent
from the outstanding amount.
(5) The payments referred to in this Section shall be
transferred into the account of the Financial and Capital Market
Commission at Latvijas Banka.
[16 May 2013 / See Paragraph 52 of Transitional
Provisions]
Section 101. (1) The Financial and Capital Market
Commission shall determine the procedures for the supervision
process in accordance with this Law and other laws and
regulations. The Financial and Capital Market Commission shall
prepare, on an annual basis, a supervisory inspection programme
indicating:
1) the measures planned for the performance of functions and
obligations of the Financial and Capital Market Commission laid
down in the Financial and Capital Market Commission Law, this Law
and other laws and regulations and the necessary resources
thereof;
2) the planned supervisory arrangements applicable to the
following:
a) credit institutions at which the stress test results
referred to in Section 101.3, Paragraph
4.1, Clauses 5 and 6 of this Law or the assessment of
which performed by the Financial and Capital Market Commission in
accordance with Section 101.3 of this Law denotes
risks which pose a significant threat for the financial stability
of the respective credit institution, or violations of the
requirements of this Law, directly applicable laws and
regulations of the European Union or regulatory provisions of the
Financial and Capital Market Commission;
b) [29 April 2021];
c) other credit institutions at the discretion of the
Financial and Capital Market Commission;
3) credit institutions for which it is planned to determine
enhanced supervision and the applicable measures thereof;
4) an on-site credit institution inspection plan, indicating
separately the planned on-site inspections at branches of credit
institutions in other Member States, subsidiary of credit
institutions and the parent company of the credit institution,
which is a financial holding company or a mixed financial holding
company, or at another subsidiary of such financial holding
company or mixed financial holding company.
(2) If such necessity is established in the assessment
performed in accordance with Section 101.3 of this
Law, the Financial and Capital Market Commission is entitled to
take the following measures:
1) increase the number or frequency of on-site inspections at
the credit institution;
2) designate an authorised representative to be constantly
present at the credit institution;
3) require that the credit institution submits additional
statements or submits such statements more frequently;
4) perform additional or more frequent examinations of
operative, strategic or business plans of the credit
institution;
5) to carry out purpose reviews in order to control specific
risks which are expected to occur.
[24 April 2014; 29 April 2021]
Section 101.1 The Financial and Capital
Market Commission has the right not to allow a credit institution
to establish close links or to request the termination of the
close links with third parties, or to prohibit transactions with
them if such links may threaten or threaten the financial
stability of the credit institution, or restrict the rights of
the Financial and Capital Market Commission to perform the
supervisory functions laid down in the law.
[11 April 2002; 11 December 2003]
Section 101.2 (1) If a credit institution
has planned to commence the provision of new financial services
not provided until now or to significantly modify the procedures
for the provision of one of the financial services, it shall, not
later than 30 days in advance, submit a substantiated submission
to the Financial and Capital Market Commission. The relevant risk
management policy and a description of procedures shall be
appended to the submission.
(2) Upon receipt of the submission referred to in Paragraph
one of this Section, the Financial and Capital Market Commission
shall, not later than within 30 days, examine the submitted
documents and evaluate the risk administration of the provision
of the planned financial service and the impact thereof on
activities of the credit institution and the whole sector of
credit institutions.
(3) The Financial and Capital Market Commission has the right
to request additional information regarding the planned financial
service or the procedures for the provision thereof in order to
assess the impact of the provision of the relevant financial
service on the credit institution and the whole sector of credit
institutions and the quality of risk administration.
(4) The Financial and Capital Market Commission shall take the
decision to prohibit the provision of a new financial service not
provided until now or significant modification of the procedures
for the provision of one of the financial services of a credit
institution, and shall notify the relevant credit institution
thereof without delay if the planned activities thereof endanger
or may endanger stable activities of such credit institution or
the whole sector of credit institutions, interferes with
appropriate carrying out of transactions or the provision of
financial services.
(5) An appeal of an administrative act issued by the Financial
and Capital Market Commission in relation to the issues referred
to in this Section shall not suspend its execution.
[28 October 2004]
Section 101.3 (1) The Financial and Capital
Market Commission shall verify the strategy, procedures and
measures of credit institutions, which have been implemented
thereby in order to conform to the requirements of this Law,
other laws and regulations, directly applicable laws and
regulations of the European Union and regulatory provisions and
decisions of the Financial and Capital Market Commission, and
shall assess:
1) the inherent and potential risks for activities of the
credit institution;
2) [29 April 2021];
3) the risks established during the stress testing taking into
consideration the scope, diversity and complexity of the
operations (transactions) performed.
(2) The Financial and Capital Market Commission shall
determine the amount and regularity of the inspection and
assessment referred to in Paragraph one of this Section depending
on the size, systemic importance of the credit institution, and
the volume, diversity and complexity of the operations
(transactions) carried out, and also taking into account the
principle of proportionality according to the criteria indicated
on the website of the Financial and Capital Market Commission.
The Financial and Capital Market Commission shall, not less often
than once per year, review and update the information included in
the assessment referred to in Paragraph one of this Section in
relation to the credit institutions included in the supervisory
inspection programme.
(21) Upon carrying out the inspection and
assessment referred to in Paragraph one of this Section, the
Financial and Capital Market Commission may apply a uniform
methodology to credit institutions with a similar risk profile
(similar business model or geographical location of exposures)
which may include risk-oriented benchmarks and quantitative
criteria, permits adequate taking into account the exposure of
each credit institution to specific risks inherent to its
operation, and does not affect the credit institution-specific
nature of measures specified in accordance with Section
36.3, Paragraph four of this Law and Paragraph
4.4 and Paragraph 4.7, Clause 2 of this
Section. The Financial and Capital Market Commission shall inform
the European Banking Authority of the use of a uniform
methodology.
(3) On the basis of the inspection and assessment carried out,
the Financial and Capital Market Commission shall decide whether
the strategy, procedures and implemented measures of the credit
institution ensure sufficient risk management and whether the
liquidity and own funds of the credit institution are sufficient
to cover the inherent and potential risks for activities
thereof.
(31) The Financial and Capital Market Commission
shall inform the European Banking Authority on the organisation
of inspections and the process of assessment referred to in this
Section.
(32) If, upon carrying out an inspection,
particularly upon assessing the activities, governance
arrangements, or business model of a credit institution, the
Financial and Capital Market Commission has justified suspicions
that the funds involved in transactions or actions have been
directly or indirectly obtained as a result of a criminal offence
or are related to terrorism and proliferation financing or an
attempt to carry out such actions or that such increased risk
exists, the Financial and Capital Market Commission shall
immediately notify the European Banking Authority thereof. If a
probability of an increased risk of money laundering and
terrorism and proliferation financing exists, the Financial and
Capital Market Commission shall immediately notify the European
Banking Authority of its assessment and also apply the measures
and actions provided for in this Law.
(4) The Financial and Capital Market Commission shall
immediately inform the European Banking Authority if it is
established as a result of the inspection and assessment referred
to in this Section that a credit institution may cause systemic
risk.
(41) The Financial and Capital Market Commission
shall, within the scope of the assessment referred to in
Paragraph one of this Section, in addition to credit risk,
operational risk and market risk assessment, assess at least:
1) the governance, corporate culture and values of the credit
institution, and the capacity of members of the board or
directors and the council to perform their assignments;
2) the commercial activity model of the credit
institution;
3) vulnerability of the credit institution to the liquidity
risk, management of the liquidity risk, including analysis of
alternative scenarios, management of liquidity risk mitigation
measures, especially the scope and composition of liquidity
buffers and the quality of assets included therein, and the
action plans in place for emergency situations;
4) [29 April 2021];
5) if the credit institution has received a permission to use
the internal model for the calculation of credit risk capital
requirement - the results of stress test performed in accordance
with EU Regulation No 575/2013;
6) if the credit institution has received a permission to use
the internal model for the calculation of market risk capital
requirement - the results of stress test performed in accordance
with EU Regulation No 575/2013;
7) vulnerability of a credit institution to the concentration
risk and the management thereof, including conformity with the
requirements of EU Regulation No 575/2013 regarding large
exposures restrictions;
8) geographical location of a credit institution's
exposures;
9) impact of diversification effects and inclusion thereof in
the risk assessment system;
10) a possibility that a credit institution may incur
considerable loss due to the risk of interests rates related to
non-trading book exposures, and considerations regarding the
possible reasons of occurrence of such loss;
11) vulnerability of a credit institution to the risk of
excessive leverage;
12) other significant risks for the credit institution;
13) the robustness, suitability, and application of the
policies and procedures implemented by a credit institution for
the management of the residual risk within the meaning of EU
Regulation No 575/2013 which is associated with the use of
recognised credit risk mitigation methods;
14) the extent to which own funds of a credit institution in
respect of assets which it has securitised are adequate having
regard to the economic substance of the transaction, including
the degree of risk transfer achieved.
(42) The Financial and Capital Market Commission
shall, not less frequently than once per year, perform stress
testing of credit institutions, the results of which are taken
into account in the assessment which is performed in accordance
with the requirements of Paragraph one of this Section.
Methodology of stress testing shall conform to the guidelines of
the European Banking Authority.
(43) [29 April 2021]
(44) Upon applying the provisions of Paragraphs one
and three of this Section and the relevant requirements of EU
Regulation No 575/2013, the Financial and Capital Market
Commission has the right to require that a credit
institution:
1) ensures additional own funds which exceed the requirements
laid down in EU Regulation No 575/2013 in accordance with the
provisions of Section 101.16 of this Law;
2) improves its strategy, procedures and measures which shall
be provided in order to conform to the requirements laid down in
Section 34.1, 34.2, or 36.2 of
this Law;
3) draws up and submits to the Financial and Capital Market
Commission a plan for resuming conformity with the requirements
of this Law, other laws and regulations, the directly applicable
legal acts of the European Union, and the regulatory provisions
issued by the Financial and Capital Market Commission,
determining the time period for the implementation of the
measures included in the plan, and also improves the plan
submitted thereby in relation to the areas of activities and the
time periods for the implementation of measures specified
therein;
4) applies a policy of recognition and assessment of special
provisioning or assets for the purpose of calculation of own
funds;
5) narrows down or restricts the commercial activity or the
extent of operations (transactions), abandons the areas of
activities which pose excessive threat to its stability;
6) reduces the risks inherent to its activity (including
activities which have been outsourced), products, or systems;
7) determines such restriction on the variable component of
remuneration of officials and employees, which is expressed as
percentage of net income and allows the credit institution to
maintain a stable capital base;
8) channels the profit after tax into strengthening of its own
funds;
9) reduces or does not perform distribution of profits or
interest payments to shareholders, holders of the instruments
included in the Additional Tier 1 capital, if it does not result
in failure of obligations;
10) provides additional reports or provides reports more
frequently, including reports regarding the owns funds,
liquidity, and leverage ratio of the credit institution if the
relevant requirement is appropriate and proportionate to the
objective for requesting the information to be included in
reports and also if the requested information is not duplicative.
Any additional information which may be requested from a credit
institution on the process of supervisory inspection and
assessment, the procedures for the supervision process, the
stress testing performed by the Financial and Capital Market
Commission, the regular inspections in relation to permissions to
use internal approaches and on the restrictions applicable to a
credit institution in accordance with Section 113, Paragraph one
of this Law shall be considered duplicative if the same
information or substantially the same information has already
been provided to the Financial and Capital Market Commission in
another form or if it itself can prepare such information. The
Financial and Capital Market Commission is not entitled to
request additional information from a credit institution if it
has previously received the relevant information in different
format or level of detail and if the abovementioned different
format or level of detail does not prevent the Financial and
Capital Market Commission from preparation of the information of
the same quality and reliability as it would have been prepared,
based on the requested additional information which would have
been provided in another form;
11) improves the modelling and parametric assumptions included
in the calculation of the economic value of the equity which are
different from the modelling and parametric assumptions specified
in the directly applicable legal acts of the European Union for
the management of the interest rate risks of the non-trading
book.
(45) [29 April 2021]
(46) [29 April 2021]
(47) On the basis of the assessment of inherent and
potential risks of the activities of a credit institution
performed in accordance with the requirements of this Section and
with consideration of the model of commercial activity of the
credit institution and the risk management organisation referred
to in Sections 34.1 and 34.2 of this Law,
the Financial and Capital Market Commission shall assess the
necessity to determine the following special liquidity
requirements for credit institutions:
1) to request from credit institutions additional reports on
liquidity items or to determine that the reports shall be
submitted more frequently than determined in Part two of EU
Regulation No 575/2013 or other laws and regulations;
2) to determine other special liquidity requirements for
credit institutions, among others, restrictions on the imbalance
of the term structure of assets and liabilities.
(48) Upon deciding on determination of special
liquidity requirements and imposing of sanctions, the Financial
and Capital Market Commission shall, subject to the assessment of
inherent and potential risks of the credit institution activities
and with consideration to the business model of the credit
institution, the risk management organisation and potential
systemic liquidity risk referred to in Sections 34.1
and 34.2 of this Law which may threaten the integrity
of the financial market of the Republic of Latvia, assess the
impact of such decision on the stability of the financial
situation of other Member States and consider the difference of
liquidity indicators of the credit institution from the liquidity
or stable financing requirements laid down in Part Six of EU
Regulation No 575/2013.
(5) The Financial and Capital Market Commission shall
determine the procedures, conforming to the guidelines of the
European Banking Authority, by which:
1) a credit institution shall manage, including identify,
evaluate, analyse, and control the interest rate risk of the
non-trading book;
2) a credit institution shall assess and monitor the credit
spread risk of the non-trading book;
3) the reduction in the economic value of equity of a credit
institution shall be calculated due to sudden and unexpected
changes in interest rates as set out in any of the six
supervisory stress scenarios applied to interest rates in
accordance with the directly applicable legal acts of the
European Union;
4) it shall be determined that the internal systems
implemented by a credit institution for the evaluation of the
interest rate risk of the non-trading book are not satisfactory
in accordance with the requirements of Section 49.2 of
this Law;
5) the reduction in the net interest income of a credit
institution shall be calculated due to sudden and unexpected
changes in interest rates as set out in any of the two
supervisory stress scenarios applied to interest rates in
accordance with the directly applicable legal acts of the
European Union.
(6) If the calculation referred to in Paragraph five, Clause 3
of this Section shows that the economic value of equity of a
credit institution will decline by 15 per cent or more from the
Tier 1 capital due to sudden and unexpected changes in interest
rates as set out in any of the six supervisory stress scenarios
applied to interest rates in accordance with Paragraph five,
Clause 3 of this Section, or if large decline in net interest
income has been established due to sudden and unexpected changes
in interest rates as set out in any of the two supervisory stress
scenarios applied to interest rates in accordance with Paragraph
five, Clause 5 of this Section, the Financial and Capital Market
Commission shall implement one or several measures in accordance
with Paragraph 4.4 of this Section, except for the
case when it, upon applying the provisions of Paragraphs one and
three of this Section, considers that the credit institution is
adequately managing the interest rate risk of the non-trading
book and is not excessively exposed to the interest rate risk of
the non-trading book.
(61) The Financial and Capital Market Commission
shall apply the requirements of this Section on an individual and
consolidated or sub-consolidated basis in accordance with the
level of application of the requirements of Part One, Title II of
EU Regulation No 575/2013.
(7) [24 April 2014]
(8) An appeal of an administrative act issued by the Financial
and Capital Market Commission in relation to the issues referred
to in this Section shall not suspend the execution thereof.
(9) The Financial and Capital Market Commission shall inform
the European Banking Authority of the principles of taking of the
decisions referred to in this Section.
[22 February 2007; 22 March 2012; 24 April 2014; 11 June
2015; 29 April 2021; 27 May 2021 / Paragraph 4.4,
Clause 11, and also the new wording of Paragraphs five and six
shall come into force on 28 June 2021. See Paragraph 102 of
Transitional Provisions]
Section 101.4 [23 December 2010]
Section 101.5 [23 December 2010]
Section 101.6 [23 December 2010]
Section 101.7 [23 December 2010]
Section 101.8 [23 December 2010]
Section 101.9 [23 December 2010]
Section 101.10 [23 December 2010]
Section 101.11 [23 December 2010]
Section 101.12 [23 December 2010]
Section 101.13 [23 December 2010]
Section 101.14 [23 December 2010]
Section 101.15 [23 December 2010]
Section 101.16 (1) The Financial and Capital
Market Commission, on the basis of the results of the inspection
referred to in Section 101.3, Paragraphs one and three
of this Law, shall request that a credit institution meets the
requirement of Section 101.3, Paragraph
4.4, Clause 1 of this Law (for the purpose of covering
risks arising to the credit institution due to its activities,
including those risks which reflect the impact of certain
economic and market developments on the risk profile of the
credit institution) in at least the following cases:
1) the credit institution is exposed to risks or elements of
risks which, in conformity with the provisions of Paragraphs two,
three, and four of this Section, are not covered or are not
sufficiently covered in accordance with the requirements laid
down in Parts Three, Four, and Seven of EU Regulation No 575/2013
and Chapter Two of Regulation (EU) 2017/2402 of the European
Parliament and of the Council of 12 December 2017 laying down a
general framework for securitisation and creating a specific
framework for simple, transparent and standardised
securitisation, and amending Directives 2009/65/EC, 2009/138/EC
and 2011/61/EU and Regulations (EC) No 1060/2009 and (EU) No
648/2012 (hereinafter - EU Regulation 2017/2402);
2) the credit institution has not met the requirements of
Section 34.1, 34.2, or 36.2 of
this Law or the requirements of Article 393 of EU Regulation No
575/2013 and there is reason to believe that the application of
other supervisory measures will not be sufficient to ensure that
the abovementioned requirements can be met within a time period
which is recognised as suitable by the Financial and Capital
Market Commission;
3) the value adjustments carried out by the credit institution
to the items of the non-trading book should not be considered
sufficient to enable the credit institution to sell these items
within a short period of time or to limit the risks related to
such items without material losses under circumstances of a
functioning market;
4) the own funds requirements are not sufficient because the
credit institution which has received the permission to use
internal approaches for the calculation of risk-weighted amount
or own capital requirements does not conform to the conditions
for the receipt of such permission anymore;
5) the credit institution is repeatedly unable to create or
ensure sufficient Common Equity Tier 1 capital in order to cover
the guidance on additional own funds notified to the credit
institution in accordance with the provisions of Section
101.17, Paragraph three of this Law;
6) in other situations specified to the activities of the
credit institution which, in the opinion of the Financial and
Capital Market Commission, cause material supervisory
concerns.
(2) Risks or elements of risks shall not be covered or shall
not be sufficiently covered in accordance with the requirements
laid down in Parts Three, Four, and Seven of EU Regulation No
575/2013 and Chapter Two of EU Regulation 2017/2402 if the
capital necessary for covering the inherent or potential risks of
the activities of a credit institution and also the types and
distribution of such capital which are considered adequate by the
Financial and Capital Market Commission, taking into account the
inspection performed thereby regarding the assessment carried out
by the credit institution in accordance with the requirements of
Section 36.2, Paragraph one of this Law, exceed the
requirements of the abovementioned EU Regulations.
(3) Within the meaning of Paragraph two of this Section, a
capital shall be considered adequate if it covers all such risks
or elements of risks which are identified as material as a result
of the assessment performed in accordance with Paragraph four of
this Section and which are not covered or not sufficiently
covered by the requirements laid down in Parts Three, Four, and
Seven of EU Regulation No 575/2013 and Chapter Two of EU
Regulation 2017/2402. The interest rate risk arising from the
non-trading book may be considered material in at least the cases
referred to in Section 101.3, Paragraph six of this
Law, except for the case when the Financial and Capital Market
Commission, upon carrying out the inspection and assessment
referred to in Section 101.3, Paragraphs one and three
of this Law, concludes that the credit institution adequately
manages the interest rate risk arising from the non-trading book
activities and is not excessively exposed to the interest rate
risk arising from the non-trading book activities.
(4) The Financial and Capital Market Commission, taking into
account the risk profile of a credit institution, shall assess
its exposure to risks, including assess:
1) the risks specific to the activities of the credit
institution or elements of such risks which are excluded from or
not addressed by the requirements laid down in Parts Three, Four,
and Seven of EU Regulation No 575/2013 and Chapter Two of EU
Regulation 2017/2402;
2) the risks specific to the activities of the credit
institution or elements of such risks which might have been
underestimated despite compliance with the requirements laid down
in Parts Three, Four, and Seven of EU Regulation No 575/2013 and
Chapter Two of EU Regulation 2017/2402. Such risks or elements of
risks to which the conditions of the transitional period
specified in the regulatory provisions of the Financial and
Capital Market Commission or EU Regulation No 575/2013 or the
rights to apply the conditions previously in force apply are not
considered risks or elements of such risks which might have been
underestimated despite compliance with the requirements laid down
in Parts Three, Four, and Seven of EU Regulation No 575/2013 and
Chapter Two of EU Regulation 2017/2402.
(5) If the Financial and Capital Market Commission requests
for the credit institution to ensure additional own funds to
address risks other than the risk of excessive leverage that is
not sufficiently covered in accordance with the requirement laid
down in point (d) of Article 92(1) of EU Regulation No 575/2013,
it shall determine the level of additional own funds which has
been requested in the case referred to in Paragraph one, Clause 1
of this Section as the difference between the capital considered
thereby as adequate in accordance with the requirements of
Paragraph two of this Section and the requirements laid down in
Parts Three and Four of EU Regulation No 575/2013 and Chapter Two
of EU Regulation 2017/2402.
(6) If the Financial and Capital Market Commission requests
for the credit institution to ensure additional own funds to
address the risk of excessive leverage that is not sufficiently
covered in accordance with the requirement laid down in point (d)
of Article 92(1) of EU Regulation No 575/2013, it shall determine
the level of additional own funds which has been requested in the
case referred to in Paragraph one, Clause 1 of this Section as
the difference between the capital considered thereby as adequate
in accordance with the requirements of Paragraph two of this
Section and the requirements laid down in Parts Three and Seven
of EU Regulation No 575/2013.
(7) A credit institution shall ensure the additional own funds
requirement imposed by the Financial and Capital Market
Commission in accordance with Section 101.3, Paragraph
4.4, Clause 1 of this Law and which addresses risks
other than the risk of excessive leverage with the own funds
which conform to such requirements (unless the Financial and
Capital Market Commission has specified otherwise in accordance
with Paragraph nine of this Section):
1) at least three quarters of the additional own funds
requirement shall be met with Tier 1 capital;
2) at least three quarters of the Tier 1 capital referred to
in Clause 1 of this Paragraph of the Section consist of Common
Tier 1 capital.
(8) A credit institution shall ensure the additional own funds
requirement imposed by the Financial and Capital Market
Commission in accordance with Section 101.3, Paragraph
4.4, Clause 1 of this Law and which addresses the risk
of excessive leverage with Tier 1 capital (unless the Financial
and Capital Market Commission has specified otherwise in
accordance with Paragraph nine of this Section).
(9) The Financial and Capital Market Commission, if necessary,
and also taking into account the specific circumstances of the
credit institution, may require the credit institution to ensure
the additional own funds requirement with a higher portion of
Common Tier 1 capital or Tier 1 capital than specified in
Paragraph seven or eight of this Section respectively.
(10) Own funds which are maintained by a credit institution in
order to ensure the additional own funds requirement requested by
the Financial and Capital Market Commission in accordance with
Section 101.3, Paragraph 4.4, Clause 1 of
this Law to address risks other than the risk of excessive
leverage may not be used to meet:
1) the own funds requirements laid down in points (a), (b),
and (c) of Article 92(1) of Regulation (EU) No 575/2013;
2) the combined buffer requirement laid down in Sections
35.22, 35.23, 35.24, and
35.25 of this Law;
3) the guidance on additional own funds referred to in Section
101.17, Paragraph three of this Law if it addresses
the risks other than the risk of excessive leverage.
(11) Own funds which are maintained by a credit institution in
order to ensure the additional own funds requirement requested by
the Financial and Capital Market Commission in accordance with
Section 101.3, Paragraph 4.4, Clause 1 of
this Law to address the risk of excessive leverage that is not
sufficiently covered in accordance with the requirement laid down
in point (d) of Article 92(1) of EU Regulation No 575/2013 may
not be used to meet:
1) the own funds requirement laid down in point (d) of Article
92(1) of EU Regulation No 575/2013;
2) the leverage ratio buffer requirement laid down in Article
92(1a) of EU Regulation No 575/2013;
3) the guidance on additional own funds referred to in Section
101.17, Paragraph three of this Law if it addresses
the risk of excessive leverage.
(12) The Financial and Capital Market Commission shall notify
a credit institution in writing of its decision to require to
ensure the additional own funds requirement in accordance with
Section 101.3, Paragraph 4.4, Clause 1 of
this Law, providing an appropriate justification for it. The
Financial and Capital Market Commission shall prepare a
justification which provides a clear statement of the assessment
performed thereby in accordance with this Section. In the case
referred to in Paragraph one, Clause 5 of this Section the
Financial and Capital Market Commission shall include a specific
statement in its justification regarding the reasons due to which
determination of the guidance on additional own funds is no
longer considered sufficient.
[29 April 2021]
Section 101.17 (1) The Financial and Capital
Market Commission shall, within the scope of the inspection and
assessment referred to in Section 101.3, Paragraphs
one and three of this Law, inter alia, taking into account the
results of the stress testing performed in accordance with
Section 101.3, Paragraph 4.2 of this Law,
regularly inspect the own funds level determined by a credit
institution in accordance with Section 36.2, Paragraph
2.1 of this Law. On the basis of the abovementioned
inspection, the Financial and Capital Market Commission shall
determine such overall level of own funds for the credit
institution which is considered thereby as appropriate for the
credit institution.
(2) The Financial and Capital Market Commission shall
determine a specific guidance on additional own funds for a
credit institution, taking into account that:
1) the guidance on additional own funds is own funds which
exceed the relevant amount of the own funds required in
accordance with Parts Three, Four, and Seven of EU Regulation No
575/2013, Chapter Two of EU Regulation 2017/2402, Section
101.3, Paragraph 4.4, Clause 1 of this Law
and in the relevant case Sections 35.22,
35.23, 35.24, and 35.25 of this
Law or Article 92(1a) of EU Regulation No 575/2013 and is
necessary to achieve the overall level of own funds which is
considered by the Financial and Capital Market Commission as
appropriate for the credit institution in accordance with
Paragraph one of this Section;
2) the guidance on additional own funds may cover risks
addressed by the additional own funds requirement requested in
accordance with Section 101.3, Paragraph
4.4, Clause 1 of this Law only to the extent in which
it covers aspects of the abovementioned risks which have not been
covered yet in accordance with the abovementioned additional own
funds requirement.
(3) The Financial and Capital Market Commission shall notify a
credit institution of the specific guidance on additional own
funds set out for it in accordance with Paragraph two of this
Section and the credit institution shall ensure it with Common
Tier 1 capital.
(4) Common Tier 1 capital which is maintained by a credit
institution to ensure the guidance on additional own funds
notified thereto in accordance with Paragraph three of this
Section to address the risks other than the risk of excessive
leverage may not be used to meet:
1) the own funds requirements set out in points (a), (b), and
(c) of Article 92(1) of Regulation (EU) No 575/2013;
2) the additional own funds requirement set out in accordance
with Section 101.16 of this Law to address risks other
than the risk of excessive leverage;
3) the combined buffer requirement set out in Sections
35.22, 35.23, 35.24, and
35.25 of this Law.
(5) Common Tier 1 capital which is maintained by a credit
institution to ensure the guidance on additional own funds
notified thereto in accordance with Paragraph three of this
Section to address the risk of excessive leverage may not be used
to meet:
1) the own funds requirement set out in point (d) of Article
92(1) of EU Regulation No 575/2013;
2) the additional own funds requirement set out in accordance
with Section 101.16 of this Law to address the risk of
excessive leverage;
3) the leverage ratio buffer requirement set out in Article
92(1a) of EU Regulation No 575/2013.
(6) A credit institution which does not meet the guidance on
additional own funds notified thereto in accordance with
Paragraph three of this Section, however, meets the requirements
set out in Parts Three, Four, and Seven of EU Regulation No
575/2013 and in Chapter Two of EU Regulation 2017/2402, the
relevant additional own funds requirement set out in accordance
with Section 101.3, Paragraph 4.4, Clause 1
of this Law and in the relevant case the capital buffer
requirement set out in Sections 35.22,
35.23, 35.24, and 35.25 of this
Law or the leverage ratio buffer requirement set out in Article
92(1a) of EU Regulation No 575/2013 shall not apply the
restrictions on distribution specified in Section
35.27, Paragraphs one and three or Section
35.35, Paragraphs one and three of this Law.
[29 April 2021]
Section 102. [22 February 2007]
Section 103. [22 February 2007]
Section 104. [22 February 2007]
Section 105. [22 February 2007]
Section 105.1 The Financial and Capital
Market Commission shall summarise the information related to the
remuneration policy and practice which credit institutions have
made public in accordance with the requirements of EU Regulation
No 575/2013 and have provided in accordance with Section
34.3, Paragraph six of this Law, and the information
on differences in pay for male and female workers, and also
assess the remuneration trends and practice. The Financial and
Capital Market Commission shall provide the aforementioned
information to the European Banking Authority. The Financial and
Capital Market Commission shall determine the procedures for
preparing and submitting the information referred to in this
Section.
[29 April 2021]
Section 105.2 Using the band amounting to
EUR 1 million, the Financial and Capital Market Commission shall
collect the information made public by credit institutions in
accordance with the requirements of EU Regulation No 575/2013
with regard to the number of its officials and employees whose
remuneration during the reporting year is equal to or larger than
EUR 1 million, including the information on the obligations,
scope of activities and major remuneration components of such
officials and employees. The Financial and Capital Market
Commission shall provide the aforementioned information to the
European Banking Authority.
[24 April 2014]
Section 105.3 (1) The Financial and Capital
Market Commission shall regularly, but not less than once in
three years, verify that the credit institution which has
received the permission to use internal approaches for the
calculation of risk-weighted values or own capital requirements
meets the preconditions for obtaining the permission which are
included in Part Three of EU Regulation No 575/2013. When
assessing conformity, the Financial and Capital Market Commission
shall pay special attention to the changes in the commercial
activity model of the credit institution, to application of
internal approaches to new products, to the manner in which the
credit institution improves its internal approach on the basis of
proven modern techniques and practices.
(2) If the verification referred to in Paragraph one of this
Section shows that the internal approach of the credit
institution does not cover all significant risks, the Financial
and Capital Market Commission shall require the credit
institution to eliminate the respective defects. To mitigate
risks until the defects are remedied the Financial and Capital
Market Commission may determine a higher coefficient which shall
be used for the calculation of the own capital requirements in
accordance with the internal approach, additional own capital
requirements or implement other suitable and effective
measures.
(3) If the inspection of the internal model used for the
calculation of the market risk capital requirements of the credit
institution shows that the internal model is not or is no longer
sufficiently accurate as, upon applying of back testing in
accordance with Article 366 of EU Regulation No 575/2013, it has
been found that the number of overshootings does not correspond
to the allowed level, the Financial and Capital Market Commission
shall require the credit institution to eliminate such defects
without delay, or cancels the permission to use the internal
model.
(4) If the Financial and Capital Market Commission establishes
that a credit institution does not conform to the provisions for
the receipt of a permission to use the internal approach and the
credit institution is not able to provide reasonable evidence
that such incompliance does not have significant effect on the
calculation of risk-weighted exposure value or own funds
requirement in accordance with the requirements of EU Regulation
No 575/2013, the Financial and Capital Market Commission shall
require that the credit institution draws up and implements an
action plan which ensures remedying of the incompliance. The
Financial and Capital Market Commission shall require that the
credit institution amends its submitted incompliance remedy plan,
if the measures provided for therein do not ensure restoration of
complete compliance or the timeframes of the implementation
thereof are not acceptable.
(5) If there are grounds to believe that a credit institution
is not capable to restore the internal approach compliance with
the provisions of the receipt of the permission of use thereof
within an acceptable timeframe and the credit institution has not
provided reasonable evidence that non-compliance does not have
significant effect on the calculation of own funds requirements
in accordance with EU Regulation No 575/2013, the Financial and
Capital Market Commission shall cancel the permission to use the
internal approach or permit use thereof only in such areas in
which complete compliance with the preconditions for obtaining
the permission is ensured or will be ensured within an acceptable
timeframe.
(6) The Financial and Capital Market Commission shall inform
the European Banking Authority of the principles of taking the
decisions referred to in this Section.
[24 April 2014; 21 July 2017]
Section 105.4 (1) The Financial and Capital
Market Commission shall assess the quality of internal approaches
not less frequently than once per year, analysing the report of
the credit institution concerning the calculation of exposures
and risk-weighted values of items or own funds requirement
included in the benchmark portfolio and paying special attention
to:
1) internal approaches as a result of application of which
significant differences arise in the volume of own funds
requirements for similar exposures;
2) internal approaches, the results of application of which
indicate a considerable and systematic determination of too small
own funds requirement volume or the application of which to a
benchmark portfolio and the credit institution's exposures
demonstrate especially big or especially small differences in the
modelling results.
(2) If the results of an internal approach used by a credit
institution significantly differ from the results of use of
internal approaches used by the majority of similar credit
institutions and it can be clearly established that the own funds
requirements are being underestimated as a result of the internal
approach used by the credit institution and it cannot be
explained by the credit institution's exposures or the
differences of risks inherent to the financial instruments'
items, the Financial and Capital Market Commission shall require
that the credit institution takes such corrective measures to
improve the used internal approach, which will ensure the
compliance of the results of use of the internal approach which
is applied to the credit institution's exposures with the results
of the benchmark portfolio. When deciding on corrective measures,
the Financial and Capital Market Commission shall ensure that
they do not restrict risk-sensitivity of the credit institution's
internal approach, do not promote standardisation of internal
approaches or determination of privileges for a certain internal
approach, do not create incorrect incentives, and do not promote
equalisation of internal approaches used by different credit
institutions.
[24 April 2014]
Section 106. (1) The Financial and Capital Market
Commission or an authorised person thereof has the right to
inspect the activities of a credit institution, a financial
holding company, a mixed financial holding company, a mixed
holding company and the subsidiaries thereof and the activities
of other persons related to the abovementioned companies or
authorised representatives thereof who perform the functions
necessary for ensuring of the activities of the abovementioned
companies.
(2) The Financial and Capital Market Commission or an
authorised person thereof has the right to require from the
persons referred to in Paragraph one of this Section the
information necessary for the Financial and Capital Market
Commission to perform its functions, to become acquainted with
the documentation of the persons referred to in Paragraph one of
this Section, verify the accounting data and records and receive
any extracts and copies thereof, to receive explanations and
information from the persons referred to in Paragraph one of this
Section or their representatives or employees regarding
commercial companies in which the consolidation group has
investments or to interview any other person who has consented
thereto, to acquire information regarding the subject to be
verified.
(3) An authorised representative of Latvijas Banka has the
right to verify the compliance with the regulatory instructions
and provisions approved thereby by the credit institution, as
well as to become acquainted with all the documentation, assets
and liabilities of the credit institution and to receive
explanations and information from the responsible persons of the
credit institution necessary for the verification.
(4) Credit institutions, subsidiaries of credit institutions
which provide financial services related to credit risk, savings
and loan associations, and insurers have the right to, directly
or through an institution established specifically for this
purpose, mutually exchange information on debtors and the course
of fulfilment of their obligations. Credit institutions according
to the procedures laid down in this Paragraph have the right to
mutually exchange information regarding all cases when a customer
fails to comply, fully or partially, with the requirements of
Section 73 of this Law.
(5) In order to evaluate the ability of the customer -
consumer - to repay the credit, and the ability of the customer's
guarantor to fulfil the obligations resulting from the guarantee
contract or its ability to manage the credit risk, credit
institutions, the subsidiaries of credit institutions which
provide financial services related to the credit risk, savings
and loan associations, and also capital companies that have
received the special permit (licence) for the provision of
consumer finance services shall exchange information regarding a
customer, customer's guarantor, their obligations and the course
of the fulfilment of obligations in accordance with the
provisions of the Consumer Rights Protection Law.
[1 June 2000; 11 April 2002; 11 December 2003; 28 October
2004; 22 February 2007; 17 May 2007; 23 December 2010; 24 April
2014; 25 October 2018]
Section 106.1 The participation of a credit
institution, a branch of a credit institution and such commercial
company, which has close relationship with the credit
institution, shall be laid down in the Law on the Credit
Register.
[24 May 2012]
Section 106.2 (1) Any person may report to
the Financial and Capital Market Commission on potential and
actual violations of this Law, any regulatory provisions of the
Financial and Capital Market Commission issued on the basis of
this Law, and also EU Regulation No 575/2013 and EU Regulation No
1286/2014.
(2) The Financial and Capital Market Commission shall
establish and maintain a safe system for reporting that includes
at least the following elements:
1) the procedures by which reports on the violations are
received;
2) in accordance with the laws and regulations regarding
personal data protection - personal data protection of such
person who is reporting on the violation, as well as personal
data protection of such natural person regarding whom there are
suspicions that he or she has committed the violation;
3) the provisions regarding ensuring confidentiality to such
person who is reporting on the violation, except for the case
when disclosure of such information is provided for in the laws
and regulations of the Republic of Latvia.
(3) The procedures for reporting on potential and actual
violations of this Law, any regulatory provisions of the
Financial and Capital Market Commission issued on the basis of
this Law, and also EU Regulation No 575/2013 and EU Regulation No
1286/2014, and the procedures for processing the reports received
at the Financial and Capital Market Commission shall be
determined by the regulatory provisions of the Financial and
Capital Market Commission.
(4) Reporting which, in accordance with Paragraphs one and
five of this Section, may be performed by the employees of the
credit institution shall not be considered as the violation of
the prohibition to disclose information specified in the contract
and any law or regulation, and the person may not be held liable
for such reporting. Discriminatory or other unfair activities may
not, due to such reporting, be directed against the employees of
the credit institution who report on potential and actual
violations at the credit institution.
(5) The credit institution shall develop a procedure by which
an independent and special internal channel for reporting on the
violation is established, and it shall ensure that the employees
of the credit institution can report on potential or actual
violations of this Law, any regulatory provisions of the
Financial and Capital Market Commission issued on the basis of
this Law, and also EU Regulation No 575/2013 and EU Regulation No
1286/2014. The procedure for establishing the internal channel
for reporting on the violation developed by the credit
institution shall ensure compliance with the requirements laid
down in Paragraph two, Clauses 2 and 3, and also Paragraph four
of this Section.
[19 December 2019 / See Paragraph 85 of Transitional
Provisions]
Section 107. [28 October 2004]
Section 107.1 (1) The supervisory authority
of another Member State has the right to carry out inspections at
branches and representations of a credit institution of the
relevant Member State registered in the Republic of Latvia, as
well as at such credit institutions and commercial companies
thereof, which have submitted information to the supervisory
authority of the Member State for the performance of consolidated
supervision, as well as to become acquainted with the
documentation and to receive explanations and information
required within the framework of inspection.
(2) Prior to the commencement of the inspection, the
supervisory authority of another Member State shall, in a timely
manner, inform the Financial and Capital Market Commission
thereof in writing. A representative of the Financial and Capital
Market Commission has the right to participate in such
inspection. The supervisory authority of another Member State
shall submit to the Financial and Capital Market Commission a
copy of the report prepared on the results of the inspection
carried out.
(3) The Financial and Capital Market Commission has the right
to, in accordance with their mutual agreement, provide the
supervisory authority of another Member State with information
not to be further disclosed, which is necessary for exercising
the supervision at the branches and representations of the credit
institutions of the relevant Member State registered in the
Republic of Latvia, as well as the credit institutions and
commercial companies thereof referred to in Paragraph one of this
Section, which have submitted information to the supervisory
authority of such Member State for exercising the consolidated
supervision, if the legal acts of the relevant Member State
provide liability for the disclosure of information not to be
disclosed.
[28 October 2004; 22 February 2007; 26 February 2009; 23
December 2010 / Amendment in relation to replacement of the word
"bank" with the words "credit institution" shall come into force
on 30 April 2011. See Paragraph 39 of Transitional
Provisions]
Section 107.2 The rights of a Member State
supervisory authority laid down in Section 107.1 of
this Law shall also be applied to a foreign supervisory authority
insofar as it is necessary for exercising the supervision of
credit institutions, on the basis of consolidated financial
accounts and an agreement between the Financial and Capital
Market Commission and the relevant foreign supervisory
authorities of credit institutions.
[28 October 2004]
Section 108. (1) A written report shall be submitted to
the management of the credit institution on the results of the
inspection where the violations are indicated and directions
instructions for the required changes in the further activities
and credit policy of the credit institution are provided.
(2) If a credit institution does not agree with the opinion of
the inspection by the Financial and Capital Market Commission, it
may submit a complaint to the council of the Financial and
Capital Market Commission, which is entitled to appoint a new
inspection or decide to make amendments to the opinion of the
inspection, or to reject the complaint.
(3) If the decision of the council of the Financial and
Capital Market Commission does not satisfy the credit
institution, it is entitled to appeal the decision in court.
(4) If a credit institution does not agree with the opinion of
the inspection by Latvijas Banka, it is entitled submit a
complaint to the council of Latvijas Banka which is entitled to
appoint a new inspection or to decide to make amendments to the
opinion of the inspection, or to reject the complaint.
(5) If the decision of the council of Latvijas Banka does not
satisfy the credit institution, it is entitled to appeal the
decision in court.
[1 June 2000; 11 December 2003]
Section 108.1 (1) If the Financial and
Capital Market Commission determines that the branch of a credit
institution that is registered in another Member State, which
operates in Latvia, or a credit institution that is registered in
another Member State, which provides financial services without
opening a branch performs activities that are in contradiction to
the laws of Latvia, it shall without delay request that such
credit institution terminate such activities.
(2) If the branch of a credit institution registered in
another Member State which is operating in Latvia, or a credit
institution registered in another Member State which is providing
financial services without opening a branch does not discontinue
activities that are in contradiction to the laws of Latvia, the
Financial and Capital Market Commission shall, without delay,
inform the supervisory authority of the relevant Member State
whose obligation is to act so as to eliminate the violations. The
supervisory authority of another Member State shall inform the
Financial and Capital Market Commission of the measures
taken.
(3) If the branch of a credit institution registered in
another Member State which is operating in Latvia, or a credit
institution registered in another Member State which is providing
financial services without opening a branch does not discontinue
activities that are in contradiction to the laws of Latvia, the
Financial and Capital Market Commission shall inform the
supervisory authority of the relevant Member State and take
measures for rectification of such violations.
(4) The requirements laid down in Paragraphs one, two, and
three of this Section shall not prevent the Financial and Capital
Market Commission from performing activities in order to rectify
violations which are in contradiction to the laws of Latvia that
safeguard the interests of the society, and to apply penalties
for them.
(5) The provisions of this Section shall not hinder a credit
institution that is registered in another Member State to
disseminate advertising in Latvia regarding the financial
services provided by it.
(6) In crisis situations, without conforming to the procedures
referred to in Paragraphs one, two, three, and four of this
Section, the Financial and Capital Market Commission is entitled
to implement measures in order to protect the interests of
depositors, investors, and other recipients of the services of a
credit institution by conforming to the commensurability of such
measures with the interests to be protected and without causing
preferences for the creditors of a credit institution referred to
in this Paragraph in comparison to creditors in other Member
States. The Financial and Capital Market Commission shall,
without delay, inform the relevant supervisory authority of the
Member State, the European Banking Authority, and the European
Commission of taking the measures referred to in the first
sentence of this Paragraph. If the administrative or judicial
authority of the state of domicile applies reorganisation
measures to the credit institution, then from the day of
commencing such reorganisation measures the measures taken by the
Financial and Capital Market Commission shall become invalid.
[11 April 2002; 11 December 2003; 28 October 2004; 22
February 2007; 22 March 2012; 21 July 2017]
Section 108.2 (1) In order to ensure the
supervision of such credit institutions, which with the
intermediation of branches are operating in one or several Member
States, the Financial and Capital Market Commission shall
co-operate with the supervisory authorities of the relevant
Member States, provide and receive information from such
authorities necessary for the supervision of credit institutions
regarding management and stockholders (shareholders) of credit
institutions, as well as information that is related to the
requirements governing the receipt of a licence of a credit
institution, the commencing activities of branches and the
activities of credit institutions, in particular in relation to
liquidity, solvency, deposit guarantees, limiting of the large
exposures, administrative and accounting procedures and internal
control mechanisms.
(2) The Financial and Capital Market Commission is entitled to
inform the European Banking Authority of the cases when the
supervisory authority of another Member State does not cooperate
or does not provide information upon a substantiated request of
the Financial and Capital Market Commission, or does not provide
information within a corresponding (reasonable) time period.
[23 December 2010; 22 March 2012; 24 April 2014]
Section 108.3 (1) The Financial and Capital
Market Commission, by indicating a justification, shall send to
the supervisory authority or consolidating supervisor,
supervising the consolidation group that includes a credit
institution, which has a branch registered in the Republic of
Latvia, of the state of domicile of a credit institution not
included in the consolidation group, which has a branch
registered in the Republic of Latvia, a request to co-ordinate
the opinions in order to take the decision (hereinafter - the
co-ordinated decision) to recognise the branch registered in the
Republic of Latvia as significant.
(2) When assessing the significance of a branch, the Financial
and Capital Market Commission shall take into account the
following criteria:
1) deposits attracted by the branch in the Republic of Latvia
are exceeding two per cent from the amount of deposits attracted
by the sector of credit institutions;
2) suspension or termination of activities of the branch may
have an impact on the payment, clearing and settlement system, as
well as the liquidity of the financial market of the Republic of
Latvia;
3) assets and the number of customers of the branch are
significant for the sector of credit institutions or the
financial system of the Republic of Latvia.
(3) The Financial and Capital Market Commission and the
supervisory authority of the state of domicile or consolidated
supervisor of the branch shall co-operate and carry out all
necessary activities in order to within two months from the day
of sending the request referred to in Paragraph one of this
Section the co-ordinated decision is taken to recognise a branch
as significant.
(4) The decision referred to in Paragraph three of this
Section may be appealed in the state of domicile of consolidated
supervisor or the branch in accordance with the procedures laid
down in the laws of the relevant state.
41) [24 April 2014]
(5) If within two months from sending of the request referred
to in Paragraph one of this Section the co-ordinated decision is
not taken, the Financial and Capital Market Commission is
entitled, in conformity with the opinion of the supervisory
authority of the state of domicile or the consolidated
supervisor, within the following two months, to take the decision
to recognise the relevant branch as significant without
co-ordination of opinions.
51) [24 April 2014]
(6) The supervisory authority of another Member State may
apply to the Financial and Capital Market Commission with a
request that a branch registered in this Member State of a credit
institution registered in the Republic of Latvia is recognized as
significant or, if the Financial and Capital Market Commission is
the consolidating supervisory authority, with a request that
branches of the credit institutions included in the consolidation
group are recognized as significant. The Financial and Capital
Market Commission shall take all the necessary measures in order
to, within two months from the day of receipt of the request,
make the co-ordinated decision to recognise a branch as
significant. If the co-ordinated decision is not taken, the
Financial and Capital Market Commission shall conform to the
decision taken by the supervisory authority of another Member
State to recognise the relevant branch as significant.
(7) The decision referred to in Paragraph six of this Section
may be appealed against to the Administrative Regional Court.
(8) The decision taken to recognise a branch as significant
shall be communicated to the relevant supervisory authorities of
subsidiary credit institutions and branches registered in other
Member States of a credit institution registered in the Republic
of Latvia.
(9) Recognition of a branch as significant shall not affect
the rights and obligations laid down for the supervisory
authorities.
(10) The Financial and Capital Market Commission shall
co-operate with the supervisory authorities of the significant
branches of credit institutions registered in the Republic of
Latvia in the countries involved, exchanging the information
referred to in Section 112.7, Paragraph one, Clauses 3
and 4 of this Law and carrying out the supervisory activities
referred to in Section 112.3, Paragraph one, Clause
3.
(11) If the Financial and Capital Market Commission detects an
emergency situation, it shall, in conformity with the provisions
for disclosure of restricted access information and using already
established types of exchange of information as much as possible,
without delay notify the national central banks of the countries
involved, which are part of the European System of Central Banks,
the European Central Bank and the European Systemic Risk
Board.
(111) If a credit institution registered in the
Republic of Latvia has significant branches in other Member
States, the Financial and Capital Market Commission shall inform
the supervisory authorities of credit institutions of the
relevant States of the risks referred to in Section
101.3, Paragraph one and Section 112.4,
Paragraph two of this Law and the assessment results of the
capital necessary for covering them, and the decisions taken in
accordance with Section 101.3, Paragraph three of this
Law, insofar the relevant risk assessments and decisions apply to
such branches.
(112) The Financial and Capital Market Commission
shall co-operate with the supervisory authority of such country
involved in which a credit institution of the Republic of Latvia
has a registered significant branch in relation to the action
plan for overcoming the potential liquidity crisis if it may
affect the liquidity risk in the currency of the country
involved.
(113) If the Financial and Capital Market
Commission does not receive the information requested thereby
from the supervisory authorities of significant branches of
credit institutions registered in the Republic of Latvia or the
measures taken by such branches are not corresponding, the
Financial and Capital Market Commission may request that the
European Bank Authority participates in examining the issue in
accordance with Article 19 of EU Regulation No 1093/2010.
(12) If a credit institution registered in the Republic of
Latvia has significant branches in other Member States and the
credit institution is not included in the college of supervisors
established within the framework of the consolidation group, the
Financial and Capital Market Commission shall set up and manage a
college of supervisors with the supervisory authorities of such
countries involved in which the significant branches of the
abovementioned credit institution have been registered in order
to ensure co-operation with the supervisory authorities of the
abovementioned Member States by carrying out the activities
referred to in Paragraphs ten and eleven of this Section and
Section 108.2. The Financial and Capital Market
Commission shall create a college of supervisors by entering into
a co-operation agreement with the supervisory authorities of the
relevant countries involved.
(13) The Financial and Capital Market Commission, taking into
account the importance of the planned or co-ordinated supervisory
activities for the supervisory authorities of the countries
involved and the potential impact on the stability of the
financial system of the relevant Member States, particularly in
emergency situations, shall determine such supervisory authority
that has the obligation to participate in meetings of the college
of supervisors.
(14) The Financial and Capital Market Commission shall, in due
time, inform all participants of the college of supervisors of
organisation of meetings of the college, the main issues to be
examined and the planned activities, as well as the decisions
taken or the measures carried out in the meetings.
[23 December 2010; 22 March 2012; 24 April 2014; 21 July
2017]
Section 109. The Financial and Capital Market
Commission may request the announcement of a meeting of the
stockholders (shareholders) or a meeting of the board of the
credit institution and determine the issues to be discussed.
Authorised representatives of the Financial and Capital Market
Commission have the right to participate in such meetings.
[1 June 2000; 11 April 2002; 11 December 2003]
Section 110. [1 June 2000]
Section 110.1 (1) Information on a credit
institution and its customer, the activities of the credit
institution and its customer transactions which has not been
previously published in accordance with the procedures laid down
by law, or the disclosure of which has not been governed by other
laws, or the decision on disclosure of which has not been taken
by the Financial and Capital Market Commission, information
received in accordance with the procedures laid down in this
Section from Member State, foreign competent authorities and
persons, and also from institutional units established by Member
States and foreign countries, and information obtained by credit
institutions in inspections for the needs of supervision shall be
deemed to be restricted access information and shall not be
disclosed to third parties other than in the form of an overview
or summary so that it would be impossible to identify a specific
credit institution or its customer. Such information on a credit
institution and its customer, and also the activities of the
credit institution and its customer transactions shall have the
status of restricted access information also in such case where
the insolvency proceedings of the credit institution or its
customer have been initiated or liquidation thereof has been
initiated, or the credit institution or its customer (legal
person) has been liquidated.
(2) The prohibition to disclose restricted access information
shall not apply to information:
1) which is related to court proceedings in a civil case if
the insolvency proceedings of a credit institution have been
declared or liquidation thereof has been initiated and such
information is not related to third parties involved in actions
to improve the financial situation of the credit institution;
2) which has been provided by the Financial and Capital Market
Commission to the person directing the proceedings in a criminal
case on the basis of the relevant request;
3) on a potential criminal offence established by the
Financial and Capital Market Commission in the activities of a
credit institution whereof it shall inform law enforcement
authorities;
4) on persons who are responsible for detecting and
investigating violations of laws and regulations in the field of
commercial activity if the following conditions are complied
with:
a) provision of information is necessary for detecting and
investigating violations of laws and regulations governing the
field of commercial activity;
b) a certification has been provided that information will be
available only to such persons who are involved in the execution
of the task and that the requirements for the protection of
information are binding on them;
c) if the Financial and Capital Market Commission has obtained
the necessary information from the supervisory authority of the
financial market participant of another country, such information
shall be disclosed only after receipt of the consent of the
authority which provided the information.
(3) The provisions of Paragraph one of this Section shall not
prohibit the Financial and Capital Market Commission, in
conformity with the competence, to exchange restricted access
information with the supervisory authorities of financial market
participants of another Member State and the European Central
Bank, the European Banking Authority, the European Securities and
Markets Authority, the European Insurance and Occupational
Pensions Authority, and the European Systemic Risk Board by
preserving the status of restricted access information for the
information provided, and also to openly disclose (publish on its
website) the results of the stress tests performed by the
Financial and Capital Market Commission.
(4) The Financial and Capital Market Commission is entitled to
use the obtained information in accordance with Paragraphs three,
seven, and nine of this Section only for the performance of its
functions:
1) in order to ascertain conformity with the laws and
regulations governing the founding and activities of credit
institutions in the supervision of the activities of credit
institutions, especially in relation to liquidity, solvency,
large exposures, organisation of administration and accounting,
and internal control mechanisms;
2) in order to apply the administrative measures and sanctions
laid down by law;
3) in legal proceedings in which the administrative acts
issued by the Financial and Capital Market Commission or its
actual actions are appealed.
(5) The Financial and Capital Market Commission is entitled to
request information from a credit institution on the basis of the
request of the supervisory authority of credit institutions of
another Member State and the request of such foreign supervisory
authority of credit institutions with which a contract for
exchange of information has been entered into. The abovementioned
authorities are entitled to use the information provided thereto
by the Financial and Capital Market Commission only subject to
written consent of the Financial and Capital Market Commission
and may use such information only for the requested purpose
thereof.
(6) The Financial and Capital Market Commission is entitled to
enter into contracts for exchange of information with foreign
supervisory authorities of credit institutions or the authorities
of the relevant foreign country the functions of which are
comparable to the functions of the authorities referred to in
Paragraphs seven and nine of this Section if the laws and
regulations of this foreign country provide for the protection of
restricted access information equivalent to this Section and the
requirements in force in the field of personal data protection
are conformed to. Such information shall only be used for the
supervision of financial market participants or the relevant
authorities for the performance of the functions laid down by
law.
(7) When preserving the status of restricted access
information, the provisions of Paragraphs one and four of this
Section shall not prohibit the Financial and Capital Market
Commission from exchange of restricted access information
with:
1) the supervisory authorities of credit institutions of
another Member State and the ministries of finance of such
countries;
2) the authorities which have the duty to supervise the
financial market or financial market participants;
3) the authorities of the Member States, including collegiate
authorities and institutional units established by the Member
States which have the obligation to maintain the stability of the
financial system in Member States and which determine or
implement macroprudential policy;
4) the authorities of the Member States which are responsible
for the reorganisation of financial market participants,
including collegiate authorities and institutional units
established by Member States, and also the State authorities the
purpose of which is to protect the stability of the financial
system;
5) contractual or institutional systems for customer
protection of Member States;
6) the competent authorities which are involved in insolvency,
liquidation and similar procedures of credit institutions laid
down in the legal acts of other Member States;
7) the persons who are responsible for mandatory audits of the
financial statements of credit institutions;
8) the authorities of a Member State which manage investment
and deposit compensation schemes if such information is necessary
for the performance of the functions thereof;
9) the authorities which are responsible for the supervision
of the financial market participants in the field of the
prevention of money laundering and terrorism and proliferation
financing and other authorities similar to the Financial
Intelligence Unit of Latvia;
10) the competent authorities, State authorities or
institutional units which are responsible for the application of
rules in respect of structural division of actions in a banking
group.
(8) The Financial and Capital Market Commission shall notify
the European Banking Authority of State authorities and
institutional units which may receive restricted access
information for the performance of monitoring or supervisory
functions or which in accordance with laws and regulations are
responsible for detecting and investigating violations of laws
and regulations in the field of commercial activity.
(9) The provisions of this Section shall not preclude the
Financial and Capital Market Commission from exchanging
restricted access information with the central banks of the
Member States and other authorities of the Member State which are
responsible for the monitoring of payment systems if provision of
such information is necessary for the performance of the
functions thereof laid down by law and also with the European
Systemic Risk Board.
(10) In case of an emergency situation, adverse circumstances
or condition where unfavourable development is observed on
financial markets that could substantially threaten proper
functioning, liquidity and integrity of the financial market and
the stability of the financial system or part thereof in the
European Union or in any of the Member States, the Financial and
Capital Market Commission shall immediately, upon the relevant
request, provide to the central banks of the Member States and
the European Systemic Risk Board the information which is
necessary to these authorities for the performance of the
functions laid down by law, including for the implementation of
the monetary policy and the provision of associated liquidity,
the supervision of payment, clearing, and settlement systems and
for ensuring the stability of the financial system.
(11) The provisions of this Section shall not preclude the
Financial and Capital Market Commission from provision of
restricted access information in accordance with the procedures
laid down in Paragraph thirteen of this Section to the following
international authorities:
1) the International Monetary Fund and the World Bank - for
the performance of assessments intended for the Financial Sector
Assessment Program;
2) the Bank for International Settlements - for the
performance of quantitative impact studies;
3) the Financial Stability Board - for the performance of its
functions.
(12) The Financial and Capital Market Commission shall provide
restricted access information to the authorities referred to in
Paragraph eleven of this Section in conformity with the
provisions of Paragraph thirteen of this Section if a motivated
request has been received and the following conditions are
complied with:
1) the request is sufficiently justified, taking into account
the particular tasks carried out by the requesting authority in
accordance with the legal acts governing its operation;
2) the request is sufficiently accurate in relation to the
content, amount of the requested information and the means for
disclosure thereof;
3) a certification has been provided that the requested
information is necessary for the performance of particular tasks
of the requesting authority and does not exceed the scope of
functions assigned to such authority in the laws and regulations
governing the activity thereof;
4) a certification has been provided that information will be
available only to such persons who are involved in the execution
of the task and the requirements for the protection of
information are binding on them.
(13) The authorities referred to in Paragraph eleven of this
Section may become acquainted with restricted access information
only in person in the premises of the Financial and Capital
Market Commission.
[23 September 2021 / Amendment regarding the replacement of
the words "Financial and Capital Market Commission" with the
words "Latvijas Banka" shall come into force on 1 January 2023
and shall be included in the wording of the Law as of 1 January
2023. See Paragraph 110 of Transitional Provisions]
Section 111. (1) The employees of Latvijas Banka, the
Ministry of Financial and the Financial and Capital Market
Commission, the authorised representatives of the Financial and
Capital Market Commission, and sworn auditors, the authorised
persons of Latvijas Banka and the Financial and Capital Market
Commission or other persons who have acted pursuant to the
instructions of the authorised representatives of the Financial
and Capital Market Commission or sworn auditors, shall be
considered to be officials and shall be punishable for the
disclosure of non-disclosable information, if they have,
intentionally or unintentionally, made public or disclosed
information on a credit institution to other persons.
(2) The provisions of Paragraph one of this Section shall not
apply to the information which is submitted by the employees of
Latvijas Banka and the Financial and Capital Market Commission in
accordance with the procedures laid down in this Law, as well as
in the cases and according to the procedures laid down in other
laws.
(3) Information on a credit institution may be submitted to a
court and the Office of the Prosecutor in a criminal matter, as
well as disclosed in a court, if an insolvency or liquidation
matter of the credit institution has been initiated.
(4) If Latvijas Banka or the Financial and Capital Market
Commission determines violations of law in the activities of a
credit institution, it has the right to notify the State Revenue
Service, the Office of the Prosecutor, the State Police, and
other State institutions, which are entitled to perform enquiry
and pre-trial investigations.
(5) An employee and authorised person of the Financial and
Capital Market Commission shall not be liable to the third
parties for losses, which have occurred thereto, upon fulfilling
of the official duties of the employee or upon fulfilling the
tasks of the authorised person.
(6) The Financial and Capital Market Commission shall be
liable for losses which have been caused to a third party by an
action to the Financial and Capital Market Commission, upon
fulfilling of the functions thereof laid down in the law, only in
case if the illegal action of the Financial and Capital Market
Commission has been intentional or the Financial and Capital
Market Commission has permitted gross negligence.
(7) The Financial and Capital Market Commission shall be
liable for losses which have been caused to a third party by an
action of the employee or authorised person of the Financial and
Capital Market Commission only in case if the illegal action of
the employee or authorised person has been intentional or the
employee or authorised person has permitted gross negligence.
[21 May 1998; 1 June 2000; 11 April 2002; 11 December 2003;
17 May 2007; 12 February 2009]
Section 112. [22 February 2007]
Section 112.1 [23 December 2010] Amendment
regarding the deletion of Section shall come into force on 30
April 2011. See Paragraph 39 of Transitional Provisions]
Chapter
VII.1
Supervision of Activities of Credit
Institutions at the Level of Consolidation Group
[23 December 2010]
Section 112.2 (1) The Financial and Capital
Market Commission shall carry out consolidated supervision of
parent credit institutions of the Republic of Latvia, or parent
credit institutions of the European Union registered in the
Republic of Latvia on the level of a consolidation group of the
parent credit institution.
(2) If the parent company of a credit institution is a parent
investment firm of the Republic of Latvia, a parent investment
firm of the European Union registered in the Republic of Latvia,
or a parent investment firm of the European Union registered in
another Member State which does not have credit institutions -
subsidiaries - in other Member States, the Financial and Capital
Market Commission shall carry out consolidated supervision of
such credit institutions at the level of such investment
firm.
(3) If the parent company of credit institutions -
subsidiaries - registered in the Republic of Latvia and at least
one other Member State is a parent investment firm of the
Republic of Latvia, a parent investment firm of the European
Union registered in the Republic of Latvia, an investment firm of
another Member State, or a parent investment firm of the European
Union registered in another Member State, the Financial and
Capital Market Commission shall carry out consolidated
supervision, if the credit institution registered in the Republic
of Latvia has the largest total assets.
(4) If the parent company of a credit institution is a parent
financial holding company of the Republic of Latvia, a parent
mixed financial holding company of the Republic of Latvia, a
European Union parent financial holding company registered in the
Republic of Latvia, or a European Union parent mixed financial
holding company registered in the Republic of Latvia, or also a
European Union parent financial holding company of another Member
State, or a European Union parent mixed financial holding company
of another Member State which does not have credit institutions -
subsidiaries - in other Member States, the Financial and Capital
Market Commission shall carry out consolidated supervision of
such group.
(5) If a credit institution registered in the Republic of
Latvia and an investment firm registered in at least one other
Member State are subsidiaries of the same parent financial
holding company of the Republic of Latvia, parent mixed financial
holding company of the Republic of Latvia, European Union parent
financial holding company registered in the Republic of Latvia,
or European Union parent mixed financial holding company
registered in the Republic of Latvia, the Financial and Capital
Market Commission shall carry out consolidated supervision of
such group.
(6) If the parent company of credit institutions registered in
the Republic of Latvia and at least one other Member State is a
financial holding company or mixed financial holding company
registered in the Republic of Latvia and at least one other
Member State, and there is also a registered credit institution -
subsidiary - in each such Member State, the Financial and Capital
Market Commission shall carry out consolidated supervision, if
the credit institution registered in the Republic of Latvia holds
the largest total assets.
(7) If consolidation is carried out in accordance with Article
18(3) or (6) of EU Regulation No 575/2013, the Financial and
Capital Market Commission shall carry out consolidated
supervision, if the credit institution registered in the Republic
of Latvia has the largest total assets.
(8) In special cases when, in the situations referred to in
Paragraphs two, three, six, and seven of this Section, several
credit institutions - subsidiaries - of such group are registered
in one Member State, the Financial and Capital Market Commission
shall carry out consolidated supervision, if the credit
institution registered in the Republic of Latvia has the largest
total assets or the credit institutions registered in the
Republic of Latvia have the largest total assets.
(9) In special cases the Financial and Capital Market
Commission is entitled, upon mutual agreement with the
supervisory authorities of the relevant Member States, not to
apply the procedures laid down in Paragraphs one, two, three,
five, six, and seven of this Section, if the application thereof
would be inappropriate, taking into account the relative
significance of the credit institutions and investment firms
involved and their activities in different countries or taking
into account the necessity to ensure that carrying out of
consolidated supervision is continued by the supervisory
authority of the relevant credit institution or investment firm,
and to propose determination of another supervisory authority for
the carrying out of consolidated supervision, rather
determination of the supervisory authority according to the usual
procedures. Prior to taking of this decision, the supervisory
authorities involved shall provide the parent company of the
European Union, the European Union parent mixed financial holding
company, the European Union parent financial holding company, or
the credit institution, or the investment firm with the largest
total assets, with an opportunity of expressing an opinion on the
decision to be taken. The Financial and Capital Market Commission
shall, without delay, inform the European Commission and the
European Banking Authority of such type of agreement and the
content thereof.
(10) A financial holding company or a mixed financial holding
company which is the parent company of a credit institution but
which has not been issued with the permit in accordance with
Section 33.3 of this Law, shall provide the credit
institution the consolidated supervision of which is carried out
by the Financial and Capital Market Commission with information
on such credit institutions and financial institutions which are
subsidiaries of the financial holding company or the mixed
financial holding company or in which the financial holding
company or the mixed financial holding company has a
participation.
(11) A financial holding company or a mixed financial holding
company shall ensure that members of the council or the board of
a financial holding company registered in the Republic of Latvia
or a mixed financial holding company registered in the Republic
of Latvia meet the same requirements and are subjected to the
same restrictions as respectively imposed on the member of the
council or the board of the credit institution by Section 24,
Paragraphs one and two, Section 25, Paragraph one, and Section
26, Paragraph one, and also Section 26.1 of this Law,
taking into account the specific characteristics of the
activities of the financial holding company registered in the
Republic of Latvia or the mixed financial holding company
registered in the Republic of Latvia.
(12) If a credit institution registered in the Republic of
Latvia is a subsidiary of a parent credit institution of another
Member State, a parent mixed financial holding company of another
Member State, or a parent financial holding company of another
Member State and it is not included in the consolidation group in
such Member State for the purposes of consolidated supervision in
accordance with EU Regulation No 575/2013, the Financial and
Capital Market Commission is entitled to request information from
the parent company registered in the relevant Member State
necessary for the supervision of the credit institution
registered in the Republic of Latvia.
(13) Subsidiaries of such credit institutions, mixed financial
holding companies, and financial holding companies which are not
included in the consolidation group for the purposes of
consolidated supervision in accordance with EU Regulation No
575/2013 shall, upon request of the Financial and Capital Market
Commission, provide the information necessary for the
supervision. The Financial and Capital Market Commission may
carry out inspections or assign the carrying out thereof to the
third parties - a sworn auditor or a commercial company of sworn
auditors - in order to verify the information received from the
abovementioned subsidiaries.
(14) If the requirements of this Law and the equivalent
requirements of the Financial Conglomerates Law are binding on a
mixed financial holding company, especially with regard to risk
management and internal control, the Financial and Capital Market
Commission, if it is the consolidated supervisor, has the right,
after negotiations with the involved supervisory authorities,
apply only the requirements of the Financial Conglomerates Law to
that company.
(15) If the requirements of this Law and equivalent
requirements of the Insurance and Reinsurance Law are binding to
a mixed financial holding company, particularly in relation to
the risk management and internal control, the Financial and
Capital Market Commission, if it is the consolidated supervisor,
upon agreement with a group supervisory authority in the
insurance sector, is entitled to apply only the requirements of
such law to the mixed financial holding company in relation to
the financial sector which has been laid down as the most
important in accordance with the Financial Conglomerates Law.
(16) The Financial and Capital Market Commission shall inform
the European Banking Authority and the European Insurance and
Occupational Pensions Authority of taking the decisions referred
to in Paragraphs fourteen and fifteen of this Section.
[29 April 2021]
Section 112.3 (1) In order to ensure the
supervision a parent credit institution of the European Union
registered in the Republic of Latvia and of a credit institution
which is a subsidiary of a European Union parent financial
holding company registered in the Republic of Latvia or a
European Union parent mixed financial holding company registered
in the Republic of Latvia, at the level of a consolidation group,
the Financial and Capital Market Commission shall:
1) co-ordinate the acquisition and disclosure of essential
information for the needs of supervision including in emergency
situations;
2) in cooperation with the supervisory authorities of credit
institutions of other Member States included in the consolidation
group, plan and co-ordinate day-to-day supervisory activities,
including activities necessary for the purpose of taking a
co-ordinated decision on specific prudential requirements and the
sanctions to be imposed;
3) in co-operation with the supervisory authorities of credit
institutions of other Member States included in the consolidation
group and, where appropriate, central banks of such Member
States, which are part of the European System of Central Banks
and the European Central Bank, plan and co-ordinate the
supervisory activities for readiness for emergency situations and
during emergency situations, including such emergency situations,
which may develop in case of deterioration of the financial
situation of the credit institution, or due to the impact of
unfavourable development of financial markets. The supervisory
activities provided for emergency situations shall include the
preparation of a joint assessment of the situation, the
implementation of a crisis management plan and the provision of
public information. During the exchange process of the necessary
information already established types of exchange of information
shall be used as much as possible for the provision of crisis
management.
(11) If the supervisory authorities of credit
institutions of other Member States included in the consolidation
group do not co-operate adequately in implementation of the
supervisory tasks laid down in Paragraph one of this Section, the
Financial and Capital Market Commission is entitled to apply to
the European Banking Authority for the settlement of disputes in
accordance with EU Regulation No 1093/2010.
(2) [24 April 2014]
(3) [24 April 2014]
(4) [24 April 2014]
41) [24 April 2014]
(5) [24 April 2014]
51) [24 April 2014]
(6) [24 April 2014]
(7) [24 April 2014]
71) [24 April 2014]
(8) [24 April 2014]
[22 March 2012; 16 May 2013; 24 April 2014]
Section 112.4 (1) If the Financial and
Capital Market Commission is the consolidated supervisor, it and
the supervisory authorities of other Member States which
supervise subsidiaries of a European Union parent institution,
subsidiaries of a European Union parent mixed financial holding
company, or subsidiaries of a European Union parent financial
holding company which are included in a consolidation group shall
carry out the activities which are within their competence and
necessary to take the co-ordinated decision on:
1) evaluation of the assessment process of the sufficiency of
capital of a consolidation group and subsidiaries included in the
consolidation group and implementation of the process for the
inspection of supervision, determining the amount of capital
required for covering the inherent and potential risks for the
activities of the entire consolidation group and the subsidiaries
included in the consolidation group, and also, if necessary,
imposing an obligation for the entire consolidation group and the
subsidiaries included in the consolidation group to maintain a
higher level of own funds in accordance with Section
101.3, Paragraph 4.4, Clause 1 of this
Law;
2) measures necessary to solve significant findings related to
the supervision of liquidity, inter alia, such, which refer to
the organisation structure of the liquidity risk management and
sufficiency of procedures, as well as, where appropriate, to
determine special liquidity requirements in accordance with
Section 101.3, Paragraphs 4.7 and
4.8 of this Law;
3) the guidance on additional own funds in accordance with
Section 101.17, Paragraph three of this Law.
(2) The co-ordinated decision referred to in Paragraph one,
Clause 1 of this Section shall be taken within four months after
the Financial and Capital Market Commission has submitted a
report to the supervisory authorities of the subsidiaries
involved in the decision-making on assessment of the risks of the
consolidation group and the additional own funds necessary for
covering thereof that has been carried out in accordance with
Section 101.3, Paragraph 4.4, Clause 1 of this Law. The
co-ordinated decision referred to in Paragraph one, Clause 2 of
this Section shall be taken within four months after the
Financial and Capital Market Commission has submitted a report to
the supervisory authorities involved in the decision-making which
contains a liquidity risk assessment of the consolidation group
in accordance with the requirements of Section 101.3
of this Law. The co-ordinated decision referred to in Paragraph
one, Clause 3 of this Section shall be taken within four months
after the Financial and Capital Market Commission has submitted a
report to the supervisory authorities involved in the
decision-making on assessment of the risks of the consolidation
group and the capital necessary for covering thereof which has
been carried out in accordance with the requirements of Section
101.17 of this Law. When taking co-ordinated
decisions, the assessment of the risks of subsidiaries and the
capital necessary for covering thereof (including the additional
own funds requirement and the guidance on additional own funds),
which is carried out by the supervisory authorities of the
subsidiaries involved in the consolidation group, shall also be
taken into account.
(3) The Financial and Capital Market Commission shall send the
co-ordinated decision referred to in Paragraph one, Clause 1 or 2
of this Section together with a complete justification to the
European Union parent institution of the relevant consolidation
group.
(4) In case of a dispute between the supervisory authorities
involved in the decision-making, the Financial and Capital Market
Commission shall, upon request from any supervisory authority
involved in the decision-making or upon its own initiative,
consult with the European Banking Authority or shall apply to the
European Banking Authority for the settlement of disputes in
accordance with EU Regulation No 1093/2010.
(5) If the Financial and Capital Market Commission and the
supervisory authorities of the companies included in the
consolidation group during the time period referred to in
Paragraph two of this Section do not take the co-ordinated
decision and neither any supervisory authority of the companies
included in the consolidation group nor the Financial and Capital
Market Commission has applied the settlement of disputes to the
European Banking Authority during this time period, the Financial
and Capital Market Commission shall, taking into account the risk
assessment carried out by all supervisory authorities of the
subsidiaries, take the decision on:
1) measures which are necessary for solving essential
determinations related to liquidity supervision;
2) the application of special liquidity requirements in
accordance with Section 101.3, Paragraphs
4.7 and 4.8 of this Law;
3) the implementation of the process of inspection of
supervision at the level of the consolidation group, determining
the amount of capital necessary for covering the inherent and
potential risks for the activities of the consolidation group,
and also, if necessary, imposing an obligation for the entire
consolidation group to ensure additional own funds or the
guidance on additional own funds, taking into account the risk
assessment carried out by all supervisory authorities of
subsidiaries.
(6) The decision on measures which are necessary for solving
essential determinations related to liquidity supervision or the
decision on the application of special liquidity requirements in
accordance with Section 101.3, Paragraphs
4.7 and 4.8 of this Law, or the decision on
the implementation of the process of inspection of supervision
for a subsidiary on an individual or sub-consolidated basis, by
determining the amount of capital necessary for covering the
inherent and potential risks for the activities of the subsidiary
on an individual or sub-consolidation basis, and also, if
necessary, by imposing an obligation for the subsidiary on an
individual or sub-consolidation basis to ensure additional own
funds or the guidance on additional own funds, shall be taken by
the supervisory authorities of the involved subsidiaries, taking
into account the opinion expressed by the Financial and Capital
Market Commission.
(7) If the Financial and Capital Market Commission and the
supervisory authorities of the companies included in the
consolidation group do not take the co-ordinated decision within
the time period referred to in Paragraph two of this Section and
any of the supervisory authorities of the companies included in
the consolidation group, or the Financial and Capital Market
Commission has applied the settlement of disputes to the European
Banking Authority during this time period, the Financial and
Capital Market Commission shall conform to the decision of the
European Banking Authority when taking the decision on measures
which are necessary for solving essential determinations related
to liquidity supervision or the decision on the application of
special liquidity requirements in accordance with Section
101.3, Paragraphs 4.7 and 4.8 of
this Law, or the decision on the implementation of the process of
inspection of supervision at the level of the consolidation
group, or determining the amount of capital necessary for
covering the inherent and potential risks for the activities of
the consolidation group, and also, if necessary, imposing an
obligation for the entire consolidation group to ensure
additional own funds or the guidance on additional own funds.
(8) If the Financial and Capital Market Commission is the
consolidated supervisor, it shall send the decision taken in
accordance with Paragraph five or seven of this Section together
with the justification and the risk assessment carried out by the
supervisory authorities of the companies included in the
consolidation group, their opinions and reservations to all
supervisory authorities involved in the decision-making and the
European Union parent institution of the relevant consolidation
group.
(9) If consultations have taken place with the European
Banking Authority, all the supervisory authorities involved in
the decision-making shall take into account the recommendations
thereof or, if the recommendations are not taken into account,
shall provide explanations.
(10) The decisions referred to in Paragraph one of this
Section may be appealed to the Administrative Regional Court.
(11) The decisions referred to in Paragraph one of this
Section or any other decision taken in the absence of the
co-ordinated decision, shall be reviewed at least once a year or
in the situation when the supervisory authority of the
subsidiary, by submitting a reasoned request to the Financial and
Capital Market Commission in writing, requests a review of the
decision on the obligation to ensure additional own funds or the
guidance on additional own funds or the decision on the
application of special liquidity requirements in accordance with
Section 101.3, Paragraphs 4.7 and
4.8 of this Law. If the review of a decision has been
initiated by a subsidiary, it may be reviewed by the Financial
and Capital Market Commission, involving only the supervisory
authority of the respective subsidiary. If the Financial and
Capital Market Commission is not the consolidated supervisor for
a consolidation group which contains a credit institution
registered in the Republic of Latvia, the Financial and Capital
Market Commission may, upon submitting a reasoned request to the
supervisory authority in writing, propose to review the decision
on the obligation to ensure additional own funds or the guidance
on additional own funds or the decision on the application of
special liquidity requirements in accordance with Section
101.3, Paragraphs 4.7 and 4.8 of
this Law.
(12) If the Financial and Capital Market Commission is not the
consolidated supervisor for a consolidation group which contains
a credit institution registered in the Republic of Latvia, the
Financial and Capital Market Commission shall, upon expressing
its opinion, participate with the consolidated supervisor and the
supervisory authorities of the subsidiaries of other Member
States in taking of the co-ordinated decision on:
1) the amount of capital necessary for covering the inherent
and potential risks for the activities of the whole consolidation
group and the subsidiaries included in the consolidation
group;
2) the obligation for the whole consolidation group and the
subsidiaries included in the consolidation group to ensure
additional own funds or guidance on additional own funds;
3) the measures necessary to solve significant findings
related to the supervision of liquidity, inter alia, such, which
refer to the organisation structure of the liquidity risk
management and sufficiency of procedures;
4) the application of special liquidity requirements in
accordance with Section 101.3, Paragraphs
4.7 and 4.8 of this Law.
(13) If there are disputes between the Financial and Capital
Market Commission and the consolidated supervisor, the Financial
and Capital Market Commission is entitled to request that the
consolidated supervisor consults with the European Banking
Authority, or itself is entitled to apply to the European Banking
Authority for the settlement of disputes. If the co-ordinated
decision is not taken within the time period referred to in
Paragraph two of this Section, which is counted from the day of
receipt of the report of the consolidated supervisor, but the
settlement of disputes has not been applied to the European
Banking Authority by any supervisory authority from the companies
included in the consolidation group, the decision at the level of
the consolidation group shall be taken by the consolidated
supervisor, but the decision on measures which are necessary for
solving essential determinations related to liquidity supervision
or the decision on the application of special liquidity
requirements in accordance with Section 101.3,
Paragraphs 4.7 and 4.8 of this Law to a
credit institution registered in the Republic of Latvia on an
individual or sub-consolidated basis, or the decision on the
amount of capital necessary for covering the inherent and
potential risks of activities of a credit institution registered
in the Republic of Latvia on an individual or sub-consolidated
basis, and also, if necessary, the decision to impose an
obligation for a credit institution registered in the Republic of
Latvia or a consolidation subgroup thereof to ensure additional
own funds and the guidance on additional own funds, shall be
taken by the Financial and Capital Market Commission, taking into
account the opinion of the consolidated supervisor, and the
respective decision shall be sent to the consolidated
supervisor.
(14) If within the specified time period from the day of
receipt of the report of the consolidated supervisor referred to
in Paragraph thirteen of this Section any supervisory authority
of the companies included in the consolidation group has applied
to the European Banking Authority for the settlement of disputes
on the measures necessary to solve significant findings related
to the supervision of liquidity or on the application of special
liquidity requirements in accordance with Section
101.3, Paragraphs 4.7 and 4.8 of
this Law, or on the amount of capital necessary for covering the
inherent and potential risks for the activities of the entire
consolidation group or subsidiaries included in the consolidation
group, and also, if necessary, on imposition of an obligation for
the entire consolidation group and subsidiaries included in the
consolidation group to ensure additional own funds or the
guidance on additional own funds, the consolidated supervisor and
the Financial and Capital Market Commission shall conform to the
decision of the European Banking Authority.
(15) The co-ordinated decisions referred to in Paragraph
twelve of this Section may be appealed in the state of domicile
of the consolidated supervisor in accordance with the procedures
laid down in the laws of the relevant state.
[29 April 2021]
Section 112.5 (1) In case of an emergency
situation, including when unfavourable trends in the development
of financial markets are identified, which could endanger the
liquidity of the financial market and the stability of the
financial system in any of the Member States, where commercial
companies of a consolidation group supervised by the Financial
and Capital Market Commission or significant branches of credit
institutions of such consolidation group, or licensed commercial
companies not included in the consolidation group are registered,
the Financial and Capital Market Commission, in accordance with
the provisions for disclosure of restricted access information
and for the provision of crisis management using already
established types of exchange of information as much as possible,
shall, without delay, warn the European Banking Authority, the
European Systemic Risk College, the central bank of the relevant
Member State, or another competent authority responsible for the
monetary system, as well as the supervisory authorities of credit
institutions, financial institutions, investment firms and
insurance companies regarding the emergency situation, and shall
notify all the information related to the performance of the
tasks thereof.
(11) If the information on the emergency situation
referred to in Paragraph one of this Section falls at the
disposal of Latvijas Banka, it shall without delay notify the
Financial and Capital Market Commission and the European Banking
Authority on such situation.
(2) The Financial and Capital Market Commission, if possible,
shall request the information necessary for consolidated
supervision which is already at the disposal of the supervisory
authority of another Member State from the relevant supervisory
authority in order for the commercial companies included in the
consolidation group not to be required to provide the same
information several times.
[22 March 2012; 24 April 2014]
Section 112.6 (1) In order to ensure
efficient consolidated supervision, the Financial and Capital
Market Commission shall enter into co-operation agreements with
the supervisory authorities of the commercial companies included
in the consolidation group. The Financial and Capital Market
Commission, as the institution responsible for consolidated
supervision, is entitled to undertake additional supervisory
tasks, as well as to stipulate the co-operation procedures.
(11) If the Financial and Capital Market Commission
is the consolidated supervisor for a consolidation group which
includes a European Union parent financial holding company
registered in another Member State or a European Union parent
mixed financial holding company which has received a permit in
accordance with Section 33.3 of this Law, the
Financial and Capital Market Commission shall enter into the
cooperation agreement referred to in Paragraph one of this
Section also with the competent authority of the relevant Member
State.
(2) The tasks that may facilitate the supervision of such
credit institution registered in the Republic of Latvia and
included in the consolidation group, which is a subsidiary of a
parent credit institution of another Member State or a parent
financial holding company of another Member State, may be handed
over by the Financial and Capital Market Commission to the
supervisory authority of the relevant Member State upon a mutual
agreement. The Financial and Capital Market Commission shall
inform the European Banking Authority regarding such an agreement
and the content thereof.
(3) If the Financial and Capital Market Commission is the
authority of consolidated supervision, it shall establish a
college of supervisors of the supervisory authorities of
subsidiaries of other Members States and the supervisory
authorities of such Member States, where the significant branches
established in accordance with the requirements of Section
108.3, Paragraph six of this Law are registered for
the credit institutions forming the consolidation group has
registered, in order to facilitate the compliance with the tasks
laid down Sections 112.3, 112.4 and Section
112.5, Paragraph one of this Law, as well as, where
appropriate, involve representatives of foreign supervisory
authorities in the college of supervisors, if the foreign country
conforms to provisions equivalent to the provisions for
disclosure of restricted access information adopted in the
European Union in order to ensure appropriate co-ordination and
co-operation with the relevant foreign supervisory
authorities.
(31) If the Financial and Capital Market Commission
is the consolidated supervisor, it shall establish a college of
supervisors also if the headquarters of all cross-border
subsidiaries of a parent credit institution of the European
Union, a European Union parent financial holding company, or a
European Union parent mixed financial holding company are located
in foreign countries in order to promote the execution of the
tasks referred to in Section 112.3, Paragraph one,
Section 112.5, Paragraphs one and 1.1, and
Section 112.6, Paragraph one of this Law, if
provisions equivalent to the provisions for the disclosure of
restricted access information adopted in the European Union are
conformed to in the foreign country.
(4) Participants of the college of supervisors are entitled to
share restricted access information. The operation thereof shall
not affect the rights and obligations of the supervisory
authorities, but ensure the carrying out of the following tasks
for the consolidated supervisor and the supervisory authorities
of other Member States constituting the college of
supervisors:
1) exchange of information among the supervisory authorities
involved and the European Banking Authority;
2) if necessary, consensus building for voluntary carrying out
of tasks and delegation of responsibilities;
3) determination of programmes for inspections of supervision
in accordance with the requirements of Section 101 of this Law,
on the basis of the risk assessment of the consolidation group,
which has been performed in accordance with Section
103.3 of this Law;
4) increase in efficiency of supervision, eliminating the
overlapping of supervisory requirements, including requiring the
information referred to in Section 112.5, Paragraph
two and Section 112.7, Paragraph three of this
Law;
5) application of consistent prudential requirements in
accordance with this Law and EU Regulation No 575/2013 to all
commercial companies of the consolidation group;
6) performance of the supervisory activities referred to in
Section 112.3, Paragraph one, Clause 3 of this
Law.
(5) The college of supervisors in accordance with the decision
of the constituent supervisory authorities thereof may, where
appropriate, include a representative from the central bank,
which is part of the European System of Central Banks, of the
Member State involved in the college of supervisors or a
representative from the European Central Bank, as well as
representative from the supervisory authority of the relevant
foreign country, if laws and regulations of the foreign country,
in the opinion of all supervisory authorities forming the college
of supervisors, provide for legal framework for exchange of
restricted access information equivalent to the legal framework
laid down in this Law and legal acts of the European Union. The
college of supervisors, if necessary, may include the supervisory
authority of such Member State the European Union parent
financial holding company or the European Union parent mixed
financial holding company registered in which has received a
permit in accordance with Section 33.3 of this
Law.
(6) The Financial and Capital Market Commission as the
consolidated supervisor shall chair the meetings of the college
of supervisors and determine which supervisory authorities shall
be invited to participate in the meetings of the college of
supervisors. The Financial and Capital Market Commission shall,
in due time, inform all participants of the college of
supervisors regarding holding of the meetings of the college of
supervisors, the main issues to be examined and the planned
activities. The Financial and Capital Market Commission shall, in
due time, inform all participants of the college of supervisors
also regarding the decisions taken in the college meetings.
(7) The Financial and Capital Market Commission, when taking
decisions within the framework of the established college of
supervisors, shall take into account the significance of the
planned or co-ordinated supervisory activities to these
supervisory authorities, particularly the impact of the decisions
on stability of the financial system of the relevant Member
State.
(8) The Financial and Capital Market Commission shall inform
the European Banking Authority regarding the decisions taken by
the college of supervisors, including in emergency situations,
and shall provide it with all the information necessary for equal
application of the supervisory requirements.
(9) Where the consolidated supervisor of another Member State
carries out the supervision of a consolidation group, which
includes a credit institution registered in the Republic of
Latvia, or the supervision of such credit institutions, which
have significant branches registered in the Republic of Latvia,
the Financial and Capital Market Commission shall participate in
the work of the college of supervisors established by them to the
extent determining by the consolidated supervisor.
(10) The Financial and Capital Market Commission is entitled
apply to the European Banking Authority for resolution of
disputes related to the activities of the college of supervisors,
in accordance with EU regulation No 1093/2010.
[22 March 2012; 24 April 2014; 29 April 2021]
Section 112.7 (1) In co-operation with
supervisory authorities of other Member States, the Financial and
Capital Market Commission shall exchange with them information
which is essential or relevant for the consolidated supervision
and verification of compliance with the requirements of this Law
and EU Regulation No 575/2013. The Financial and Capital Market
Commission shall, upon its own initiative, provide any essential
information and, upon request, provide useful information to the
supervisory authorities of other Member States. Information shall
be considered to be essential for the performance of consolidated
supervision if it can affect the stability rating of the
activities of a credit institution or financial institution of
another Member State, and shall include at least information
on:
1) legal, management and organisational structure of the
consolidation group, indicating the regulated commercial
companies, unregulated subsidiaries and significant branches
included in the consolidation group, and any parent commercial
company, as well as information regarding compliance with the
requirements of Section 14, Paragraph one, Clauses 2 and 3,
Section 34.1, Section 50.9 of this Law, and
regarding the supervisory authorities of the regulated commercial
companies included in the consolidation group;
2) the procedures to be complied with when receiving
information from credit institutions forming the group, and the
procedures for the verification of such information;
3) negative development trends of the credit institution or
other commercial companies of the group, which may have a
material impact on the activities of the credit institution;
4) significant sanctions and supervisory measures in emergency
situations, which the Financial and Capital Market Commission
shall determine and carry out in accordance with this Law, as
well as regarding the obligation to maintain a higher level of
own funds than the total sum of minimum capital requirements and
any restrictions on use of the advanced operational risk
measurement approach in accordance with EU Regulation No
575/2013.
(11) The Financial and Capital Market Commission is
entitled to inform the European Banking Authority of cases when
the supervisory authorities of other Member States have not
provided essential information or upon a substantiated request of
the Financial and Capital Market Commission have refused to
co-operate or have failed to act within a corresponding
(reasonable) time period.
(2) The Financial and Capital Market Commission shall provide
all the relevant information to the supervisory authorities of
other Member States, the jurisdiction of which covers the
subsidiaries of a parent credit institution of the European Union
registered in the Republic of Latvia, the subsidiaries of a
European Union parent mixed financial holding company registered
in the Republic of Latvia or the subsidiaries of a European Union
parent financial holding company registered in the Republic of
Latvia. When determining extent of the useful information, the
significance of the referred to subsidiaries in the financial
system of the relevant Member State shall be taken into
account.
(3) If the Financial and Capital Market Commission for
supervision of such credit institution which is a subsidiary of a
parent credit institution of the European Union of another Member
State, a European Union parent mixed financial holding company of
another Member State, or a European Union parent financial
holding company of another Member State, needs information on
approaches to be used for the calculation of capital
requirements, the methodology and the procedures for
implementation thereof in accordance with this Law and EU
Regulation No 575/2013, which may already be at the disposal of
the supervisory authority of the relevant Member State, the
Financial and Capital Market Commission, if possible, shall
require such information the from supervisory authority of the
Member State.
(4) Prior to taking of decisions important for carrying out of
the supervisory functions of other Member States, the Financial
and Capital Market Commission shall consult with the supervisory
authorities of the relevant Member States, on the following
matters:
1) on such changes in the composition of stockholders
(shareholders) and organisational or management body of the
credit institution group which require a permission from the
supervisory authorities;
2) on significant sanctions and supervisory measures in
emergency situations, which the Financial and Capital Market
Commission plans to determine and carry out, also regarding the
obligation to maintain a higher level of own funds than the total
sum of minimum capital requirements and any restrictions on use
of the advanced operational risk measurement approach in
accordance with EU Regulation No 575/2013. Prior to taking the
abovementioned decisions in relation to credit institutions which
are subsidiaries of parent credit institutions of other Member
States or of parent financial holding companies of other Member
States, the Financial and Capital Market Commission shall always
consult with the supervisory authority of the relevant Member
State which is responsible for consolidated supervision. In
urgent cases or in cases when such consultations might endanger
the efficiency of taking the decision, the Financial and Capital
Market Commission may, without consulting with the supervisory
authority of the relevant Member State and without delay, notify
the decision taken thereto.
(5) The Financial and Capital Market Commission shall,
according to its competence, cooperate with the Financial
Intelligence Unit of Latvia and institutions of other Member
States the obligations of which on the merits are similar and
with the supervisory and control authorities which supervise the
conformity of the activities of credit institutions and financial
authorities with the requirements for the prevention of money
laundering and terrorism and proliferation financing, and also
exchange with all the necessary information which is important
for the performance of the relevant obligations in accordance
with this Law, EU Regulation No 575/2013, and the requirements
for the prevention of money laundering and terrorism and
proliferation financing. Such cooperation and exchange of
information shall not affect the preparation of requests,
investigation, or processes in accordance with the criminal law
or administrative law of such Member State in which the
abovementioned institutions are located.
(6) The Financial and Capital Market Commission is entitled to
apply to the European Banking Authority for the resolution of
disputes related to coordination of supervisory activities in
accordance with EU Regulation No 1093/2010.
[22 March 2012; 16 May 2013; 24 April 2014; 29 April
2021]
Section 112.8 (1) If the parent company of
one or more credit institutions is a mixed holding company, the
Financial and Capital Market Commission shall, directly or with
the intermediation of credit institutions - subsidiaries, request
that the mixed holding company and other subsidiaries thereof
provide information which is relevant for the supervision of the
credit institutions - subsidiaries.
(2) The Financial and Capital Market Commission may carry out
inspections or assign them to third parties - a sworn auditor or
commercial company of sworn auditors to verify the information
received from mixed holding companies and its subsidiaries. If a
mixed-activity holding company or any of the subsidiaries thereof
is registered in another Member State, verification of
information in the presence shall be carried out in accordance
with the procedures laid down in Section 112.12 of
this Law.
Section 112.9 (1) A credit institution the
parent company of which is a mixed holding company has the
obligation to provide the Financial and Capital Market Commission
with information on transactions which have been carried out
thereby with the parent company and other subsidiaries thereof,
with the exception of large transactions with exposure, regarding
which information has been provided to the Financial and Capital
Market Commission in accordance with EU Regulation No
575/2013.
(2) The credit institution shall establish an appropriate
system for risk management and internal control, as well as
develop relevant accounting procedures, in order to appropriately
determine, assess and control transactions with the parent
company thereof, which is a mixed holding company, and other
subsidiaries of such mixed holding company.
(3) [24 April 2014]
(4) The Financial and Capital Market Commission shall
determine the procedures for submitting the information referred
to in Paragraph one of this Section.
[16 May 2013; 24 April 2014]
Section 112.10 (1) The Financial and Capital
Market Commission is entitled to request from credit
institutions, financial institutions, financial holding
companies, mixed holding companies, mixed financial holding
companies and their subsidiaries or commercial companies included
in the consolidation group or exempt from inclusion therein, and
the aforementioned persons have the obligation to provide
information, which in accordance with the laws and regulations,
including EU Regulation No 575/2013, or a mutual agreement
between the Financial and Capital Market Commission and the
supervisory authority of credit institutions of other Member
State is necessary for exercising consolidated supervision of
credit institutions.
(2) If the parent company and any of the subsidiaries thereof
- credit institutions - are registered in the Republic of Latvia
and in other Member States, the Financial and Capital Market
Commission and the supervisory authorities of such Member States
shall share all the information necessary for exercising of
consolidated supervision. If the Financial and Capital Market
Commission does not carry out consolidated supervision of a
parent company registered in the Republic of Latvia, then upon a
request of the supervisory authority of other Member State
responsible for carrying out of such supervision, the Financial
and Capital Market Commission shall request information from the
parent company, which could be relevant for consolidated
supervision, and shall forward it to the supervisory authority
responsible for consolidated supervision.
(3) The Financial and Capital Market Commission is entitled to
share the information referred to Paragraph two of this Section
with the supervisory authorities of other Member States, which
has been received from financial holding companies of credit
institutions, mixed financial holding companies, financial
institutions, mixed holding companies and such subsidiaries
thereof, which are not credit institutions or are exempt from
inclusion in the consolidation group, and which is necessary to
the Financial and Capital Market Commission and the supervisory
authorities of other Member States for exercising of consolidated
supervision. The fact that the Financial and Capital Market
Commission acquires and uses such information shall not mean that
the Financial and Capital Market Commission supervises the
abovementioned merchants.
[16 May 2013; 24 April 2014]
Section 112.11 (1) If a credit institution,
a financial holding company, a mixed financial holding company,
or a mixed holding company controls one or more subsidiaries
which are insurance companies or commercial companies providing
such investment services for which an authorisation (license) is
necessary, the Financial and Capital Market Commission shall
co-operate with the supervisory authorities of such insurance
companies of other Member States and other licensed commercial
companies. The Financial and Capital Market Commission shall
provide information to the supervisory authorities of other
Member States, which can ensure the supervision of activities and
financial situation of such commercial companies.
(11) If a European Union parent mixed financial
holding company is registered in the Republic of Latvia and the
Financial and Capital Market Commission is the consolidated
supervisor, but is not the coordinator in accordance with the
Financial Conglomerates Law, the Financial and Capital Market
Commission shall cooperate with the coordinator in order to apply
the requirements of this Law and EU Regulation No 575/2013 to the
consolidation group. The Financial and Capital Market Commission
shall enter into a cooperation agreement with the relevant
coordinator.
(2) The information received by the Financial and Capital
Market Commission, in carrying out consolidated supervision
(particularly any information received from the supervisory
authorities), shall be deemed to be restricted access
information.
(3) If the Financial and Capital Market Commission carries out
supervision of such credit institutions which are subsidiaries of
a financial holding company or a mixed financial holding company,
at the level of the consolidation group of a financial holding
company or a mixed financial holding company in accordance with
EU Regulation No 575/2013, the Financial and Capital Market
Commission shall draw up a list of such financial holding
companies or mixed financial holding companies and send it to the
supervisory authorities of other Member States, the European
Banking Authority and the European Commission.
[22 March 2012; 16 May 2013; 24 April 2014; 29 April
2021]
Section 112.12 (1) If the accuracy of such
information which the Financial and Capital Market Commission has
received during consolidated supervision regarding a credit
institution, financial institution, ancillary services
undertaking (as defined in Article 4(1)(18) of EU Regulation No
575/2013), financial holding company, mixed holding company,
mixed financial holding company registered in another Member
State, or regarding a subsidiary of a credit institution, a
financial holding company, a mixed financial holding company, or
a mixed holding company, which is an insurance undertaking or
commercial company which provides investment services requiring a
permit (licence), or a subsidiary of a credit institution, a
financial holding company, or a mixed financial holding company
which is not subject to consolidated supervision needs to be
verified, the Financial and Capital Market Commission shall send
to the supervisory authority of the relevant Member State a
request to verify the accuracy of the received information. The
Financial and Capital Market Commission shall itself verify the
received information, if the respective supervisory authority has
granted permission thereto, and may also participate in the
verification of information that is carried out by the
supervisory authority of the respective Member State or another
person authorised to carry out the abovementioned
verification.
(2) The Financial and Capital Market Commission is entitled to
carry out inspections in a credit institution, financial
institution, ancillary services undertaking (within the meaning
of Article 4(1)(18) of EU Regulation No 575/2013), financial
holding company, mixed holding company, mixed financial holding
company registered in the Republic of Latvia or a subsidiary of a
credit institution, a financial holding company, a mixed
financial holding company, and a mixed holding company which is
an insurance company or a commercial company which provides
investment services which require a permit (licence), or a
subsidiary of a credit institution, a financial holding company,
or a mixed financial holding company which is not subjected to
consolidated supervision, upon a request of a supervisory
authority of another Member State, in order to verify the
accuracy of the information received by the relevant supervisory
authority of the Member State on the relevant companies in the
course of consolidated supervision, or to allow the supervisory
authority of such Member State to carry out such inspection. If
the supervisory authority of the relevant Member State does not
carry out its own inspection, it may participate in the
inspection carried out by the Financial and Capital Market
Commission.
[16 May 2013; 24 April 2014]
Section 112.13 (1) If a financial holding
company, a mixed holding company, or a mixed financial holding
company registered in the Republic of Latvia which is the parent
company of a credit institution or financial institution or the
holding company referred to in Section 33.3 of this
Law, does not conform to the requirements of this Law or does not
provide the information necessary for consolidated supervision of
the credit institution, the Financial and Capital Market
Commission has the right to impose the sanctions referred to in
this Law, including to prohibit the use of the voting right
thereof in credit institutions and financial institutions
registered in the Republic of Latvia.
(2) [24 April 2014]
[16 May 2013; 24 April 2014; 29 April 2021]
Section 112.14 (1) If the Financial and
Capital Market Commission does not carry out consolidated
supervision of such credit institution, the parent company of
which is a foreign credit institution, a mixed financial holding
company or a financial holding company, the Financial and Capital
Market Commission, upon its own initiative or upon request of the
parent company of the credit institution, or upon request of a
credit institution, an insurance undertaking, a reinsurance
undertaking, an alternative investment fund manager, investment
management company or an investment firm registered in a Member
State, shall consult with the supervisory authorities of the
relevant Member States and assess whether the credit institution
is subject to consolidated supervision requirements equivalent to
those laid down in the Member States.
(2) When assessing whether the consolidated supervision
carried out by the supervisory authority of the relevant foreign
country conforms to the consolidated monitoring requirements laid
down in Member States, the Financial and Capital Market
Commission shall consult with the European Banking Authority
prior to taking of the decision referred to in Paragraph one of
this Section.
(3) If consolidated supervision carried out by the supervisory
authority of the relevant foreign country does not conform to the
requirements laid down in Member States, the Financial and
Capital Market Commission shall carry out consolidated
supervision of the credit institution, the parent company of
which is a foreign credit institution, a mixed financial holding
company or a financial holding company, in accordance with the
requirements of this Law and EU Regulation No 575/2013.
[22 March 2012; 16 May 2013; 24 April 2014]
Chapter VIII
Restrictions Applicable to Credit Institutions
[12 February 2009]
Section 113. (1) If the Financial and Capital Market
Commission finds that a credit institution does not comply, or
the Financial and Capital Market Commission has grounds to
believe that within 12 months after the date on which it took the
decision to implement the activities referred to in this Section,
it will not conform to the requirements of this Law, EU
Regulation No 575/2013, the directly applicable laws and
regulations issued by the European Union authorities or the
requirements of decisions or regulatory provisions issued by the
Financial and Capital Market Commission, or if activities of the
a credit institution endanger the stability or solvency thereof,
the security or stability of the sector of credit institutions of
Latvia, threatens to cause significant losses to the national
economy, or if an excessive outflow of deposits or other outside
funds from the credit institution takes place, the Financial and
Capital Market Commission is entitled to carry out one or more of
the following activities by taking a decision:
1) [24 April 2014];
2) [24 April 2014];
3) to give binding written instructions to the administrative
bodies of the credit institution, their managers and members,
which are necessary for the prevention of such situation;
4) to impose restrictions for the rights and activities of the
credit institution, including to suspend the provision of
financial services in full or in part, as well as to lay down
restrictions for performance of liabilities;
5) [11 June 2015];
6) to appoint one or more authorised persons of the Financial
and Capital Market Commission in the credit institution
(hereinafter - the decision to appoint an authorised person);
7) [24 April 2014];
8) [24 April 2014];
9) [24 April 2014];
10) [24 April 2014];
11) to apply the measures referred to in Section
101.3, Paragraph 4.4 of this Law.
(2) The Financial and Capital Market Commission is entitled to
implement one or more of the activities referred to in Paragraph
one of this Section also when activities of a commercial company
involved in the consolidation group of the credit institution
endangers or may endanger sound operation of the relevant credit
institution or all sector of credit institutions.
(3) If the restrictions referred to in Paragraph one, Clause 4
of this Section are imposed on a credit institution servicing a
transit credit, the Ministry of Finance shall take the decision
to continue the transit credit servicing in this credit
institution or transfer to other credit institutions.
(4) The Financial and Capital Market Commission shall inform
the European Banking Authority on the principles, which have been
determined for the implementation of the activities referred to
in this Section.
(5) The Financial and Capital Market Commission is entitled,
in conformity with Article 24 of EU Regulation No 1286/2014
regarding violations of Regulation, to implement one or several
of the following activities:
1) to prohibit the distribution of packaged private investment
products;
2) to impose the obligation to suspend the distribution of
packaged private investment products;
3) to prohibit the distribution of a key information document
which does not comply with the requirements of Article 6, 7, 8,
or 10 of EU Regulation No 1286/2014, or to assign publishing of a
new key information document complying with this Regulation;
4) to impose on a person who is the creator of packaged
private investment products or provides consultations on packaged
private investment products, or sells them the obligation to
inform the relevant customer who is a private investor and whose
rights and interests have been violated of the sanction or
supervisory measure applied and also of where the customer may
submit a complaint or where he or she can go in order to initiate
extrajudicial settlement of disputes, as well as of his or her
rights to bring a claim to a court.
[12 February 2009; 23 December 2010; 22 March 2012; 24
April 2014; 11 June 2015; 21 July 2017]
Section 114. [11 June 2015]
Section 115. (1) The objective of activities, tasks and
functions of an authorised person, the scope and time period of
authorisation, the amount of remuneration of an authorised
person, the amount of expenses allowed for the carrying out of
the tasks of an authorised person, as well as other provisions
considered as essential by the Financial and Capital Market
Commission shall be laid down in the decision to appoint an
authorised person.
(2) If several authorised persons are appointed, in addition
to the provisions of Paragraph one of this Section the
distribution of the scope of the powers of authorised persons and
their mutual subordination shall be determined in the decision to
appoint an authorised person.
(3) A person may not be appointed to be an authorised person
without his or her written consent.
(4) An authorised person shall be appointed for a time period
which does not exceed one year. In an exceptional case the
Financial and Capital Market Commission may extend such time
period if the conditions necessary for appointing an authorised
person still exist.
[12 February 2009; 11 June 2015]
Section 116. (1) The following persons may be an
authorised person:
1) a natural person, including an official of the Financial
and Capital Market Commission who conforms to the requirements of
Paragraph two of this Section and to whom the restrictions laid
down in Paragraph three of this Section cannot be applied;
2) a legal person (capital company), to the members of the
board of which the restrictions laid down in Paragraph three of
this Section cannot be applied and the majority of members of the
board of which conform to the requirements of Paragraph two of
this Section.
(2) Such natural person may be appointed as the authorised
person, the objectivity of whose actions in relation to the
particular credit institution raises no doubt and who has:
1) State recognised second level higher vocational education
or higher academic education and corresponding qualification;
2) corresponding competence and sufficient professional work
experience;
3) impeccable reputation;
(3) The following natural person may not be appointed as the
authorised person:
1) who has to be recognised as an interested person in
relation to a credit institution or a person related thereto;
2) against whom insolvency proceedings have been completed or
initiated as against a debtor or who is considered to be the
debtor's representative in an insolvency case and this case has
not been terminated;
3) who has been convicted of a crime against the State, a
criminal offence against the property, general security and
public order, management procedures or jurisdiction or a criminal
offence in the national economy or service of public authorities
regardless of extinguishing or setting aside of the criminal
record;
4) against whom criminal prosecution has been initiated or who
is a suspect in criminal proceedings;
5) who has been convicted of committing the criminal offence
laid down in Clause 3 of this Paragraph, although released from
serving his or her punishment due to limitation period, clemency
or amnesty;
6) against whom criminal proceedings for committing the
criminal offence laid down in Clause 3 of this Paragraph are
terminated due to limitation period or amnesty;
7) to whom a restriction of rights has been imposed in
accordance with the procedures laid down in the Criminal Law to
engage in a specific entrepreneurial activity or take up specific
offices;
8) [1 November 2018].
(4) If the decision to appoint an authorised person in
accordance with Section 117, Paragraph one, Clause 3 of this Law
provides that the authorised person shall manage the credit
institution, then, in addition to the requirements and
restrictions laid down in Paragraphs one, two, and three of this
Section, only the legal person referred to in Paragraph one of
this Section or such natural person who is an employee of the
Financial and Capital Market Commission or has been appointed to
the position of the administrator of insolvency proceedings in
accordance with the Insolvency Law may be such authorised
person.
[12 February 2009; 21 July 2017; 1 November 2018]
Section 117. (1) The decision to appoint an authorised
person may provide that from the time of entry into effect
thereof:
1) the authorised person is entitled to convene a meeting of
stockholders or shareholders of the credit institution, a meeting
of the council and the board and to participate therein with the
right to propose the issues to be considered at either
meeting;
2) the authorised person shall decide whether to allow or not
to allow the credit institution to make payments, enter into new
transactions, as well as to amend or terminate the existing
transactions in order to ensure the compliance with the
restrictions laid down for the credit institution by Section 113,
Paragraph one, Clause 4 of this Law;
3) the authorised person shall perform the administration of
the credit institution.
(2) If the decision to appoint an authorised person determines
his or her right in accordance with Paragraph one of this Section
to convene a meeting of stockholders or shareholders of the
credit institution, a meeting of the council and the board and to
participate therein, the decision of the relevant administrative
body of the credit institution shall not been taken if the
authorised person objects thereto.
(3) If the Financial and Capital Market Commission takes the
decision to suspend the activities of the council, the board and
a procuration holder of the credit institution, and to impose a
prohibition on the credit institution to act with the property
thereof, as well as with the property belonging to the third
parties in control or possession of the credit institution, the
authorised person shall obtain this right in accordance with
Paragraph one, Clause 3 of this Section. Appointing an authorised
person shall not restrict the rights of stockholders
(shareholders) laid down in The Commercial Law.
(31) If the authorisation to represent the credit
institution has been laid down for the authorised person in the
decision to appoint an authorised official taken by the Financial
and Capital Market Commission, the Financial and Capital Market
Commission shall publish such decision on its website.
(4) For the performance of his tasks the authorised person is
entitled:
1) to issue binding instructions to all units of the credit
institution and the staff thereof;
2) not to conform to the restrictions indicated in the
articles of association, by-laws and provisions (policies,
descriptions of procedures and other operational instruments) of
the credit institution;
3) to submit to the Financial and Capital Market Commission a
proposal regarding transition of a credit institution
undertaking, to carry out alienation or transfer of the property,
tangible or intangible objects, contracts and liabilities of a
credit institution, if such activities are aimed at ensuring
repayment of the deposits made with the credit institution;
4) to draw up and approve financial reports of the credit
institution on behalf of the administrative bodies of the credit
institution.
(5) The authorised person may exercise the authorisation to
convene a meeting of stockholders (shareholders) and to determine
the agenda of such meeting only with a consent of the Financial
and Capital Market Commission, unless such consent has already
been included in the decision referred to in Paragraph one of
this Section.
[12 February 2009; 23 December 2010; 24 April 2014; 11 June
2015; 29 April 2021]
Section 118. (1) The Financial and Capital Market
Commission shall pay remuneration to the authorised person and
shall cover the expenditures necessary for the performance of his
or her tasks in the amount laid down in the decision to appoint
an authorised person. The credit institution shall indemnify the
costs laid down in this Paragraph to the Financial and Capital
Market Commission within the time period stipulated thereby.
(2) The authorised person does not have the right to receive
any remuneration or income for the performance of his or her
tasks in addition to that provided for in the decision to appoint
an authorised person.
[12 February 2009]
Section 119. (1) Administrative bodies, units, staff of
the credit institution and other representatives and stockholders
of the credit institution shall be under the obligation to
co-operate with the authorised person and upon his or her
request:
1) to hand over items (documents, keys, access codes,
passwords, etc.) to him or her;
2) to provide him or her with the necessary information,
documents, explanations and assistance.
(2) The authorised person shall immediately notify the
Financial and Capital Market Commission regarding a failure to
conform to the provisions referred to in Paragraph one of this
Section, as well as on other obstacles for the performance of his
or her tasks.
[12 February 2009]
Section 120. (1) The authorised person has the
obligation to provide a report on his or her activities to the
Financial and Capital Market Commission within the time period
stipulated thereby and to notify the Financial and Capital Market
Commission without delay of the findings, which may have an
impact on the financial situation of the credit institution.
(2) The authorised person, when performing his or her tasks,
shall take care of the interests of national economy, the safety
and stability of the sector of credit institutions of Latvia and
the protection of the interests of depositors, as well as of
careful and prudent management of the credit institution.
[12 February 2009]
Section 121. (1) The authorised person is entitled to
resign from the fulfilment of his or her duties by submitting a
substantiated submission to the Financial and Capital Market
Commission, to which a report on activities of the authorised
person regarding the whole time period of his or her activities
is appended.
(2) The Financial and Capital Market Commission shall examine
the submission of the authorised person regarding resigning from
the fulfilment of his or her duties within one month from the day
of receipt thereof and shall take the relevant decision. Until
taking such decision is taken and matters are handed over, the
authorised person shall continue the fulfilment of the duties
assigned to him or her.
[12 February 2009]
Section 122. (1) The Financial and Capital Market
Commission shall supervise the activities of the authorised
person, and is entitled, at any time, in its sole discretion, to
dismiss him or her.
(2) The authorisation of the authorised person shall
expire:
1) upon expiry of the time period laid down in the decision to
appoint an authorised person,
2) by dismissal of the authorised person.
(3) The Financial and Capital Market Commission shall examine
the matter of dismissal of the authorised person if it is found
that the authorised person, in fulfilling his or her duties,
fails to comply with the provisions of this Law or other laws and
regulations and court rulings, that he or she does not meet the
requirements laid down in this Law or abuses his or her
powers.
(4) The authorised person, upon expiry of the authorisation,
shall hand over the matters to the person determined by the
Financial and Capital Market Commission within the time period
stipulated by the Commission.
[12 February 2009]
Section 123. An appeal of an administrative act issued
by the Financial and Capital Market Commission regarding
performance of the activities referred to in Chapter VIII of this
Law shall not suspend the execution thereof.
[12 February 2009]
Section 124. [12 February 2009]
Section 125. [12 February 2009]
Chapter IX
Liquidation of a Credit Institution
[21 May 1998]
Section 126. (1) The liquidation of a credit
institution may be carried out:
1) in accordance with a decision of a meeting of the
stockholders (shareholders) of the credit institution (voluntary
liquidation);
2) in accordance with a court ruling;
3) in case of insolvency.
(2) It is prohibited to liquidate a credit institution in
order to perform its reorganisation.
(3) It is prohibited to reorganise a credit institution by
re-registering it as another commercial company, unrelated to the
activities of a credit institution, without written permission
from the Financial and Capital Market Commission, which shall be
issued by the Financial and Capital Market Commission if the
credit institution has fulfilled all the obligations towards the
depositors, which are recorded in the accounting registers of the
credit institution.
[1 June 2000; 11 April 2002; 11 December 2003; 28 October
2004; 1 November 2018]
Section 126.1 (1) Reorganisation measures or
liquidation legal relations, which arise from employment
contracts, shall be governed by only those laws and regulations
of Member States, which relate to entered into employment
contracts.
(2) Reorganisation measures or liquidation rights in relation
to:
1) immovable property shall be governed by those Member State
laws and regulations in the territory of which the immovable
property is located;
2) ships or aircraft shall be governed by those Member State
laws and regulations within whose purview the relevant public
register is located in which the relevant ship or aircraft is
recorded (registered);
3) financial instruments, which are to be registered in public
registers, credit institution accounts or a central depository,
and the approved rights thereof, shall be governed by those
Member State laws and regulations in accordance with which the
ownership rights of the credit institution to the relevant
financial instruments is certified.
[28 October 2004]
Section 126.2 (1) The Financial and Capital
Market Commission controls the compliance of the liquidation
(also voluntary liquidation) proceedings with the requirements
laid down in this Law, Law on the Prevention of Money Laundering
and Terrorism and Proliferation Financing, Law on International
Sanctions and National Sanctions of the Republic of Latvia,
Commercial Law, the regulatory provisions of the Financial and
Capital Market Commission and other laws and regulations, insofar
as it applies to liquidation (also voluntary liquidation)
proceedings. For this purpose, the Financial and Capital Market
Commission has the right to become acquainted with all the
documentation of the credit institution, all the documentation of
the liquidator which is related to the credit institution, as
well as to receive explanations and any other necessary
information which applies to the liquidation (also voluntary
liquidation) proceedings of the credit institution.
(2) During the liquidation (also voluntary liquidation)
proceedings of a credit institution the liquidator shall,
according to the risk inherent to the activities of the credit
institution to be liquidated, ensure that the requirements of the
laws and regulations in the field of money laundering and
terrorism and proliferation financing are met, insofar as they
are applicable to the liquidation (also voluntary liquidation)
proceedings of credit institutions, including inform the
Financial Intelligence Unit of Latvia of the suspicious
transactions established during the liquidation (also voluntary
liquidation) proceedings.
(3) The liquidator shall develop a methodology for the
fulfilment of the requirements for the prevention of money
laundering and terrorism and proliferation financing according to
the money laundering and terrorism and proliferation financing
risk inherent to the activities of the credit institution and
shall submit it to the Financial and Capital Market Commission
and the Financial Intelligence Unit of Latvia. Disbursement of
funds for the creditors of a credit institution shall be
commenced only after the methodology has been approved by the
Financial and Capital Market Commission.
(4) The Financial and Capital Market Commission shall
determine the requirements to be set for methodology for the
fulfilment of the requirements for the prevention of money
laundering and terrorism and proliferation financing in the
liquidation (also voluntary liquidation) proceedings of the
credit institution according to the money laundering and
terrorism and proliferation financing risk inherent to the
activities of the credit institution.
[13 June 2019]
Section 127. A decision of a meeting of the
stockholders (shareholders) of a credit institution cannot
suspend or discontinue a previously taken decision of a meeting
of the stockholders (shareholders) to commence the process of
voluntary liquidation or to perform reorganisation measures. The
commencement of the voluntary liquidation of a credit institution
(also of its branches in the country involved) shall not restrict
the commencement of the liquidation thereof based on a court
ruling.
[28 October 2004; 1 November 2018]
Section 128. (1) A credit institution, which is
preparing to commence voluntary liquidation (also the liquidation
of the branch thereof in the involved state), shall submit to the
Financial and Capital Market Commission a submission regarding
voluntary liquidation within five days after such decision has
been taken. The following shall be attached to the
submission:
1) the most recent report of the credit institution, which
reflects the financial situation at the end of the accounting
period and which has been prepared in conformity with the
regulatory provisions of the Financial and Capital Market
Commission regarding the preparation of the annual financial
statement;
2) a voluntary liquidation plan which provides for the process
of implementation of voluntary liquidation and the procedures for
fulfilling the obligations towards the creditors;
3) information regarding the potential liquidator.
(2) Within 30 days after receipt of all the necessary
documents which certify the information referred to in Paragraph
one of this Section, the Financial and Capital Market Commission
shall verify whether the credit institution is able to fulfil the
obligations towards creditors within the time period specified in
the contracts and in the full amount, and shall assess the impact
of the money laundering and terrorism and proliferation financing
risk inherent to the activities of the credit institution on the
ability of the credit institution to fulfil the abovementioned
obligations.
(3) Voluntary liquidation of a credit institution (also the
branches thereof in the involved state) shall be performed by a
liquidator elected by a meeting of the stockholders
(shareholders). The credit institution shall prepare a deed of
delivery of property (for example, documents, objects). Upon
commencing the fulfilment of his or her duties, the liquidator
shall accept and sign the deed.
(4) Upon completing the voluntary liquidation of a credit
institution (also its branches in the involved state), the
liquidator shall take the decision to complete the voluntary
liquidation and submit it to the Financial and Capital Market
Commission.
[28 October 2004; 9 June 2005; 16 July 2009; 21 July 2017;
13 June 2019; 29 April 2021]
Section 129. (1) If the licence (permit) issued to a
credit institution for the activities of a credit institution is
cancelled in accordance with Section 27, Paragraph one, Clause 1,
2, 3, 7, 8, or 9 of this Law, the Financial and Capital Market
Commission shall appoint an authorised person and submit to the
court an application for the liquidation of such credit
institution and the appointment of a liquidator by concurrently
nominating a liquidator.
(11) During the voluntary liquidation proceedings
of a credit institution, the Financial and Capital Market
Commission may appoint an authorised person and submit to the
court an application for the liquidation of such credit
institution and the appointment of a liquidator, if it
establishes the violations of the requirements for the voluntary
liquidation of credit institutions laid down in Section
126.2, Paragraphs one and two of this Law. The
provisions of this Law shall be applicable to the authorised
person referred to in the first sentence of Paragraph one,
insofar as they are applicable to the voluntary liquidation
proceedings of a credit institution.
(2) After the cancellation of a licence, the meeting of the
stockholders (shareholders) of the credit institution is not
entitled to decide on commencement of voluntary liquidation and
the appointment of a liquidator.
(3) If the licence for the activities of a credit institution
issued to the credit institution is cancelled or it ceases to be
valid, the Financial and Capital Market Commission shall without
delay inform Latvijas Banka thereof in writing.
(4) An appeal of an administrative act issued by the Financial
and Capital Market Commission regarding appointing of an
authorised person shall not suspend the execution thereof.
[1 June 2000; 11 April 2002; 11 December 2003; 9 June 2005;
22 February 2007; 12 February 2009; 21 July 2017; 1 November
2018; 13 June 2019; 29 April 2021]
Section 130. [1 November 2018]
Section 131. (1) The liquidator of a credit
institution, if the credit institution is to be liquidated by a
court ruling, may be:
1) sworn advocates;
2) sworn auditors;
3) commercial companies whose primary activity is auditing
services.
(2) If the appointed liquidator is a legal person, it shall
authorise, in writing, a natural person who will represent the
liquidator in the liquidation proceedings and to whom the
requirements laid down in Paragraph one of this Section and the
restrictions laid down in Section 132 of this Law shall
apply.
[28 October 2004]
Section 131.1 (1) A natural person who has
been appointed to the position of the administrator of insolvency
proceedings in accordance with the Insolvency Law, who has not
been released, removed or suspended from the position of the
administrator, or the functions of whose position have not been
suspended, and who is not subject to the restrictions laid down
in Section 132.1 of this Law may be the administrator
of a credit institution in the insolvency proceedings of the
credit institution.
(2) A candidate for the position of the administrator for
particular insolvency proceedings of a credit institution shall
be selected from the list of candidates for the position of
administrators maintained in the Electronic Insolvency Accounting
System of the Insolvency Control Service, using an automated
selection ensured by the Court Information System.
(3) The Cabinet shall lay down the procedures by which the
list of candidates to the position of the administrator shall be
kept in the Electronic Insolvency Accounting System, indications
based on which the administrator shall be included in the list of
candidates to the position of the administrator, and the
procedures by which a candidate to the position of the
administrator shall be selected within the insolvency proceedings
of a credit institution, using an automated selection provided by
the Court Information System.
[21 July 2017; 1 November 2018 / Paragraph two shall come
into force on 1 January 2021. See Paragraph 79 of Transitional
Provisions]
Section 132. (1) A natural person may not undertake and
fulfil the duties of a liquidator in the liquidation proceedings
of a credit institution if:
1) the liquidator who has been appointed to the position of
the administrator has been released, removed or suspended from
the position of the administration due to the established
violations of the laws and regulations, or the functions of his
or her position have been suspended;
2) the liquidator is a suspect or an accused in criminal
proceedings for committing an intentional criminal offence;
3) the liquidator has been punished for committing an
intentional criminal offence, irrespective of extinguishing or
expungement of the criminal record;
4) the liquidator, within the last five years before
proclamation of the liquidation proceedings of the credit
institution, has been:
a) a participant (stockholder) of the credit institution to be
liquidated or a member of administrative bodies thereof;
b) a procuration holder or a person with a commercial power of
attorney of the credit institution to be liquidated;
c) a person who is married to the founder, participant
(stockholder) of the credit institution to be liquidated or the
member of its administrative bodies, in kinship or affinity
relationship to the second degree;
d) a creditor who is in one group of companies with the credit
institution to be liquidated;
5) the liquidator has had employment legal relationship with
the credit institution to be liquidated within the last five
years prior to the day of proclamation of the relevant
liquidation proceedings;
6) the liquidator, within the last two years prior to the day
of appointing the liquidator, has been in the relationship of an
authorisation contract with the creditor of the credit
institution to be liquidated in its legal relationship with the
credit institution to be liquidated;
7) the credit institution to be liquidated has the right of
action against the liquidator, except when the total amount of
the claim does not exceed 20 minimum monthly wages, and such
claim has arisen in the business relationship between the
liquidator and the credit institution within the framework of its
usual activity, the transaction is not disputed, and the
liquidator does not enjoy special advantages;
8) the liquidator has the right of action against the credit
institution to be liquidated, except when the amount of the claim
does not exceed the amount of the covered deposit;
9) an insolvency matter has been initiated against the
liquidator as a debtor, or the liquidator is considered to be a
representative of the debtor in another insolvency matter and
that other matter has not been terminated;
10) the liquidator is personally interested in the matter of
liquidation proceedings of the credit institution to be
liquidated or there are other circumstances causing justified
doubts in respect of his or her impartiality;
11) the liquidator carries out the activities related to the
duties of the liquidator in the liquidation proceedings of the
credit institution to be liquidated in which he or she himself or
herself, his or her spouse or person who are in kinship or
affinity relationship with the liquidator up to the second
degree, or his or her transaction partners are or might be
personally or financially interested;
12) the liquidator carries out the activities related to the
duties of the liquidator in relation to such creditor or debtor
whose participant, stockholder, member, member of the control or
executive body he or she is himself herself, his or her spouse,
or persons who are in kinship or affinity relationship with the
liquidator up to the second degree;
13) the liquidator has already fulfilled the duties of a
liquidator in the liquidation proceedings of such credit
institution to be liquidated.
(2) The provisions of Paragraph one, Clause 4, Sub-clause "d",
Clauses 6, 7, 8, 10, and 13 of this Section, as well as the
following restrictions shall apply to a liquidator - legal
person:
1) the liquidator, within the last five years before
proclamation of the liquidation proceedings of the credit
institution, has been a participant (shareholder) of the credit
institution to be liquidated;
2) an insolvency matter has been initiated against the
liquidator as a debtor;
3) the liquidator carries out the activities related to the
duties of the liquidator in the liquidation proceedings of the
credit institution to be liquidated in which he or she himself or
herself or his or her transaction partners are or might be
personally or financially interested;
4) the liquidator carries out the activities related to the
duties of the liquidator in relation to such creditor or debtor
whose participant or shareholder he or she himself or herself
is.
(3) The liquidator and the natural person authorised by the
commercial company of the liquidator may concurrently fulfil the
duties of the liquidator or administrator of the credit
institution within only one liquidation or insolvency proceeding
of the credit institution.
(4) [13 June 2019]
[21 July 2017; 13 June 2019]
Section 132.1 (1) The duties of the
administrator in the insolvency proceedings of a credit
institution may not be undertaken and fulfilled if:
1) the administrator has been released, removed or suspended
from its position due to the established violations of the laws
and regulations, or the functions of his or her position have
been suspended;
2) the administrator is a suspect or an accused in criminal
proceedings for committing of an intentional criminal
offence;
3) the administrator has been punished for committing an
intentional criminal offence, irrespective of extinguishing or
expungement of the criminal record;
4) the administrator, within the last five years before
proclamation of the liquidation proceedings of the credit
institution, has been:
a) a participant (stockholder) of the credit institution to be
administered or a member of its administrative bodies;
b) a procuration holder or a person with a commercial power of
attorney of the credit institution to be administered;
c) a person who is married to the founder, participant
(stockholder) of the credit institution to be administered or the
member of its administrative bodies, in kinship or affinity
relationship to the second degree;
5) the administrator has had employment legal relationship
with the credit institution to be administered within the last
five years prior to the day of proclamation of the relevant
insolvency proceedings;
6) within the last two years before the day when the
administrator was appointed, the administrator has been in
relationship of an authorisation contract with the creditor of
the credit institution to be administered within its legal
relationship with the credit institution to be administered;
7) the credit institution to be administered has the right of
action against the administrator, or the administrator has the
right of action against the credit institution to be
administered;
8) another insolvency case has been initiated against the
administrator as a debtor, or the administrator is a
representative of the debtor in another insolvency case and that
other case has not been terminated;
9) the administrator is personally interested in the case of
insolvency proceedings of the credit institution to be
administered or there are other circumstances causing justified
doubts regarding his or her impartiality;
10) within the insolvency proceedings of the credit
institution to be administered, the administrator carries out the
activities related to the duties of the administrator in which he
or she himself or herself, his or her spouse or person who are in
kinship or affinity relationship with the administrator up to the
second degree, or his or her transaction partners are or might be
personally or financially interested;
11) the administrator carries out activities related to the
duties of the administrator in relation to such creditor or
debtor whose participant, stockholder, member, member of the
control or executive body is he or she is himself or herself, his
or her spouse, or persons who are in kinship or affinity
relationship with the administrator up to the second degree;
12) the administrator has already fulfilled the duties of the
administrator in the insolvency proceedings of such credit
institution to be administered.
(2) The administrator may concurrently fulfil the duties of
the administrator or liquidator of a credit institution only in
one insolvency and liquidation proceeding.
(3) In conformity with the competence laid down in this Law,
the Financial and Capital Market Commission is entitled to
control the activities and conformity of the administrator to the
restrictions laid down in this Law. For this purpose, the
authorised representative of the Financial and Capital Market
Commission has the right to become acquainted with all the
documentation of a credit institution that is related to the
credit institution, as well as to receive explanations and any
other necessary information which is related to the insolvency
proceedings of the credit institution from the administrator.
[21 July 2017]
Section 133. (1) The liquidator of a credit institution
shall submit, not later than within three days after the
acceptance by the Financial and Capital Market Commission of the
decision of a meeting of the stockholders (shareholders) of the
credit institution or after adoption of a court ruling on
liquidation, for publication in the official gazette Latvijas
Vēstnesis and at least in two other newspapers, a notice
regarding the liquidation of the credit institution in which the
following shall be indicated:
1) the date when the decision on voluntary liquidation or the
court ruling was taken, and the date from which the credit
institution is considered to be liquidated;
2) the time period during which the claims and other demands
of creditors and other persons are to be submitted;
3) the given name and surname of the liquidator (if the
liquidator is a legal person, its name and the name of its
authorised representative), the place of activities and the
telephone number.
(2) The time period referred to in Paragraph two, Clause 2 of
this Section shall be three months, except for the claims of
creditors of covered bonds which, in accordance with the Covered
Bonds Law, shall be applied regardless of the abovementioned time
period. The running of the time period shall begin on the day of
publication of the notice in the official gazette Latvijas
Vēstnesis.
(3) A liquidator of the credit institution shall ensure the
use of the word "likvidējamā" [to be liquidated] in all the
particulars of the credit institution.
(4) The provisions of Chapter XI of this Law, except for
Sections 160 and 166, and also the rights, duties and powers of
the administrator laid down in Sections 172 and 172.1
of this Law shall be applicable to the liquidator of a credit
institution which has been appointed by a court.
(5) The provisions of Chapter XI of this Law, except for
Section 155, Section 156, Paragraph two, Section 157, Paragraphs
two and three, Sections 160, 166, 167, 168 and 169, and also the
rights, duties and powers of the administrator laid down in
Sections 172 and 172.1 of this Law shall be applicable
to the liquidator of a credit institution which has been elected
by the meeting of stockholders.
[1 June 2000; 11 April 2002; 11 December 2003; 16 May 2013;
24 April 2014; 1 November 2018; 27 May 2021]
Section 134. (1) The liquidation expenses of a credit
institution shall be covered by the credit institution to be
liquidated.
(2) The following payments shall be included in the
liquidation expenses:
1) the remuneration to the liquidator and the assistant to the
liquidator in the amount laid down in Section 135 of this
Law;
2) the salaries to be paid to the employees, calculating from
the day when the decision to liquidate the credit institution was
taken, and the severance pay to be paid;
3) the necessary expenses for the maintenance of the property
of the credit institution to be liquidated and for the
maintenance of the necessary work premises during the
liquidation;
4) court costs;
5) expenses for the placement of publications in
newspapers;
6) expenses for the organisation of auctions;
7) expenses which are related to the making of entries in
public registers during the liquidation process.
[28 October 2004]
Section 135. (1) In case of liquidation of a credit
institution, if the liquidation is carried out on the basis of
Section 126, Paragraph one, Clause 1 of this Law, the
remuneration of the liquidator shall be determined by the meeting
of stockholders (shareholders) of the credit institution.
(2) If the liquidation is carried out upon a court ruling and
if the meeting of creditors has not agreed with the liquidator on
another amount of remuneration, the amount of the total pro rata
remuneration of the liquidator and the assistant to the
liquidator shall be determined as an appropriate share of the
difference between the total amount of monetary funds to be
disbursed to creditors and the sum in which the monetary funds in
the cashier's office of the credit institution to be liquidated,
its investments in Latvijas Banka, freely available
(unencumbered) monetary funds in other credit institutions, means
which have been obtained from selling financial instruments
admitted for trade in the regulated market, and means which have
been obtained from exercising the right of action against a
Member State or a foreign country, are included. The amount of
the total remuneration in proportion of the liquidator and the
assistant to the liquidator shall be determined as:
1) 2 per cent of the means included in the difference referred
to in the introduction part of this Paragraph the amount of which
does not exceed 30 per cent of such difference;
2) 3 per cent of the means included in the difference referred
to in the introduction part of this Paragraph the amount of which
does not exceed 30 per cent, but exceeds 60 per cent of such
difference;
3) 4 per cent of the means included in the difference referred
to in the introduction part of this Paragraph the amount of which
does not exceed 60 per cent, but exceeds 75 per cent of such
difference;
4) 5 per cent of the means included in the difference referred
to in the introduction part of this Paragraph the amount of which
exceeds 75 per cent of such difference.
(21) The amount of the total remuneration in
proportion of the liquidator and the assistant to the liquidator
shall not exceed EUR 100 000.
(3) In relation to monetary assets that were recovered through
legal proceedings, a complexity coefficient of 1.25 shall be
applied to the remuneration laid down in Paragraph two of this
Section in the part of the remuneration to be paid out, which in
proportion corresponds to the total amount of assets recovered
through legal proceedings.
(4) In relation to monetary assets that were recovered through
legal proceedings, by recognising a transaction concluded
contrary to the interests of the credit institution as void or
revocable, a complexity coefficient of 1.5 shall be applied to
the remuneration laid down in Paragraph two of this Section in
the part of the remuneration to be paid out, which in proportion
corresponds to the total amount of assets recovered through legal
proceedings.
(5) [1 November 2018]
(6) The liquidator shall cover the costs for remuneration to
the persons referred to in Section 161, Paragraph four, Clause 19
of this Law and other costs related to the liquidation process,
other than those referred to in Section 134, Paragraph two of
this Law, unless the meeting of creditors and the liquidator has
agreed on other procedure for covering of the costs.
(7) Within liquidation proceedings that have been commenced
upon a court ruling or within the scope of insolvency
proceedings, the convening of the meeting of creditors and taking
decisions shall be ensured by the liquidator and administrator in
accordance with Sections 135.1, 135.2,
135.3, 135.4, 135.5,
135.6 and 135.7 of this Law.
(8) The liquidator and administrator has the right to convene
the meeting of creditors:
1) upon its own initiative;
2) upon a request of the creditors.
[16 May 2013; 1 March 2018; 1 November 2018]
Section 135.1 (1) The administrator or
liquidator shall notify the creditors of the place, time and
agenda of the meeting of creditors not later than two weeks
before the specified date of the meeting. The notice on the
meeting of creditors shall be published in the official gazette
Latvijas Vēstnesis and two other newspapers.
(2) If there are more than three hundred creditors, when
notifying of the meeting of creditors, the administrator or
liquidator shall invite those creditors the claims of whom does
not exceed one per cent of the amount of all claims to authorise
a joint representative.
[1 November 2018]
Section 135.2 (1) All creditors have the
right to be represented at a meeting of creditors, irrespective
of the amount of claim. Participation in the meeting of creditors
is personal or through the mediation of a lawful or contractual
representative.
(2) If the number of creditors is more than three hundred,
only those creditors who represent not less than one per cent of
the whole of the claim amount are entitled to personally
participate in the meeting of creditors. In such case one person
shall represent several creditors.
(3) In a meeting of creditors where the vote on the plan for
liquidation or insolvency proceedings is taken, the secured
creditors shall also have voting rights to the full extent of the
claim.
(4) In a meeting of creditors, the secured creditors shall
have voting rights to the extent of the unsecured part of the
debt. Secured creditors may withdraw from the security or its
part and declare a claim, thus gaining voting rights to the
extent of the whole debt or the unsecured part of the debt.
(5) To meetings of creditors shall be invited person the
participation of whom in the insolvency proceedings is
mandatory.
[1 November 2018]
Section 135.3 (1) The meeting of creditors
shall:
1) elect the committee of creditors;
2) shall agree with the administrator or liquidator on the
determination of the amount of total administrator's or
liquidator's proportionate remuneration and other expenses
related to the insolvency or liquidation proceedings;
3) shall examine other issues related with the insolvency or
liquidation proceedings that are proposed for examination by the
administrator or liquidator.
(2) The meeting of creditors shall be chaired by the
administrator or liquidator.
(3) The meeting of creditors is entitled to take decisions
irrespective of the amount of debt represented therein if all
known creditors were notified of the convening of the meeting
within the time period provided for in this Law and if the
persons whose participation in the insolvency or liquidation
proceedings is mandatory have been invited thereto.
(4) The failure of the persons whose participation in the
insolvency or liquidation proceedings is mandatory to attend the
meeting of creditors shall not be an obstacle for its proceeding
if the meeting of creditors has been convened in accordance with
the procedures laid down in this Law.
(5) The meeting of creditors shall take decisions with a
simple majority of those creditors with voting rights on the
basis of amount of claims. The number of votes of each creditor
shall be determined in proportion to his or her declared amount
of debt, as well as the amount reflected in the documents of the
debtor - credit institution (accounting records registers) if the
claim of a creditor has not been lodged.
(6) The number of votes in the meeting of creditors shall be
determined by granting one vote for the smallest known creditor
claim (amount of claim); the remaining number of votes shall be
determined by dividing the claim (amount of claim) of each
creditor with the smallest known creditor claim (amount of
claim). The number of votes of each creditor shall be determined
before each meeting of creditors, taking into account changes in
the composition of unsecured creditors and the amount of
claims.
(7) Minutes shall be taken during the course of the meeting of
creditors. The minute taking shall be ensured by the chairperson
of the meeting of creditors.
(8) The meeting of creditors with its justified decision may
be suspended for a period of up to one month if more than half of
the creditors present on the basis of amounts of claim voted for
this, indicating the time, place and agenda for the
recommencement of the meeting.
[1 November 2018]
Section 135.4 (1) The meeting of creditors
shall elect a committee of creditors if more than fifty creditors
have lodged their claims in insolvency or liquidation
proceedings.
(2) The committee of creditors shall be elected from among the
participants with voting rights at the meeting of creditors
composed of not less than five and not more than nine members for
the whole of the insolvency or liquidation proceedings period.
All the rounds of creditors involved in the insolvency or
liquidation proceedings shall be represented in the committee of
creditors in accordance with the provisions of Section
139.2 and 139.3 of this Law.
[1 November 2018]
Section 135.5 (1) The meeting of creditors
has the right to remove the committee of creditors.
(2) A member of the committee of creditors may withdraw from
the fulfilment of duties by providing a written warning thereof
to the administrator or liquidator one month in advance. If the
number of members of the committee of creditors decreases to less
than five, the administrator or liquidator shall convene a
meeting of creditors which shall elect new members of the
committee of creditors.
[1 November 2018]
Section 135.6 (1) The form of activity of
the committee of creditors is meetings.
(2) The meetings of the committee of creditors are convened
and chaired by the chairperson of the committee of creditors. The
administrator or liquidator may request the chairperson of the
committee of creditors to convene a meeting of the committee of
creditors within one week from day of the submission of the
request.
(3) The committee of creditors is entitled to take decisions
if more than half of the members elected at the meeting of
creditors take part in the meeting. Decisions shall be taken by
the committee of creditors by a simple majority of votes of the
members of the committee present. If the votes are divided
equally, then the deciding vote shall be the vote of the
chairperson of the committee of creditors.
[1 November 2018]
Section 135.7 (1) A creditor to represent
him or her at the meeting of the creditors may authorise not more
than one person. The authorised person shall represent the
creditor to the full amount of the creditor's claim.
(2) A round of creditors may authorise not more than one
person to represent it at the meeting of creditors. The
authorised person shall represent the round of creditors to the
full amount of the round of creditors' claims.
[1 November 2018]
Section 136. (1) If liquidation is takin place based on
a court ruling, after completion of the liquidation the
liquidator shall submit a report on the entire liquidation period
to the court and to the Financial and Capital Market Commission.
The court shall approve the report on the entire liquidation
period. The court shall take the decision to complete liquidation
proceedings.
(2) If voluntary liquidation of a credit institution is
carried out, the liquidator shall submit, within five days after
receipt of a written request from the Financial and Capital
Market Commission, a report on the liquidation proceedings of the
credit institution to the Financial and Capital Market
Commission. After completion of voluntary liquidation, the
liquidator shall submit a report on the entire period of
voluntary liquidation to the Financial and Capital Market
Commission.
(3) The report of the liquidator shall provide a true and
clear presentation of the entire period of the liquidation.
(4) The liquidator shall, within the first 10 days of each
month, submit for publication in the official gazette Latvijas
Vēstnesis an account on the previous month of the credit
institution, which reflects the financial situation at the end of
the accounting period, and a report on the recovered assets,
including property, and the liquidation expenses of the previous
month.
[1 June 2000; 11 December 2003; 16 July 2009; 16 May
2013]
Section 137. (1) If the liquidator finds that the
stockholders (shareholders), the chairperson or the members of
the council or the board, the executive managers, the head or
members of the internal audit service of the credit institution,
company controller, auditors or sworn auditors have exceeded
their powers or have failed to comply with the requirements of
the laws, Cabinet regulations, the regulatory instructions and
regulations of Latvijas Banka, the regulatory provisions and
orders of the Financial and Capital Market Commission, the
provisions of the articles of association of the credit
institution or the decisions of the meeting of the stockholders
(shareholders) of the credit institution, or also have acted
neglectfully or in bad faith, it is the obligation of the
liquidator to inform law enforcement institutions thereof based
on the jurisdiction and the Financial and Capital Market
Commission.
(2) If losses have been incurred by the creditors or
stockholders (shareholders) as a result of the actions referred
to in Paragraph one of this Section, the liquidator shall bring
an action in a court against the offenders for the compensation
of such losses.
[1 June 2000; 11 April 2002; 11 December 2003; 28 October
2004; 13 June 2019]
Section 138. (1) If during the course of liquidation of
a credit institution the liquidator finds that the credit
institution to be liquidated does not have enough property to
fully satisfy the claims of all creditors, it is the obligation
of the liquidator to take the decision to initiate insolvency
proceedings and to submit an insolvency petition to a court,
petitioning the court in the name of the credit institution to
declare the credit institution insolvent and to take a decision
to initiate bankruptcy proceedings.
(2) [1 November 2018]
(3) In such case, as the administrator of the credit
institution shall be appointed by a court adjudication the
liquidator, if the requirements of Section 131.1 of
this Law have been complied with and the restrictions laid down
in Section 132.1 do not apply.
[22 February 2007; 1 November 2018]
Section 139. (1) The liquidator shall determine the
procedures for covering other costs and debts in conformity with
the provisions of Sections 139.2, 139.3,
139.4, 139.5, 139.6, and
139.7 of this Law.
(2) During the liquidation (also voluntary liquidation)
proceedings of a credit institution, the payments to the
creditors are not performed for the deposits the depositor of
which is not identified as a customer according to the
requirements of the Law on the Prevention of Money Laundering and
Terrorism and Proliferation Financing or until identification of
a customer and customer due diligence is completed.
[1 November 2018; 13 June 2019; 27 May 2021]
Section 139.1 [27 May 2021]
Section 139.2 After covering the expenses of
the insolvency proceedings or liquidation, the remaining funds
are distributed for the satisfaction of the principal sums
(without interest) of the creditors' claims according to the
following rounds:
1) payments to depositors who in accordance with the law are
entitled to a guaranteed compensation in the amount of the
covered deposit. The payments shall be determined in the amount
of the covered deposit in accordance with the Deposit Guarantee
Law. If the depositor has several accounts at a credit
institution, it shall be deemed that the depositor has one
deposit in the total amount of all the deposits. If the depositor
has received the guaranteed compensation in the amount of the
covered deposit, he or she shall lose the right of action with
respect to the amount received, and claims of the deposit
guarantee fund against the credit institution shall be treated as
claims of this round;
2) payments to depositors who are natural persons,
micro-enterprises, small and medium-sized enterprises (within the
meaning of the Law on Recovery of Activities and Resolution of
Credit Institutions and Investment Firms) in the amount of the
part of the deposit which exceeds the covered deposit, except for
those deposits which are attracted by using a branch of a credit
institution registered in Latvia which is located outside the
European Union;
3) claims of employees regarding the remuneration for work for
the last three months of legal employment relations in the 12
month period prior to the court judgment on the declaration of
insolvency of the debtor; regarding the annual vacation pay to
which rights were acquired in the 12 month period prior to the
court judgment on the declaration of insolvency of the debtor;
regarding the compensation for other types of paid leave for the
last three months of legal employment relations in the 12 month
period prior to the court judgment on the declaration of
insolvency of the debtor; regarding the severance pay in the
minimum amount laid down in the law; regarding the compensation
for injuries related to an occupational accident or an
occupational disease - for the whole unpaid time period, and the
payments of such compensation which are to be made three years in
advance, if the occupational accident occurred, or the
occupational disease was incurred until 1 January 1997, as well
as in cases if after 1 January 1997 a former employee who is not
deemed to be an insured person in accordance with the Law on
Mandatory Social Insurance Against Accidents at Work and
Occupational Diseases has been diagnosed with an occupational
disease the cause of which is the work performed by such employee
in harmful working conditions until 1 January 1997; the mandatory
payments of State social insurance and personal income tax
payments which are related to the expenditure referred to in this
Clause, or the claims of the Insolvency Control Service if it has
satisfied the aforementioned claims from the funds of the
employees claims guarantee fund in accordance with the law On
Protection of Employees in case of Insolvency of Employer;
4) taxes and other payments (debts) to the State budget and
the budgets of local governments, as well as such transit credits
and interest payments for the use of such credits which were paid
back to the credit institution before the day when insolvency was
declared or the day when the court took the ruling on the
liquidation of the credit institution;
5) such debts to creditors which have arisen from a credit
institution accepting, but failing to fulfil, payment orders from
a customer regarding money transfer to accounts of the State or
local government budgets;
6) State claims regarding repayment of credits guaranteed by
the State.
[1 November 2018; 28 February 2019]
Section 139.3 After complete satisfaction of
the creditors' claims provided for in Section 139.2 of
this Law, the remaining funds shall be distributed for the
satisfaction of creditors' claims in the following rounds:
1) the remaining legal claims of the creditors (principal sum
with interest), also claims of such creditors which have obtained
the status of a creditor after initiation of insolvency
proceedings or taking the court ruling on liquidation, if they
are not, in accordance with this Law, treated as if they were the
creditors' claims provided for in Section 139.2.
Deferred tax payments after making payments of the creditors'
claims provided for in Section 139.2 of this Law, the
remaining deposits of natural persons, micro-enterprises, and
medium-sized enterprises and salary debts, and also other
payments arising from employment relationship, shall be treated
as if they were claims of this round. If a creditor's deposit has
been insured and the creditor has received insurance
compensation, the claims of the relevant insurance company (fund)
against the credit institution shall be treated as if they were
claims of this round. In this round also claims of covered bonds
shall be satisfied in accordance with the Covered Bonds Law;
2) [28 February 2019];
3) claims of creditors lodged after the specified time period,
except for the non-settled claims of covered bonds which are
settled in accordance with Clause 1 of this Section also if they
have been lodged after the specified time period, and also claims
of the State and local government authorities that are
responsible for the accounting and control of taxes;
31) claims arising from a debt security in relation
to which a lower value has been specified in the contract
regarding the principal sum of the security than for such
creditors' claims which arise from the liabilities excluded in
Article 72a(2) of EU Regulation No 575/2013;
32) claims arising from a debt security whose
initial maturity, in accordance with the contract or the
prospectus, is at least one year, which is not considered a
derivative financial instrument, which does not contain a
derivative financial instrument and in relation to which a lower
quality has been specified in the contract or the prospectus than
for those claims of the creditors which are similar to those laid
down in Section 139.2 of this Law and Clauses 1 and 3
of this Section. A security debt with a variable interest rate to
be determined on the basis of a base interest rate generally
recognised in the financial market and a security debt which is
not expressed in the national currency of the issuer, provided
that the principal sum, sum to be repaid, and the interest rate
are expressed in the same currency, shall not be considered such
debt security in which a derived financial instrument is included
only due to the indications referred to in this sentence;
4) claims which do not arise from Tier 2 capital securities
which creditors have loaned to the credit institution for a
definite time period, provided that they may be requested early
only in the case of liquidation of the credit institution;
5) claims arising from liabilities which a credit institution
to which that specified in Section 61 of the Law on Recovery of
Activities and Resolution of Credit Institutions and Investment
Firms applies has issued to a resolution entity and which a
resolution entity has purchased directly or indirectly with the
intermediation of other entities of the same resolution group or
which the credit institution has issued to the current
stockholder which is not included in the same resolution group,
and which the stockholder has purchased;
6) claims arising from Tier 2 capital securities which conform
to the conditions of Article 63 of EU Regulation No 575/2013;
7) claims arising from Additional Tier 1 capital securities
which conform to the conditions of Article 52(1) of EU Regulation
No 575/2013.
[1 November 2018; 28 February 2019; 24 April 2021; 27 May
2021]
Section 139.4 The claims of each subsequent
round of creditors shall be satisfied only after complete
satisfaction of the previous round of creditors. If the funds of
the credit institution are insufficient to fully satisfy all
claims of the creditors of one round, such claims shall be
satisfied proportionately to the amount due to each creditor
within the framework such round.
[1 November 2018]
Section 139.5 The funds, which remain after
the satisfaction of the claims referred to in Sections
139.2 and 139.3 of this Law shall be
distributed to the stockholders (shareholders) of the credit
institution in proportion to the amount of the contribution of
each.
[1 November 2018]
Section 139.6 When, in insolvency
proceedings of a credit institution, creditors have submitted
their claims of creditors, after declaration of insolvency
proceedings of the credit institution creditors need not to
resubmit the claims of creditors in the amount applied in the
liquidation proceedings of the credit institution.
[1 November 2018]
Section 139.7 If, in the liquidation
proceedings of a credit institution, the court declares the
credit institution as insolvent, the administrator shall continue
to satisfy the claims of the creditors of the relevant round to
the percentage of the creditors' claims specified by the
liquidator. Upon reaching the amount of claims specified in the
first sentence of this Section, the administration shall satisfy
the claims of the creditors of the relevant round in accordance
with the procedures laid down in this Law.
[1 November 2018]
Section 139.8 The liquidator of a credit
institution is entitled to hold the monetary assets of the credit
institution to be liquidated, including the monetary assets
recovered in liquidation proceedings in the euro account of the
credit institution to be liquidated in Latvijas Banka according
to the conditions for servicing the accounts of Latvijas Banka
which are provided for in the account servicing contract which
has been entered into by and between the credit institution and
Latvijas Banka. Only the liquidator is entitled to transfer
monetary assets into this account from the account of the credit
institution to be liquidated in the credit institution of the
Member State and to transfer monetary assets from such account to
the account of the credit institution to be liquidated in the
credit institution of the Member State. The liquidator has the
right to keep cash in the cashier's office in such amount which
is necessary to cover the current expenditures of the insolvency
proceedings.
[17 June 2020]
Chapter X
Insolvency of Credit Institutions
[21 May 1998]
Section 140. (1) A credit institution may submit an
insolvency petition if it is unable to, or under circumstances
that can be proved will not be able to adequately fulfil its debt
obligations.
(2) A credit institution has the obligation to submit an
insolvency petition if at least one of the following
circumstances applies:
1) the credit institution is unable to fulfil its debt
obligations within eight days after the time period for the
fulfilment of the obligations has expired, and no written
agreement with the creditors regarding the settlement of the debt
has been reached; or
2) the debt obligations of the credit institution exceed its
assets.
Section 141. All the provisions of Section 138 and
Section 140, Paragraph one of this Law shall apply to an
insolvency petition, which is submitted by the liquidator of a
credit institution.
Section 142. (1) The administrator in another
insolvency proceeding may submit an insolvency petition against a
credit institution, which has a debt obligations to the debtor
represented by the administrator.
(2) In such event all the provisions of Section 143 of this
Law shall apply to the application of the administrator.
Section 143. A creditor or a group of creditors may
submit an insolvency petition, if at least one of the following
circumstances exists:
1) within five days after a creditor has submitted a statement
of claim to the credit institution, the claim is neither
satisfied, nor are objections raised to it, and after the
expiration of this time period the creditor has informed the
credit institution, in writing, about his or her intention to
submit an insolvency petition at least three days before
submitting it, and the credit institution has not been able to
settle the debt also during this time period; or
2) the credit institution has informed the creditor, in
writing, of its actual insolvency.
Section 143.1 (1) If the permanent place of
residence of a creditor or the location of management is outside
of the Republic of Latvia, his or her right to submit creditor
claims and other objections is the same as the rights of a
creditor registered or residing permanently in the Republic of
Latvia.
(2) If the permanent place of residence of a creditor or the
location of management is outside of the Republic of Latvia, his
or her right in respect of reorganisation measures or liquidation
is the same as the rights of a creditor registered or residing
permanently in the Republic of Latvia.
[28 October 2004]
Section 144. (1) An insolvency petition may not be
submitted by secured creditors. Until the initiation of an
insolvency matter the claims of secured creditors against a
credit institution regarding the collection of debts shall be
examined in accordance with general procedures.
(2) An insolvency petition may be submitted by such secured
creditors whose claim against a credit institution is not secured
in full.
Section 145. The Financial and Capital Market
Commission may submit an insolvency petition to a court if at
least one of the following circumstances exists:
1) the credit institution is unable to adequately fulfil its
debt obligations; or
2) the debt obligations of the credit institution exceed its
assets.
[1 June 2000; 11 December 2003]
Section 146. (1) A credit institution, the liquidator
of a credit institution, a creditor or a group of creditors, and
the administrator in another insolvency proceeding shall first
submit the insolvency petition to the Financial and Capital
Market Commission.
(2) The Financial and Capital Market Commission shall examine
the insolvency petition within five days from the receipt of such
petition, and in the case of a determination of actual
insolvency, or a possibility of its occurrence, shall decide on
the submission of the petition to a court in accordance with the
procedures laid down in the law. The Financial and Capital Market
Commission shall submit the insolvency petition to the court
within three days after it has taken the decision to submit the
petition to a court.
(3) The Financial and Capital Market Commission may decide on
suspension of the petition for a definite time period which does
not exceed one month, if it is in possession of evidence that the
actual insolvency of a credit institution is temporary and
related to temporary problems of liquidity. If solvency of the
credit institution has not been restored by the end of the time
period laid down for the suspension of the petition, the
Financial and Capital Market Commission shall submit the petition
to a court, in accordance with the procedures laid down in the
law, within three days after the expiration of the time of
suspension.
(4) If the Financial and Capital Market Commission has not
determined the actual insolvency of a credit institution, or a
possibility of its occurrence, in such case it shall take a
substantiated decision according to the procedures and in the
time periods laid down in the Administrative Procedure Law to
reject the petition and inform the submitter of the petition of
such within three days from the date of taking of the decision,
indicating the grounds of the decision. Rejection of an
insolvency petition by the Financial and Capital Market
Commission shall not be an obstacle for its submission to a
court. In such case, however, such means of claim enforcement as
prevent the credit institution from providing financial services
shall not apply for the securing the claims of creditors.
(5) The Financial and Capital Market Commission shall without
delay inform Latvijas Banka in writing of the submission of an
insolvency petition to a court.
[1 June 2000; 11 December 2003; 28 October 2004; 22
February 2007]
Section 146.1 (1) During the insolvency
proceedings of a credit institution the administrator shall,
according to the risk inherent to the activities of the insolvent
credit institution, ensure that the requirements of the laws and
regulations in the field of money laundering and terrorism and
proliferation financing are met, insofar as they are applicable
to the insolvency proceedings of credit institutions, including
inform the Financial Intelligence Unit of Latvia of the
suspicious transactions established during the insolvency
proceedings.
(2) The administrator shall develop a methodology for the
fulfilment of the requirements for the prevention of money
laundering and terrorism and proliferation financing according to
the money laundering and terrorism and proliferation financing
risk inherent to the activities of the credit institution and
shall submit it to the Financial and Capital Market Commission
and the Financial Intelligence Unit of Latvia. Disbursement of
funds for the creditors of a credit institution shall be
commenced only after the methodology has been approved by the
Financial and Capital Market Commission.
(3) The Financial and Capital Market Commission shall
determine the requirements to be set for methodology for the
fulfilment of the requirements for the prevention of money
laundering and terrorism and proliferation financing in the
insolvency proceedings of the credit institution according to the
money laundering and terrorism and proliferation financing risk
inherent to the activities of the credit institution.
[13 June 2019]
Section 147. [22 February 2007]
Section 148. (1) A creditor is prohibited to perform,
from the initiation of an insolvency case, transactions whereby
losses are incurred by other creditors or third parties.
(2) Based on a submission of the creditor or the
administrator, material rights which a creditor or a third person
have gained as a result of the activities of the creditor
referred to in Paragraph one of this Section are to be deemed as
null and void in accordance with the procedures laid down in the
law.
(3) With the initiation of the insolvency proceedings the
Financial and Capital Market Commission shall appoint an
authorised person.
(4) An appeal of an administrative act issued by the Financial
and Capital Market Commission regarding appointing of an
authorised person shall not suspend the execution thereof.
[12 February 2009]
Section 149. (1) Upon the declaration of a credit
institution as insolvent:
1) the credit institution shall lose the right to act with its
property, and also the property of third parties in its
possession or holding, and such rights shall be acquired by the
administrator;
2) the activities of the administrative bodies of the credit
institution shall be suspended, and the credit institution shall
be managed by the administrator;
3) increase in late charges and interest for the creditor
claims shall be discontinued, except for tax debts where the
calculation of increase in principal debt amount and late charges
shall be discontinued in accordance with the law On Taxes and
Fees.
(2) If insolvency has been declared for a credit institution
which has performed emission of covered bonds, the legal norms
included in this Law which govern the rights of the credit
institution to cover assets and the claims related thereto
(including in relation to the receipt and maintenance of cover
assets, late payments, and interest increase for creditors'
claims) shall be applied insofar as they are not in contradiction
with the norms of the Covered Bonds Law.
[27 May 2021]
Section 150. (1) Application for the completion of
insolvency proceedings shall be submitted to a court by the
administrator. The ruling on the completion of insolvency
proceedings shall be made by a court.
(2) [1 November 2018]
(3) Insolvency proceedings shall be terminated if a court
rejects the insolvency petition or terminates the insolvency
case.
[1 June 2000; 11 December 2003; 1 November 2018]
Section 151. [1 November 2018]
Section 152. (1) Insolvency proceedings shall be
financed from the funds of the credit institution.
(2) In case of insolvency, when criminal proceedings for
bringing to insolvency is carried out, the court may recover the
expenses of the insolvency proceedings jointly from the council
and the board of the credit institution, and its members.
[1 November 2018]
Section 153. The following payments shall be included
in the expenses of insolvency proceedings:
1) the remuneration for the administrator and the assistant to
the administrator in the amount laid down in Section 166 of this
Law;
2) [1 November 2018];
3) the necessary expenses for the maintenance of the property
of the credit institution and for the maintenance of work
premises during the insolvency proceedings;
4) court costs;
5) expenses for the placement of publications in
newspapers;
6) expenses for the organisation of auctions;
7) expenses, which are related to registration of insolvency
measures in public registers.
[28 October 2004; 16 May 2013; 1 November 2018]
Chapter XI
Administrator in Insolvency Proceedings
[21 May 1998]
Section 154. [21 July 2017]
Section 155. (1) The administrator shall have security
for such cases when he or she causes harm, through his or her
activities, to creditors or other persons.
(2) The security shall be civil liability insurance for the
activities of the administrator.
(3) Regulations for the civil liability insurance for the
activities of the administrator shall be issued by the
Cabinet.
Section 156. (1) The administrator shall have a
personal seal with the inscription "Administrators
(kredītiestādes nosaukums) maksātnespējas procesā" [Administrator
in insolvency proceedings for (the name of the credit
institution)] and his or her given name, surname.
(2) The administrator shall have an identification document
with his or her photograph, given name and surname, and the
inscription "Administrators (kredītiestādes nosaukums)
maksātnespējas procesā" [Administrator in insolvency proceedings
for (the name of the credit institution)]. The identification
document shall be approved by the Chief Judge of a court with his
or her signature and the seal of the court.
[16 May 2013]
Section 157. (1) After the appointment and until the
examination of the matter in court the administrator shall
conduct the following activities:
1) prepare a list of the employees, stockholders
(shareholders) and other persons whose participation in the
insolvency proceedings is mandatory, and submit such list to the
court;
2) prepare an account on the assets, including property, of
the credit institution in accordance with its real (market) value
and submit it to the court;
3) ascertain any property of third parties that is in the
possession or care of the credit institution;
4) prepare a list of creditors based on the data in the
accounting registers of the credit institution, indicating
information regarding creditors, the amount of debt obligations,
and the time periods for fulfilment.
(2) Within three days after the initiation of insolvency
proceedings and the appointment of the administrator, the
administrator and the chairperson of the board of the credit
institution shall jointly begin making an inventory of the
documents and property of the credit institution. If the
chairperson of the board is temporarily absent or his or her
location is unknown, the inventory shall be made by the
administrator and the members of the board. After completion of
the inventory, an inventory document and a deed of acceptance and
delivery of property (documents, objects etc.) shall be prepared
and signed.
(3) If all members of the board are temporarily absent, or
their location is unknown, the administrator shall inform the
Financial and Capital Market Commission thereof in writing and
make the inventory alone. After completion of the inventory the
administrator shall prepare and sign an inventory document, and
it shall be considered to be the acceptance-delivery deed of
property (documents, objects, and the like).
[1 June 2000; 11 April 2002; 11 December 2003; 16 July
2009]
Section 158. (1) Taking reorganisation measures or
liquidation activities in relation to a credit institution (also
the branch thereof) shall not affect close-out netting,
repurchase and set-off of claims and obligations or the
fulfilment of other similar activities in the sense of legal
consequences if such activities are allowed by the law in
relation to credit institution claims.
(2) Transactions which are based upon close-out netting or
repurchase contracts shall be governed only by those laws which
relate to close-out netting or the repurchase contract in
accordance with which such transactions were made.
(3) The provisions of Paragraph two of this Section shall not
restrict the fulfilment of Section 218 of this Law.
(31) Full or partial discharge of claims and
liabilities of a credit institution and a customer thereof during
the insolvency proceedings shall not be allowed, except the case
when:
1) the credit institution and the customer thereof prior to
insolvency of the credit institution have carried out discharge
of claims and liabilities of one round on a regular basis;
2) claim of the credit institution had expired prior to
insolvency of the credit institution.
(32) During insolvency proceedings of a credit
institution mutual discharge of the loan issued by the credit
institution by a deposit shall not be permitted.
(4) Interested persons have the rights to dispute the
fulfilment of the activities laid down in Paragraphs one and two
of this Section.
[28 October 2004; 11 March 2010; 30 September 2021]
Section 159. (1) Within three days after the credit
institution has been declared insolvent, the administrator shall
send a notice and the true copy of the court judgment to Latvijas
Banka, the Enterprise Register and the district (city) court
based on the location of the immovable property, indicating in
the cover letter his or her given name, surname, the place of
operation and telephone number.
(2) The Enterprise Register has the obligation to record the
submitted information in accordance with the procedures laid down
in the law On the Enterprise Register of the Republic of
Latvia.
(3) In accordance with the Land Register Law, the district
(city) court has the obligation to make an entry in the relevant
section of the Land Register on the declaration of the insolvency
of the owner.
(4) If insolvency proceedings are terminated due to renewal of
the solvency of the credit institution, the administrator shall
send the court ruling to the Enterprise Register and the relevant
district (city) court for extinguishing of the entries made.
(5) If the insolvency proceedings are completed, the
administrator shall send the court ruling on the completion of
insolvency proceedings to the Enterprise Register so that the
credit institution would be excluded from the Commercial
Register.
[1 June 2000; 16 May 2013; 1 November 2018; 28 February
2019 / Amendments regarding the replacement of the words "Land
Registry Office" with the words "district (city) court" shall
come into force on 1 June 2019. See Paragraph 81 of Transitional
Provisions]
Section 160. (1) Within three days after declaration of
the insolvency of a credit institution, the administrator shall
submit a notice of the declaration of the insolvency of the
credit institution for publication in the official gazette
Latvijas Vēstnesis and at least two other newspapers.
(2) The notice shall include:
1) the date of the court judgment, as well as the date from
which the credit institution has been declared insolvent;
2) the given name and surname, the place of operation and
telephone number of the administrator;
3) the time period during which the claims and other demands
of creditors and other persons are to be submitted.
(3) The time period referred to in Paragraph two, Clause 3 of
this Section, shall be three months. The running of the time
period shall begin on the day of publication of the notice in the
official gazette Latvijas Vēstnesis.
[16 May 2013; 29 April 2021]
Section 161. (1) After a credit institution has been
declared insolvent, the administrator shall have all the duties,
rights and powers of the administrative bodies and the heads of
such bodies provided for in the laws and in the articles of
association of the credit institution.
(2) The administrator has the following duties:
1) to ensure the lawful and efficient progress of the
insolvency proceedings;
2) to receive the property, documentation and seal of the
credit institution, as well as the property of third parties that
is in the possession or care of the credit institution;
3) to control the property of the credit institution;
4) [1 November 2018];
5) to prepare a list of the property against which the claims
of the secured creditors and other creditors may be made;
6) to complete the inventory of the documentation and property
of the credit institution which was begun in accordance with the
procedures laid down in Section 157, Paragraph two of this
Law;
7) not later than within one month after receipt of the
request from the Ministry of Finance, to transfer the servicing
of transit credits to the Ministry of Finance or to a bank
indicated by it;
8) [1 November 2018];
9) to provide information regarding the insolvency proceedings
to the Financial and Capital Market Commission and Latvijas
Banka, and to submit all the requested information that is
necessary for them to perform their functions, within the terms
stipulated by them;
10) within the first 10 days of each month, to submit for
publication in the official gazette Latvijas Vēstnesis an
account on the previous month of the credit institution, which
reflects the financial situation at the end of the accounting
period, and a report on the recovered assets, including property,
and the expenses of the insolvency proceedings during the
previous month;
11) to conduct the accounting in accordance with the
requirements of Section 75 of this Law;
12) to provide the information provided for in this Law and in
the law On the Enterprise Register of the Republic of Latvia, as
well as in the Land Register Law, to the Enterprise Register and
the district (city) courts;
13) in accordance with the procedures laid down in the law, to
submit reports and materials to competent authorities regarding
the facts discovered during the insolvency proceedings, which may
be the basis for initiation of criminal proceedings;
14) to report to law enforcement authorities based on
jurisdiction, if the administrator finds that the stockholders
(shareholders), the chairperson or members of the council or the
board, the executive manager, the head or members of the internal
audit service, company controller, auditors or sworn auditors,
have exceeded their authority or have not complied with the
requirements of laws, Cabinet regulations, regulatory
instructions and regulations of Latvijas Banka, regulatory
provisions and orders of the Financial and Capital Market
Commission, the provisions of the articles of association of the
credit institution or the decisions of the meeting of the
stockholders (shareholders) of the credit institution, or have
acted neglectfully or in bad faith, as well as bring an action in
a court against the offenders for the compensation of losses if
as a result of actions by such persons losses have been caused to
the creditors or stockholders (shareholders);
15) [1 November 2018];
16) to calculate and compile in conformity with the law On
Protection of Employees in case of Insolvency of Employer the
claims of employees and to submit applications regarding the
satisfaction of employee's claims to the Insolvency Control
Service. After the receipt of monetary assets from the Insolvency
Control Service, the administrator shall pay out to third parties
on the basis of the execution documents from the relevant
monetary amount of the employee claim to those whom it is
applicable. The administrator shall include in the unsecured
creditor claims list the employee claim amounts satisfied by the
Insolvency Control Service;
17) [27 May 2021];
18) [27 May 2021];
19) regularly, but not less often than once per year inform
known creditors regarding the course of the insolvency.
(3) [1 November 2018]
(4) The administrator has the following rights and powers:
1) to alienate the property of the credit institution in
accordance with the procedures determined by this Law;
2) to close divisions (branches) or representative offices of
the credit institution;
3) to bring an action in a court in order that transactions of
the credit institution, which the credit institution has entered
into, within five years before being declared insolvent, with
third parties, or for the benefit of third parties, whereby,
losses to the creditors have been or may be incurred, as well as
transactions which have been entered into with any of the
creditors whereby losses to other creditors have been or may be
incurred, be declared void;
31) to withdraw unilaterally from performance of
the contract if the performance thereof reduces assets of the
credit institution and the contract does not regulate the
provision of financial service;
4) to submit to the court any claim of the credit institution
against a third person;
5) to represent the credit institution in court and in
relationships with natural or legal persons, and to appear on its
behalf;
6) to insure the transactions of the credit institution and
the property of the credit institution;
7) to prepare and sign any document in the name of the credit
institution;
8) to employ and discharge from employment the assistant to
the administrator;
9) to hire and discharge from employment employees, including
those employees who were hired before the initiation of the
insolvency proceedings, without applying the time period for
notice of termination of the employment contract laid down in the
Labour Law, as well as the provisions of the Labour Law on
collective redundancy. If an employee has entered into a
collective agreement, the administrator has the right to derogate
from the provisions of a notice of termination of the employment
contract, including the costs related to the notice of
termination. When taking the decision not to apply the provisions
laid down in the Labour Law and the collective agreement entered
into, the administrator has the obligation to assess the
usefulness of such decision;
10) to cover the expenses of the insolvency proceedings from
the funds of the credit institution;
11) to lease out any property of the credit institution, as
well as to acquire by lease any property, if it is in the
interests of all creditors;
12) to waive any claim against a third person or to enter into
any settlement in the name of the credit institution in respect
of the claims of the credit institution against third parties, if
such actions result in the increase of the possibility to satisfy
the claims of creditors, or in a more rapid repayment of debts,
without a substantial reduction of the amount of the compensation
to be paid to the creditors;
13) to require that the stockholders (shareholders) of the
credit institution perform the obligations determined by a
relevant decision of a meeting of the stockholders (shareholders)
with respect to the equity capital or other property of the
credit institution, or to bring an action in court regarding
compulsory fulfilment of such obligations;
14) to submit a petition to a court regarding the declaration
of insolvency of any such third person who has debt obligations
towards the credit institution, and to represent the claims of
the credit institution, if an insolvency matter is initiated
against the third person on the basis of such petition;
15) to change the registered legal address of the credit
institution;
16) to require and receive from natural persons, State and
local government authorities, commercial companies, information
regarding the credit institution and its representatives which is
necessary for the insolvency proceedings;
17) to represent the credit institution in criminal
proceedings and to request that security measures be determined
for the relevant representatives of the credit institution, if in
connection the particular insolvency matter, criminal proceedings
have been initiated;
18) request and receive from creditors and other persons
translations of claims and other objections in the official
language of the Republic of Latvia;
19) to invite specialists in order to receive accounting,
audit and legal services, as well as to ensure the representation
of the interests of a credit institution or the administrator in
State administrative and judicial authorities and to receive
other services that are necessary to ensure the course of
efficient insolvency proceedings;
20) to convene the meeting of creditors in order to examine
the issue of determining the amount of total proportionate
remuneration of the administrator and the assistant to the
administrator and other expenses related to insolvency
proceedings, and also other issues related to insolvency
proceedings that are proposed for examination by the
administrator.
(5) If the administrator terminates the employment contract
with the employees of the credit institution after the credit
institution has been declared insolvent, the lawful basis of the
termination of the employment contract shall be considered to be
the provisions of Section 101, Paragraph one, Clauses 9 and 10 of
the Labour Law, if no other lawful basis for the termination of
the employment contract exists. In case of termination of the
employment contract the discharged employees acquire the status
of creditors:
1) to the extent of the unpaid salaries and related receivable
payments;
2) to the extent of remuneration for an occupational accident
or an occupational disease for the whole unpaid period, and to
the extent of such payments that are to be made for three years
thereafter into the special State social insurance budget if the
occupational accident occurred, or the occupational disease was
incurred, by 1 January 1997.
[1 June 2000; 11 April 2002; 11 December 2003; 28 October
2004; 12 February 2009; 16 July 2009; 11 March 2010; 23 December
2010; 16 May 2013; 1 November 2018; 28 February 2019; 27 May
2021]
Section 162. (1) Persons have the obligation to provide
to the administrator such information at their disposal which is
of significance to the insolvency proceedings.
(2) The representatives of the credit institution and the
persons whose participation in the insolvency proceedings or in
the liquidation of the credit institution is mandatory have the
obligation to submit the information requested by the
administrator within fifteen days from the date when the request
was sent. The request shall be delivered to a representative of
the credit institution or to a person whose participation in the
insolvency proceedings or in the liquidation of the credit
institution is compulsory, in person, or sent by registered
post.
(3) The representatives of the credit institution and the
persons whose participation in the insolvency proceedings or the
liquidation of the credit institution is compulsory, shall submit
the requested information in writing, confirming its accuracy by
their signatures.
Section 163. (1) The administrator shall be fully
liable for the losses that have been caused to the creditors
through his or her fault.
(2) If several administrators have been appointed, the
administrators shall be liable only for their own actions and in
proportion to the losses, which have been caused to creditors
through their fault. In such case the scope of liability of each
administrator shall be determined by a court.
(3) The administrator shall not be liable for losses, which
were incurred by creditors before he or she commenced the
fulfilment of duties.
Section 164. (1) Claims regarding the compensation of
losses caused by the administrator may be brought to a court by
creditors in accordance with general procedures.
(2) Claims against the administrator may be brought not later
than within three years after the termination of insolvency
proceedings.
(3) If the administrator has caused losses to creditors or
other interested persons through his or her actions, and the
court has found indications of a criminal offence in such
actions, claims against the administrator shall be subject to the
general limitation period.
(4) The requirements of this Section apply to all
administrators who have participated in the relevant insolvency
proceeding, regardless of the time or duration of the
participation, and each administrator shall be liable only for
his or her activities.
Section 165. The administrator may authorise, in
writing, his or her assistant, or any employee of the credit
institution to perform particular activities which are within the
powers of the administrator in accordance with this Law. The
administrator shall be liable for losses caused by the assistant
to the administrator or an employee who acts on the basis of such
authorisation.
Section 166. (1) If the meeting of creditors has not
agreed with the administrator on another amount of remuneration,
the amount of the total proportionate remuneration of the
administrator and the assistant to the administrator shall be
determined as an appropriate share of the difference between the
total amount of monetary funds to be disbursed to creditors and
the sum in which the monetary funds in the cashier's office of
the credit institution to be liquidated, its investments in
Latvijas Banka, freely available (unencumbered) monetary funds in
other credit institutions, means which have been obtained from
selling financial instruments admitted for trade in the regulated
market, and means which have been obtained from exercising the
right of action against a Member State or a foreign country, are
included. The amount of the total proportionate remuneration of
the administrator and the assistant to the administrator shall be
determined as:
1) 2 per cent of the means included in the difference referred
to in the introduction part of this Paragraph the amount of which
does not exceed 30 per cent of such difference;
2) 3 per cent of the means included in the difference referred
to in the introduction part of this Paragraph the amount of which
does not exceed 30 per cent, but exceeds 60 per cent of such
difference;
3) 4 per cent of the means included in the difference referred
to in the introduction part of this Paragraph the amount of which
does not exceed 60 per cent, but exceeds 75 per cent of such
difference;
4) 5 per cent of the means included in the difference referred
to in the introduction part of this Paragraph the amount of which
exceeds 75 per cent of such difference.
(2) In relation to monetary assets that were recovered through
legal proceedings, a complexity coefficient of 1.25 shall be
applied to the remuneration laid down in Paragraph one of this
Section in the part of the remuneration to be paid out, which in
proportion corresponds to the total amount of assets recovered
through legal proceedings.
(21) The amount of the total proportionate
remuneration of the administrator and the assistant to the
administrator shall not exceed EUR 100 000.
(3) In relation to monetary assets that were recovered through
legal proceedings, by recognising a transaction concluded
contrary to the interests of the credit institution as void or
revocable, a complexity coefficient of 1.5 shall be applied to
the remuneration laid down in Paragraph one of this Section in
the part of the remuneration to be paid out, which in proportion
corresponds to the total amount of assets recovered through legal
proceedings.
(4) The total amount of monetary assets to be paid out to
creditors, which is laid down in Paragraph one of this Section,
shall be calculated by reducing the amount of monetary assets,
which has been acquired through recovery of the property or
selling of assets of the credit institution during insolvency
proceedings, by expenditures of insolvency proceedings laid down
in Section 153 of this Law (except for the remuneration of the
administrator of insolvency proceedings). The proportionate
remuneration determined for the administrator and the assistant
to the administrator shall be deducted from the calculated amount
of monetary assets to be paid out to creditors before
paying-out.
(5) The administrator and the assistant to the administrator
shall receive a fixed remuneration in the following cases and in
the following total amounts:
1) from the day when the administrator was appointed up to the
examination of the insolvency case - a one-time remuneration in
the amount of 10 minimum monthly wages;
2) [1 November 2018];
3) [1 November 2018];
4) [1 November 2018].
(6) In calculating the total proportional remuneration of the
administrator and the assistant to the administrator, it shall be
reduced by the amount of the fixed remuneration calculated in
accordance with Paragraph five of this Section.
(7) The administrator shall cover the expenses for
remuneration to the persons referred to in Section 161, Paragraph
four, Clause 19 of this Law and other expenses related to
insolvency proceedings, other than those referred to in Section
153 of this Law, unless the meeting of creditors and the
administrator have agreed on other procedures for covering the
expenses.
(8) Convening of a meeting of creditors and deciding of the
issues referred to in this Section shall be carried out in
accordance with Sections 135.1, 135.2,
135.3, 135.4, 135.5,
135.6 and 135.7 of this Law.
[16 May 2013; 1 March 2018; 1 November 2018]
Section 167. (1) The duties of the administrator shall
be terminated:
1) if the administrator is removed in accordance with Section
168 of this Law;
2) if the administrator resigns in accordance with Section 169
of this Law;
3) if the insolvency proceedings are terminated in accordance
with Section 150 of this Law;
4) in case of death of the administrator.
(2) If a change of administrators takes place in accordance
with the provisions of Paragraph one, Clause 1 or 2 of this
Section, the new administrator shall commence the fulfilment of
his or her duties after the acceptance-delivery deed of property
(documents, objects, and the like) has been signed. The deed
shall be accompanied by a report on the actions of the previous
administrator. Until the signing of such deed, the previous
administrator shall continue the fulfilment of duties and shall
be liable in accordance with the procedures laid down in the
law.
(3) [1 November 2018]
(4) Information regarding the expiration of the powers of the
administrator shall be published in the official gazette
Latvijas Vēstnesis.
[11 April 2002; 16 May 2013; 1 November 2018]
Section 168. (1) If the Financial and Capital Market
Commission expresses a lack of confidence in the administrator,
it shall request a court to release such administrator and to
appoint another.
(2) It is the obligation of the discharged administrator to
submit to the Financial and Capital Market Commission and a
court, within 15 days from the day of release, a report that must
present a true and clear view of his or her activities.
[1 June 2000; 11 December 2003; 1 November 2018 / Amendment
to Paragraph one regarding the deletion of the words
"recommending a new candidacy for the administrator" shall come
into force on 1 January 2021. See Paragraph 79 of Transitional
Provisions]
Section 169. (1) The administrator is entitled to
withdraw from the fulfilment of his or her duties, informing the
Financial and Capital Market Commission and the Insolvency
Control Service thereof and submitting a written submission to a
court regarding his or her withdrawal, and a report which must
present a true and clear view of the activities of the
administrator. The submission shall include the reasons why they
are unable to, or do not wish to, continue the fulfilment of the
administrator's duties.
(2) The administrator whose withdrawal has been approved by a
court shall receive remuneration in accordance with Section 166
of this Law.
[1 June 2000; 11 December 2003; 1 November 2018 / Amendment
to Paragraph one shall come into force on 1 January 2021. See
Paragraph 79 of Transitional Provisions]
Chapter XII
Property of Credit Institutions During Insolvency
Proceedings
[21 May 1998]
Section 170. The property of a credit institution
during insolvency proceedings shall be:
1) the assets, including property, of the credit institution
on the day when the insolvency petition is submitted to the
court;
2) the fruits that were gained from the assets, including
property, of the credit institution during the insolvency
proceedings;
3) other assets, including property, lawfully obtained during
the insolvency proceedings.
[16 July 2009]
Section 171. (1) After declaration of the insolvency of
a credit institution, only the administrator shall have the right
to administer the property of the credit institution.
(2) The administrator shall administer the property of a
credit institution and act with it within the scope of the powers
determined by this Law.
(3) The administrator is entitled to hold the monetary assets
of the insolvent credit institution, including the monetary
assets recovered in insolvency proceedings in the euro account of
the insolvent credit institution in Latvijas Banka according to
the conditions for servicing the accounts of Latvijas Banka which
are provided for in the account servicing contract which has been
entered into by and between the insolvent credit institution and
Latvijas Banka. Only the administrator is entitled to transfer
monetary assets into this account from the account of the
insolvent credit institution in the credit institution of the
Member State and to transfer monetary assets from such account to
the account of the insolvent credit institution in the credit
institution of the Member State. The administrator has the right
to hold cash in the cashier's office in such amount which is
necessary to cover the current expenditures of the insolvency
proceedings.
[17 June 2020]
Section 172. (1) The list of property of a credit
institution shall include deposits and interest on deposits, but
shall not include other property belonging to third parties which
is in possession of the credit institution and funds of State
funded pension scheme investment plans, funds of pension schemes
of private pension funds, the funds provided for fulfilment of
the obligations laid down in pension schemes and insurance
contracts, if such condition is referred to in the deposit
contract, and the funds of the Guarantee Fund of the Compulsory
Civil Liability Insurance of Motor Vehicle Owners. The following
shall also be considered as the property belonging to third
parties which is in possession of the credit institution:
1) the funds in the account opened with the credit institution
in the name of the private pension fund, if it is provided for in
the contract between the private pension fund and the credit
institution that such account may be only used to make
contributions in the pension schemes of private pension funds or
to perform disbursements to the recipients of supplementary
pension within the meaning of the Private Pension Fund Law;
2) the funds in the account opened with the credit institution
in the name of a covered bonds company registered in Latvia, an
issuer of a Member State, or a covered bonds company of a Member
State, if it is provided for in the contract between the relevant
covered bonds company or issuer of a Member State and the credit
institution that such account may be only used to make
contributions arising from the claims included in cover assets
and to perform disbursements to investors and creditors of
covered bonds within the meaning of the Covered Bonds Law.
(2) The administrator shall ensure safekeeping of the property
belonging to third parties until its transfer to the owner. The
administrator is entitled to collect from third parties the
expenditures incurred in relation to the safekeeping of their
property.
(3) [24 April 2014]
(4) [24 April 2014]
(5) [24 April 2014]
[20 November 2003; 26 February 2009; 24 April 2014; 19
December 2019; 27 May 2021]
Section 172.1 (1) The administrator shall
invite third parties to receive their property and agree on the
procedures for the receipt thereof, by publishing a respective
notification in mass media and the official gazette Latvijas
Vēstnesis.
(2) The administrator shall alienate the property which the
third parties do not take in their possession, in accordance with
the procedures laid down in Paragraph 2.1 two of this
Section, and within three months after alienation thereof shall
invite the third parties to lodge claims for the disbursement of
cash assets by publishing the relevant notification in mass media
and the official gazette Latvijas Vēstnesis.
(21) The assets, including property, of a credit
institution shall be sold in public auctions, unless the meeting
of creditors has decided otherwise and the law does not provide
for other alienation procedures. Auctions shall be organised by
and auction regulations shall be prepared by the
administrator.
(3) The cash assets the disbursement of which is not claimed
by third parties shall be placed by the administrator, by
entering into a written agreement, under a bailment of another
credit institution registered in the Republic of Latvia chosen at
his own discretion, by publishing a notification on entering into
the agreement in mass media and the official gazette Latvijas
Vēstnesis.
(4) The fee for the bailment of the transferred cash assets
shall be deducted in accordance with the price list of the credit
institution from the amount of cash assets, which pertain to
third parties.
(5) A third party shall lose the right of action against the
credit institution, if it has not within 10 years filed a claim
with the credit institution and collected the cash assets
pertaining to it. The cash assets, which pertain to third parties
and with regard to which the limitation period has become
applicable, shall pertain to the State as ownerless property.
(6) The acts by the administrator with the property of third
parties referred to in Paragraphs two, three, four and five of
this Section shall be also applicable to the acts with the
property of creditors of the credit institution, with regard to
which creditors do not file any claims.
[24 April 2014; 1 November 2018]
Section 173. (1) Upon a request of the administrator,
transactions of a credit institution may be declared void
regardless of the type of such transactions, if:
1) they have been concluded after the day when the insolvency
came into effect, and the credit institution has occasioned
losses to creditors thereby;
2) they have been concluded within five years before the day
when the insolvency came into effect, the credit institution has
knowingly occasioned losses to creditors thereby, and the person
with whom, or on behalf of whom, the transaction was concluded,
has known about the occasioning of such losses;
3) they have been concluded within five years before the day
when insolvency came into effect and a court has determined that
the credit institution was brought to insolvency by a criminal
offence and the person with whom, or on behalf of whom, the
transaction was concluded, knew about such offence.
(2) If the transactions by which losses have been occasioned
to creditors have been concluded by the credit institution with
the interested persons with respect to the credit institution, or
on behalf of such persons, it shall be considered that such
persons knew of the occasioning of losses or the criminal
offence, if they do not prove the contrary.
(3) A secured creditor may bring an action to a court to have
a transaction concluded by the administrator declared to be void,
if the transaction relates to property pledged for claim
security, and the rights of the secured creditor have been
violated.
(4) Transition of a credit institution undertaking carried out
in accordance with Section 59.3 or Section
59.4, Paragraph two of this Law, may not be declared
null and void.
[12 February 2009]
Section 174. (1) A property donated by a credit
institution or a part thereof may be reclaimed in accordance with
the provisions of Section 1927 of the Civil Law.
(2) Transactions concluded within five years before the day
when insolvency came into effect, or after such day, in which
inequality of mutual obligations indicates that actually a gift
has been made, may be declared void.
(3) Donations to public organisations registered in Latvia,
which promote culture, science, education, sport, health
protection or social assistance may not be declared void. A
donation to such organisation may be declared void and reclaimed,
if there is evidence that the donation is fictitious or is not
utilised for the intended purposes.
[24 April 2014]
Section 175. (1) A pledge agreement may be declared
void upon a request of the administrator, if:
1) the right of pledge of the creditor of the credit
institution was established after the day when insolvency came
into effect, or within the last six months before the day when
insolvency came into effect, for such creditor's claim against
the credit institution which had not been, until then, previously
secured;
2) it was entered into after the day when insolvency came into
effect, or within a year before it, and the pledgee was an
interested person with respect to the credit institution;
3) the pledge was alienated in order to satisfy a claim of a
secured creditor after the day when insolvency came into effect,
or six months before it, and the alienation did not take place at
an open auction in cases when the pledge was to be sold at such
auction in accordance with law or with the agreement.
(2) If a pledge agreement is declared void, the relevant
secured creditor shall acquire the status of an unsecured
creditor.
Chapter XIII
Restoration of a Credit Institution
[1 November 2018 / See Paragraph 78
of Transitional Provisions]
Section 176. [1 November 2018 / See Paragraph 78 of
Transitional Provisions]
Section 177. [1 November 2018 / See Paragraph 78 of
Transitional Provisions]
Section 178. [1 November 2018 / See Paragraph 78 of
Transitional Provisions]
Section 179. [1 November 2018 / See Paragraph 78 of
Transitional Provisions]
Section 179.1 [1 November 2018 / See
Paragraph 78 of Transitional Provisions]
Section 179.2 [1 November 2018 / See
Paragraph 78 of Transitional Provisions]
Section 179.3 [1 November 2018 / See
Paragraph 78 of Transitional Provisions]
Section 179.4 [1 November 2018 / See
Paragraph 78 of Transitional Provisions]
Section 179.5 [1 November 2018 / See
Paragraph 78 of Transitional Provisions]
Section 179.6 [1 November 2018 / See
Paragraph 78 of Transitional Provisions]
Section 179.7 [1 November 2018 / See
Paragraph 78 of Transitional Provisions]
Section 179.8 [1 November 2018 / See
Paragraph 78 of Transitional Provisions]
Section 179.9 [1 November 2018 / See
Paragraph 78 of Transitional Provisions]
Section 180. [1 November 2018 / See Paragraph 78 of
Transitional Provisions]
Section 181. [1 November 2018 / See Paragraph 78 of
Transitional Provisions]
Section 182. [1 November 2018 / See Paragraph 78 of
Transitional Provisions]
Section 183. [1 November 2018 / See Paragraph 78 of
Transitional Provisions]
Section 183.1 [1 November 2018 / See
Paragraph 78 of Transitional Provisions]
Chapter XIV
Bankruptcy Proceedings for Credit Institutions
[1 November 2018 / See Paragraph 78
of Transitional Provisions]
Section 184. [1 November 2018 / See Paragraph 78 of
Transitional Provisions]
Section 185. [1 November 2018 / See Paragraph 78 of
Transitional Provisions]
Section 186. [1 November 2018 / See Paragraph 78 of
Transitional Provisions]
Section 187. [1 November 2018 / See Paragraph 78 of
Transitional Provisions]
Section 188. [1 November 2018 / See Paragraph 78 of
Transitional Provisions]
Section 189. [1 November 2018 / See Paragraph 78 of
Transitional Provisions]
Section 190. [1 November 2018 / See Paragraph 78 of
Transitional Provisions]
Section 191. [1 November 2018 / See Paragraph 78 of
Transitional Provisions]
Section 192. [1 November 2018 / See Paragraph 78 of
Transitional Provisions]
Section 193. [1 November 2018 / See Paragraph 78 of
Transitional Provisions]
Section 194. [1 November 2018 / See Paragraph 78 of
Transitional Provisions]
Section 195. [1 November 2018 / See Paragraph 78 of
Transitional Provisions]
Section 195.1 [1 November 2018 / See
Paragraph 78 of Transitional Provisions]
Chapter XV
Liability
Section 196. (1) For the violations of this Law, the
directly applicable legal acts issued by the European Union
authorities or regulatory provisions or decisions taken by the
Financial and Capital Market Commission, the Financial and
Capital Market Commission is entitled to impose the following
sanctions:
1) to express a public announcement by indicating the person
liable for the violation and the nature of the violation;
2) issue a warning;
3) [23 September 2021];
4) [23 September 2021];
5) impose an obligation on the meeting of stockholders
(shareholders), the council or the board of the credit
institution to dismiss a member of the board or the council, the
head of the internal audit service, the risk manager, the person
responsible for conformity control of the operation, the person
responsible for fulfilment of the requirements for the prevention
of money laundering and terrorism and proliferation financing of
the credit institution, the company controller, the head of a
branch of a foreign credit institution or a branch of a credit
institution in another Member State, or a procuration holder from
their position;
6) impose the fines laid down in this Law;
7) cancel the licence (permit) in accordance with Section 27,
Paragraph one, Clauses 2 and 8 of this Law;
(11) For the violations of this Law, the directly
applicable legal acts issued by the European Union authorities or
regulatory provisions or decisions taken by the Financial and
Capital Market Commission, the Financial and Capital Market
Commission is entitled to apply the following administrative
measures:
1) require that the credit institution or the person liable
for the violation immediately ceases the respective acts;
2) determine a temporary prohibition for the member of the
board or the council of the credit institution or another natural
person liable for the violation to fulfil their duties at the
credit institution;
(2) The Financial and Capital Market Commission shall apply
the sanctions laid down in the Law on the Prevention of Money
Laundering and Terrorism and Proliferation Financing for
violations of the laws and regulations in the field of prevention
of money laundering and terrorism and proliferation
financing.
(3) In addition to that laid down in Paragraph two of this
Section, the Financial and Capital Market Commission shall, upon
assessing the severity, duration and regularity of the violations
of the Law on the Prevention of Money Laundering and Terrorism
and Proliferation Financing and other relevant circumstances
referred to in Section 77 of the Law on the Prevention of Money
Laundering and Terrorism and Proliferation Financing, submit a
draft decision to the European Central Bank on cancellation of
the licence (permit) issued to the credit institution in
accordance with Section 27, Paragraph one, Clause 8 of this
Law.
(4) The Financial and Capital Market Commission shall issue
regulatory provisions that determine the criteria for significant
violations of laws and regulations in the field of prevention of
money laundering and terrorism and proliferation financing.
[24 April 2014; 21 July 2017; 26 October 2017; 13 June
2019; 23 September 2021 / Amendment regarding the replacement of
the words "Financial and Capital Market Commission" with the
words "Latvijas Banka" and also amendment regarding the
replacement of the words "regulatory provisions" with the word
"provisions" shall come into force on 1 January 2023 and shall be
included in the wording of the Law as of 1 January 2023. See
Paragraph 110 of Transitional Provisions]
Section 196.1 If the interest of a
stockholder of a credit institution in the credit institution
threatens or may threaten its management and activity that is
financially stable, cautious and compliant with laws and
regulations, or if the person who has acquired qualifying holding
does not comply with the requirements set forth for the founders
of the credit institution, is not financially stable, fails or
refuses to provide the information referred to in Section 28,
Paragraph two or three of this Law, the Financial and Capital
Market Commission is entitled, in addition to the sanctions laid
down in Section 196 of this Law, to prohibit the stockholder to
exercise the voting right pertaining to the stocks held by him or
her.
[24 April 2014]
Section 197. [24 April 2014]
Section 197.1 [12 February 2009]
Section 198. (1) If a person does not fulfil the
requirements of Section 8 of this Law, has knowingly provided
false or incomplete information, has failed to provide the
information requested in accordance with this Law or has
interfered with the inspections carried out by an authorised
representative of Latvijas Banka and the Financial and Capital
Market Commission, the Financial and Capital Market Commission
and Latvijas Banka are entitled to impose a fine on the person
held liable for the violation from EUR 1400 up to EUR 14 200.
(2) If a credit institution does not fulfil the requirements
of Sections 79, 89.1, 89.2, 90, 91, 95, and
96 of this Law, the Financial and Capital Market Commission is
entitled to impose a fine on the credit institution from EUR 1400
up to EUR 14 200.
(3) [24 May 2012]
(4) [24 April 2014]
(5) For entering into such a consumer credit agreement where
the amount of credit is equal to 100 minimum monthly salaries or
more, if a statement regarding income of a consumer has not been
received from the State Revenue Service or the tax authority of
another country, the Financial and Capital Market Commission
shall impose a fine on the credit institution - EUR 1400. For the
same activities if re-committed within one year after imposition
of the referred to fine, the Financial and Capital Market
Commission shall impose a fine on the credit institution - EUR
4300.
(6) For the issuance of such credit, the amount of which is
equal to 100 minimum monthly salaries or more and the repayment
of which is secured by mortgage on immovable property, for more
than 90 per cent of the market value of the relevant immovable
property, the Financial and Capital Market Commission shall
impose a fine on the credit institution - EUR 1400. For the same
activities if re-committed within one year after imposition of
the referred to fine, the Financial and Capital Market Commission
shall impose a fine on the credit institution - EUR 4300.
(7) [29 May 2008 / See Paragraph 33 of Transitional
Provisions]
(8) [24 April 2014]
(9) [24 April 2014]
(10) For the attraction of deposits and other repayable funds
without obtaining a licence (permit) from the Financial and
Capital Market Commission or in the event the person has acquired
or increased qualifying holding in a credit institution prior to
submitting the notification referred to in Section 29, Paragraph
one or two of this Law to the Financial and Capital Market
Commission, during the reviewing thereof or has terminated or
reduced the qualifying holding after entering into effect of the
decision to prohibit acquisition or increase the qualifying
holding in a credit institution without notification thereof to
the Financial and Capital Market Commission, or if a credit
institution has obtained a licence (permit) for the activities of
a credit institution by providing false information or in another
unlawful manner, does not fulfil the requirements of Section 32,
34.1, 35.26, 35.27, or
35.28 of this Law or the requirements of Article 28,
52, or 63 with regard to payments to the holders of instruments
included in own funds, Article 99(1), Article 101, Article
394(1), Article 395, Article 405, Article 415(1) and (2), Article
430(1), Article 431(1), (2) and (3), and Article 451(1) of EU
Regulation No 575/2013, repeatedly or constantly fails to conform
to the requirements of Article 412 of EU Regulation No 575/2013,
or if a member of the board or of the council of a credit
institution fails to comply with the requirements of this Law,
the Financial and Capital Market Commission is entitled:
1) to impose a fine on a legal person of up to 10 per cent of
the net income from the previous fiscal year that conforms to the
amount which, in accordance with EU Regulation No 575/2013, is
used in order to calculate the own funds requirements for
operational risk in accordance with the basic indicator approach.
If 10 per cent of the amount of net income of the preceding
financial year, which has been calculated in accordance with what
is laid down in the first sentence of this Clause constitutes
less than EUR 142 300, the Financial and Capital Market
Commission is entitled to impose a fine of up to EUR 142 300. If
a legal person is a subsidiary of parent company, the net income
from the previous fiscal year shall conform to the amount which,
in accordance with EU Regulation No 575/2013, is used in order
calculate own funds requirement for operational risk according to
the basic indicator approach on the basis of the data presented
by the final parent company in consolidated financial accounts of
the previous fiscal year;
2) to impose a fine of up to EUR 5 000 000 on an official,
employee or person who at the time of committing the violation is
responsible for carrying out certain actions on behalf or in the
interests of the credit institution;
3) to impose a fine of up to double amount of the income
generated a result of the violation or of the prevented possible
loss.
(11) The Financial and Capital Market Commission is entitled,
in accordance with Article 24 of EU Regulation No 1286/2014 for
violations of Regulation:
1) to impose a fine on a legal person of up to EUR 5 million
or up to three per cent from the total annual turnover according
to the last available audited annual account of the
abovementioned legal person. If the legal person is a parent
company or a subsidiary of a parent company which prepares
consolidated financial statements in accordance with the Law on
the Annual Financial Statements and Consolidated Financial
Statements or consolidated financial statements in accordance
with the requirements of the laws and regulations of the Member
State of origin, the relevant total turnover shall be formed by
the total annual turnover or income of corresponding type in
accordance with the laws and regulations of the Member State of
origin in the field of accounting by taking into account the last
available consolidated financial statement which has been
approved by the main management body of the parent company;
2) to impose a fine of up to EUR 700 000 on a natural person
liable for the violation;
3) as an alternative to that laid down in Clause 1 or 2 of
this Paragraph to impose a fine of up to double amount of the
income gained as result of the violation or of the prevented
possible loss.
[1 June 2000; 11 December 2003; 28 October 2004; 26 May
2005; 17 May 2007; 29 May 2008; 26 February 2009; 23 December
2010; 24 May 2012; 19 September 2013; 24 April 2014; 2 June 2016;
21 July 2017]
Section 198.1 [26 October 2017]
Section 199. For the activities other than referred to
in Section 198 of this Law as a result of which violations have
occurred of the requirements of this Law or of the laws and
regulations arising from it or directly applicable laws and
regulations issued by the European Union institutions the
Financial and Capital Market Commission and Latvijas Banka shall
impose a fine up to EUR 142 300 on the person liable for the
violation.
[24 April 2014; 2 June 2016; 26 October 2017]
Section 200. If the chairperson or the members of the
council or the board, the executive managers or the employees of
a credit institution have intentionally granted unjustified
priority rights to any creditor, or have agreed that such rights
be granted, the relevant person shall be subject to
administrative or criminal liability.
Section 201. The fines collected for the violations
laid down in Sections 198 and 199 of this Law shall be paid into
in the State budget.
[26 October 2017]
Section 201.1 (1) The Financial and Capital
Market Commission shall place the information on the sanctions
imposed on persons, administrative measures, and the simultaneous
actions taken in accordance with Section 113 and Section
101.3, Paragraph 4.4 of this Law on its
website by indicating the personal data and the violation
committed thereby, and also the contesting of the administrative
act issued by the Financial and Capital Market Commission and the
ruling taken thereby.
(2) The Financial and Capital Market Commission may make
public the information referred to in Paragraph one of this
Section without identifying the person if it is established after
prior assessment that the disclosure of personal data of the
natural person is not commensurate or the disclosure of the data
of the natural or legal person may threaten the stability of the
financial market or progress of initiated criminal proceedings or
cause incommensurate damage to the persons involved.
(3) If it is expected that the circumstances referred to in
Paragraph two of this Section may change within a reasonable time
period, making of the information referred to in Paragraph one of
this Section available to the public may be suspended for this
time period.
(4) The information posted on the website of the Financial and
Capital Market Commission in accordance with the procedures laid
down in this Section shall be available for five years from the
date of posting thereof.
(5) The Financial and Capital Market Commission shall inform
the European Banking Authority of the sanctions imposed on and
administrative measures applied to persons.
(6) The Financial and Capital Market Commission has the right
to publish, in accordance with the procedures laid down in
Paragraph one of this Section, information regarding other
decisions which it has taken in accordance with Section 113 and
Section 101.3, Paragraph 4.4 of this Law,
if such decisions may affect the interests of clients, but cannot
threaten the stability of a credit institution or financial
market.
[24 April 2014; 11 June 2015; 29 April 2021; 23 September
2021 / Amendment regarding the replacement of the words
"Financial and Capital Market Commission" with the words
"Latvijas Banka" shall come into force on 1 January 2023 and
shall be included in the wording of the Law as of 1 January 2023.
See Paragraph 110 of Transitional Provisions]
Section 202. Persons who have brought a credit
institution to insolvency shall be held liable in the cases
provided for in The Criminal Law.
[1 November 2018]
Section 203. If the chairperson or the members of the
council or the board of a credit institution, or the liquidators
of a credit institution, have failed to submit an insolvency
petition in the cases provided for in Section 138 and Section
140, Paragraph two of this Law, the offenders shall be subject to
liability for the failure to submit an insolvency petition in the
cases provided for in the law.
[21 May 1998; 21 July 2017]
Section 204. (1) If an insolvency petition has been
held to be knowingly false, its submitter shall cover the court
costs and the expenses of the insolvency proceedings.
(2) A petition in which knowingly false information has been
submitted or information has been concealed, and due to which the
credit institution may be, or has been, unjustifiably declared
insolvent, shall be considered to be a knowingly false insolvency
petition.
(3) The petition of a creditor shall not be considered to be a
knowingly false insolvency petition, if the credit institution,
while being solvent, has not fulfilled the commitments.
[21 May 1998]
Section 205. (1) For submission of a knowingly false
insolvency petition the debtor or the creditor shall be subject
to criminal liability.
(2) The submitter of a knowingly false insolvency petition
shall be liable for the harm occasioned to the credit institution
as a result of the false petition.
[21 May 1998]
Section 206. A creditor or another person interested in
the insolvency proceedings of a credit institution may be subject
to criminal liability for intentional violation of the insolvency
proceedings, which is manifested as a failure to provide, or
concealment of, the information requested by a court or the
administrator and prescribed by the law, the submission of false
information, the avoidance of participation in the examination of
the matter, the illegal alienation of property during the
insolvency proceedings, the concealment, destruction or
falsification of property, transactions, documents, or other
knowingly acts which hinder the course of the insolvency
proceedings.
[21 May 1998]
Section 207. The administrator may be subject to
criminal liability for intentional concealment of information
from a court, for misleading it, for the performance of
transactions not provided for in this Law in favour of one
creditor or one round of creditors at the expense of other
creditors.
[21 May 1998; 21 July 2017]
Section 208. [28 October 2004]
Section 208.1 (1) An appeal of an
administrative act issued by the Financial and Capital Market
Commission regarding imposition of the sanctions and application
of administrative measures referred to in Chapter XV of this Law,
except regarding imposition of a fine, shall not suspend the
enforcement of such act.
(2) When deciding on the imposition of sanctions on and
application of administrative measures to the persons who have
violated the laws and regulations governing the financial market,
the Financial and Capital Market Commission shall take into
account the circumstances referred to in the Financial and
Capital Market Commission Law, and also the potential systemic
consequences of the violation.
[24 April 2014; 23 September 2021 / Amendment regarding the
replacement of the words "Law on the Financial and Capital Market
Commission" with the words "Law on Latvijas Banka", amendment
regarding the replacement of the words "Financial and Capital
Market Commission" with the words "Latvijas Banka", and also the
amendment to Paragraph one regarding the replacement of the word
"appeal" with the words "contesting and appeal" shall come into
force on 1 January 2023 and shall be included in the wording of
the Law as of 1 January 2023. See Paragraph 110 of Transitional
Provisions]
Chapter XVI
Special Features of the Reorganisation Measures or Liquidation of
Credit Institutions and Foreign Credit Institutions (also the
Branches thereof)
[28 October 2004]
Section 209. (1) The norms of this Chapter shall be
applicable to:
1) credit institutions registered in the Republic of Latvia,
which have established branches in another Member State;
2) other Member State credit institutions, which have branches
in the Republic of Latvia;
3) foreign credit institutions, which have at least one branch
located in the Republic of Latvia and one in another Member
State;
4) credit institutions registered in the Republic of Latvia,
which have creditors in another Member State.
(2) Other reorganisation measure or liquidation governing
norms shall be applicable in such amount insofar as they not in
contradiction to the norms of this Chapter.
[22 February 2007]
Section 210. (1) Only the competent authorities of the
country of residence have the right to take decisions in
conformity with the competence laid down in the law of the
relevant state on activities, which are related to reorganisation
measures or liquidation of a credit institution (also the
branches thereof) registered in the country of residence in an
involved state.
(2) In the Republic of Latvia the decisions referred to in
Paragraph one of this Section are binding commencing from the day
that they have come into effect in Member State in which they
were taken.
(3) The decisions referred to in Paragraph one of this Section
taken in the Republic of Latvia are binding on other Member
States commencing from the day that they have come into effect in
the Republic of Latvia.
(4) Reorganisation measures or liquidation shall be governed
by the laws and regulations of the relevant state of domicile if
it is not laid down otherwise in this Law.
Section 211. (1) The Financial and Capital Market
Commission or other competent institution, each in conformity
with the competence laid down in its laws and regulations, prior
to taking a decision on such reorganisation measures or
liquidation of a credit institution, which has creditors in
another Member State or branch in an involved state or which in
the involved state has submitted financial services without
opening a branch, shall without delay inform the relevant
involved state competent institution regarding such
activities.
(2) The Financial and Capital Market Commission shall ensure
the publication of the notifications related to reorganisation
measures or liquidation received from the competent authorities
of other Member States in the official gazette Latvijas
Vēstnesis and the website of the Financial and Capital Market
Commission.
(3) If a court makes a ruling or another competent institution
decides regarding a credit institution registered in the Republic
of Latvia the creditors of which are in another Member State, or
a credit institution which in the involved state provides
financial services without opening a branch, regarding
reorganisation measures, liquidation or reorganisation measures
or liquidation activities in which the credit institution
branches are involved in another Member State, the administrator
or person authorised by other laws shall without delay after the
entering into effect of such ruling or decision ensure the
publication in the official gazette Latvijas Vēstnesis of
the ruling or decision related to the reorganisation measures or
liquidation laid down in the law, as well as sending a
notification of the ruling or decision taken to the European
Union official publications bureau for publication in the
official publication "Official Journal of the European Union" and
to two of each of such involved state level newspapers in which
the Republic of Latvia registered credit institution branches or
creditors are located.
(4) The notification referred to in Paragraph three of this
Section shall be prepared in the official language of the
Republic of Latvia. The notification shall indicate its purpose,
the legal basis, identification data of the administrator or
person authorised by other laws, the final time period (date) for
the submission of claims or complaints and the full address of
the institution, which is entitled to examine complaints
regarding reorganisation measures or liquidation.
(5) The non-publication of the notification laid down in this
Section shall not influence the course of reorganisation measures
or liquidation and cannot be a basis for the appeal or dispute of
the court ruling or the decision of the competent authority
regarding reorganisation measures or liquidation.
[22 February 2007; 16 May 2013; 24 April 2014; 11 June
2015; 29 April 2021]
Section 212. (1) The liquidator or administrator, or
person authorised by other laws shall immediately notify each of
the known creditors in writing of the reorganisation measures or
liquidation irrespective of their location.
(2) The liquidator or administrator, or person authorised by
other laws shall indicate in the notification to creditors their
binding time periods, the consequences of not complying with the
time periods, the competent institution, which has the right to
receive submitted claims or other notifications related to
claims, as well as other information, which creates, amends or
terminates creditor obligations.
(3) The liquidator or administrator, or person authorised by
other laws shall provide the notification in the official
language of the Republic of Latvia utilising the form, which in
all Member State official languages is headed "Invitation to
submit a claim. Time periods to be observed in submitting
claims".
(4) All creditors irrespective of their location have the
right to submit their claims and objections in accordance with
Section 143.1, Paragraph one of this Law. A creditor
is entitled to submit a creditor claim in the Member State
official language thereof (or in one of the official languages),
which is the place of residence or management location of the
creditor. In such case, on the basis of a request from the
creditor, the application shall indicate the heading "Kreditora
prasījuma pieteikums" [Creditor claim application] in the
official language of the Republic of Latvia.
(5) The liquidator or administrator, or person authorised by
other laws has the right to request that the creditor ensures the
translation of the application in the official language of the
Republic of Latvia only when it has been previously notified in
the notification to creditors laid down in this Section.
Section 213. (1) Before the court has taken a ruling or
the competent institution has taken the decision on
reorganisation measures or liquidation activities of a foreign
credit institution in which a branch of the credit institution in
the Republic of Latvia is involved, but, if that is not possible,
after taking of the relevant ruling or decision, the Financial
and Capital Market Commission shall immediately inform competent
authorities of those Member State in which the relevant credit
institution has opened a branch of the aforementioned court
ruling or decision of authority.
(2) The Financial and Capital Market Commission in the
performance of its functions shall utilise the information
published by the European Union official publications bureau in
the official publication "Official Journal of the European Union"
regarding the performance of such activities as are related to
the involvement of branches in reorganisation measures or
liquidation.
(3) The Financial and Capital Market Commission shall perform
supervision in accordance with this Law and shall co-operate with
the relevant Member State competent authorities.
(4) [22 February 2007]
(5) The liquidator or administrator, or person authorised by
other laws shall co-operate with persons authorised by other
countries who have the right to take reorganisation measures or
liquidation.
[22 February 2007]
Section 214. The laws and regulations of the Republic
of Latvia shall govern issues, which are related to:
1) assets or activities with assets, which have been acquired
or transferred after the commencement of liquidation or
insolvency proceedings;
2) the rights and obligations of the administrative body and
liquidator or administrator;
3) close-out netting, set-off of claims and obligations,
repurchase or the fulfilment of other similar activities in the
sense of legal consequences;
4) the influence of liquidation or insolvency proceedings on
contracts entered into, where the contracting party is a credit
institution, as well as on contracts, which have been entered
into by the branches thereof;
5) the influence of liquidation or insolvency proceedings on
court proceedings brought by individual creditor, except the
unfinished court proceedings provided for in Section 223 of this
Law;
6) claims, which have been submitted against the credit
institution, and claims, which have been submitted after the
commencement of liquidation or insolvency proceedings;
7) the requirements of laws and regulations laying down the
lodging, verification and recognition of claims;
8) the requirements of laws and regulations determining the
alienation of credit institution assets, the division of income
acquired from the alienation of assets, the grouping of claims,
and such creditor rights, which are partially satisfied after the
commencement of liquidation or insolvency proceedings in
accordance with property law or with accounting, or other similar
activities in the sense of legal consequences;
9) the requirements of laws and regulations, if the
liquidation or insolvency proceedings are terminated (also
utilising settlement);
10) creditor rights after the termination of liquidation or
insolvency proceedings;
11) the requirements of laws and regulations regarding the
costs of liquidation or insolvency proceedings;
12) the provisions of laws and regulations, which restrict all
the rights determined for creditors or determine prohibitions or
restrictions in order that in relation to creditors to prevent
unequal conditions or losses.
[30 September 2021]
Section 215. If reorganisation measures or liquidation
of such credit institution registered in the Republic of Latvia
(also its branches in the involved country) or credit institution
which provides financial services in the involved country without
opening a branch, the liquidator or administrator, or person
authorised by other laws shall regularly, but not less than once
per year, inform the known creditors in other Member States of
the reorganisation measures or liquidation.
Section 216. Reorganisation measures or liquidation
shall not restrict creditor or third person property rights in
relation to property, which belongs to the credit institution and
during reorganisation measures or liquidation are located in the
territory of another Member State.
Section 217. (1) Reorganisation measures or liquidation
in relation to a credit institution, which has acquired assets
prior to the commencement of the relevant reorganisation measures
or liquidation shall not influence the rights of the transaction
partner - seller of assets, if at the moment of the commencement
of such reorganisation measures or liquidation the relevant
assets were located in the territory of such Member State, which
was not the Member State in the territory of which the referred
to reorganisation measures or liquidation is performed.
(2) The performance of reorganisation measures or liquidation
in relation to a credit institution, which sells assets prior to
the commencement of the relevant reorganisation measures or
liquidation, after the transfer of such assets the buyer shall
have no basis to revoke or suspend the transaction and shall not
influence the rights of the transaction partner - buyer, if
during such reorganisation measures or liquidation the assets are
located in the territory of such Member State as is not the
Member State in the territory of which the referred to
reorganisation measures or liquidation are being performed.
(3) Interested persons have the right to dispute the
transactions laid down in this Section.
Section 218. If after the decision to perform
reorganisation measures or liquidation has been taken and the
relevant activities have been commenced, assets are alienated,
such activities shall be governed in relation to:
1) immovable property - by those laws and regulations in the
territory of which the immovable property is located;
2) ships or aircraft - by those Member State laws and
regulations in the purview of which public registers are
located;
3) financial instruments which are to be registered in public
registers, credit institution accounts or in a central
depository, and the rights approved thereof - by those laws and
regulations in accordance with which the ownership rights of the
credit institution to the relevant financial instruments is
certified.
Section 219. (1) The rights and obligations of
participants in a regulated market in transactions with financial
instruments in relation to the implementation of reorganisation
measures or liquidation shall be governed only by those laws,
which are applicable to transactions with financial instruments
in a regulated market.
(2) The provisions of Paragraph one of this Section shall not
restrict the fulfilment of Section 126.1, Paragraph
two of this Law.
(3) Interested persons have the right to dispute the
activities or rights laid down in this Section.
Section 220. (1) The powers of the liquidator or
administrator, or person authorised by other laws that has been
appointed by competent institution of another Member State shall
be certified by a certified copy of the original decision of such
institution or another certification, which conforms to the laws
and regulations of the relevant country. Competent authorities
have the right to request that the referred to document be
translated into the official language of the Republic of
Latvia.
(2) The liquidator or administrator, or person authorised by
other laws that has been appointed by another Member State has
the right to implement such powers in the Republic of Latvia,
which he or she may implement in the territory of the relevant
Member State. The liquidator or administrator, or person
authorised by other laws has the right to appoint (authorise)
persons who shall assist such administrator or liquidator or
another person or represent him or her during reorganisation
measures or liquidation.
(3) When implementing its powers in the Republic of Latvia,
the liquidator or administrator, or person authorised by other
laws that has been appointed by another Member State shall
conform to the laws and regulations of the Republic of Latvia,
especially in relation to activities related to the sale of
assets and the provision of information to employees.
[22 February 2007]
Section 221. (1) When implementing its powers, the
liquidator or administrator, or person authorised by other laws
that has been appointed in the country of residence has the
obligation to register reorganisation measures or liquidation in
the public registers of the Republic of Latvia if such
registration is required by the laws and regulations of the
Republic of Latvia.
(2) When implementing its powers, the liquidator or
administrator, or person authorised by other laws that has been
appointed in the Republic of Latvia has the obligation to
register reorganisation measures or liquidation in the public
registers of the involved country if such registration is
required by the laws and regulations of the relevant Member
State.
(3) Expenses which are related to the registration of
reorganisation measures or liquidation in the public registers of
the Member State shall be included in the costs (expenses) of
such processes.
Section 222. The laws and regulations of the Republic
of Latvia shall not be applied to the right to lay down
prohibitions or restrictions to payments or transactions in order
that in relation to creditors to prevent unequal conditions or
losses if the person who acquires benefits from such transactions
can prove that:
1) the activity, which affects the interests of other
creditors arises from such Member State laws which the Republic
of Latvia does not have;
2) the laws and regulations of the Republic of Latvia do not
provide for the possibility of disputing the activities of a
person who has gained a benefit.
Section 223. The influence of reorganisation measures
or liquidation on matters in existing court proceedings shall be
governed by the laws and regulations of such Member State in the
territory of which the relevant court proceedings take place.
Section 224. (1) Competent institution which in the
fulfilment of functions laid down in the law receive information
on reorganisation measures or liquidation shall ensure the
non-disclosure of the abovementioned information.
(2) The procedures for the disclosure of the information
referred to in Paragraph one of this Section shall be governed by
the laws and regulations of the relevant Member State.
Transitional Provisions
1. Upon coming into force of this Law, the law On Banks
(Latvijas Republikas Augstākās Padomes un Valdības
Ziņotājs, 1992, No. 22/23 and No. 44/45; Latvijas
Republikas Saeimas un Ministru Kabineta Ziņotājs, 1994, No.
11), Cabinet Regulation No. 212, Regulations for Commercial
Banks, issued in accordance with the procedures of Article 81 of
the Constitution (Latvijas Vēstnesis, 1995, No. 109),
Cabinet Regulation No. 213, Regulations Regarding Compensation of
Deposits for Natural Persons (Latvijas Vēstnesis, 1995,
No. 109), and Cabinet Regulation No. 211, Regulations Regarding
Restoration and Bankruptcy of Commercial Banks (Latvijas
Vēstnesis, 1995, No. 109), are repealed.
2. Sections 42, 43, and 49 of this Law shall come into force
on 1 January 1996.
3. In applying the requirements of Section 35, Paragraph two,
and Section 59 of this Law:
1) the registered banks shall observe that the minimum
founding capital of a bank is:
- from the day of the coming into force of this Law until 31
March 1996 - not less than 100 000 lats,
- from 1 April 1996 until 31 March 1998 - not less than 1 000
000 lats,
- from 1 April 1998 until 31 December 1999 - not less than 2
000 000 lats.
2) [30 October 1997].
[30 October 1997; 23 December 2010 / Amendments in relation
to replacement of the word "bank" with the words "credit
institution" shall come into force on 30 April 2011. See
Paragraph 39 of Transitional Provisions]
4. The norms of Section 38 of this Law shall not apply to the
recognised internal debt of the State from the moment of the
coming into force of the 1 October 1992 Decision No. 411 of the
Council of Ministers of the Republic of Latvia (Latvijas
Republikas Augstākās Padomes un Valdības Ziņotājs, 1992, No.
49/50).
5. Registered banks shall fulfil the requirements of Section
21 of this Law by 31 December 1999.
[30 October 1997; 23 December 2010 / Amendment in relation
to replacement of the word "bank" with the words "credit
institution" shall come into force on 30 April 2011. See
Paragraph 39 of Transitional Provisions]
6. With the coming into force of this Law, pawnshops shall
continue to operate in accordance with the law On Joint-Stock
Companies and other laws, but the licences issued by Latvijas
Banka shall be cancelled. They shall be transferred to Latvijas
Banka by 1 December 1995.
7. Compensation payments to depositors - natural persons -
whose deposits are located in commercial banks, which have become
bankrupt or have been declared insolvent by the day of the coming
into force of this Law, shall be continued in accordance with the
procedures stipulated by the Cabinet.
8. In accordance with the provisions of Paragraph 7 of the
Transitional Provisions of this Law, the right of action in the
amount of the State-guaranteed compensation, regarding the funds
which have been recovered from a commercial bank which has become
bankrupt or been declared insolvent, shall be transferred from
the natural person - depositor to the Ministry of Finance.
[11 December 2003]
9. The procedures for the coming into force of Sections
12.1, 12.2, 12.3 and
108.1 shall be laid down by a special law.
[11 April 2002]
10. Section 161, Paragraph two, Clause 16 and the amendment to
Section 192, Clause 2 of this Law shall come into force on 1
January 2003.
[11 April 2002]
11. Section 24, Paragraph one, Clause 3 of this Law shall come
into force on 1 April 2004, but Paragraph two - on 1 April
2007.
[11 April 2002]
12. Insolvency (bankruptcy) or liquidation proceedings of
credit institutions that were commenced prior to the coming into
force of this Law, shall be resolved and completed according to
procedures that were laid down in the Credit Institutions Law up
to the day of the coming into force of this Law.
[11 April 2002]
12.1 The provisions of Sections 135 and 166 of this
Law are binding upon a liquidator (administrator) irrespective of
the day of the commencement of the insolvency (bankruptcy) or
liquidation proceedings of the credit institution. A
recalculation of the compensation received during the previous
activities of the liquidator (administrator) shall not be
performed.
[28 October 2004]
13. Amendments to Section 63 of this Law shall come into force
concurrently as the coming into force of the Bailiff Law.
[24 October 2002]
14. Section 63, Paragraph one, Clause 7 of this Law shall come
into force concurrently as the relevant amendments to the
Corruption Prevention and Combating Bureau Law.
[27 May 2004]
15. Section 10.2 of this Law shall come into force
simultaneously with the coming into force of the relevant law
regarding financial security.
[28 October 2004]
16. Section 63, Paragraph one, Clause 14 of this Law shall
come into force simultaneously with the coming into force of the
Law on Orphan's and Custody Courts.
[22 June 2006]
17. Credit risk capital requirement calculations based upon
the Advanced Internal Ratings Based Approach and the Advanced
Measurement Approach for the calculation of operational risk
capital requirements shall be applied from 1 January 2008.
[22 February 2007]
18. Credit institutions which for the calculation of
risk-weighted exposure amounts apply the Internal Ratings Based
Approach shall by 31 December 2009 ensure own funds, which always
are greater than the amounts indicated in Paragraphs 20, 21, and
22 of these Transitional Provisions of this Law or equal to
them.
[22 February 2007]
19. Credit institutions, which for the calculation of the
operational risk capital requirement apply the Advanced
Measurement Approach, shall from 1 January 2008 to 31 December
2009 ensure own funds, which always are greater than the amounts
indicated in Paragraphs 21 and 22 of these Transitional
Provisions of this Law or equal to them.
[22 February 2007]
20. Up to 31 December 2007, the own funds of credit
institutions shall be at least 95 per cent of minimal own funds,
which are calculated in accordance with the procedures stipulated
by the Financial and Capital Market Commission for the
calculation of sufficiency of capital.
[22 February 2007]
21. From 1 January to 31 December 2008, the own funds of
credit institutions shall be at least 90 per cent of minimal own
funds, which are calculated in accordance with the procedures
stipulated by the Financial and Capital Market Commission for the
calculation of sufficiency of capital.
[22 February 2007]
22. From 1 January to 31 December 2009, the own funds of
credit institutions shall be at least 80 per cent of minimal own
funds, which are calculated in accordance with the procedures
stipulated by the Financial and Capital Market Commission for the
calculation of sufficiency of capital.
[22 February 2007]
23. For the fulfilment of the requirements of Paragraphs 18,
19, 20, 21 and 22 of these Transitional Provisions of this Law,
the credit institution governing requirements shall be calculated
individually or at the consolidation group level in accordance
with Sections 50.8 and 50.9 of this
Law.
[22 February 2007]
24. Up to 31 December 2007, a credit institution credit risk
and counterparty risk capital requirements calculation in
accordance with the Standardised Approach laid down in Section 35
of this Law may prepare it according to the sufficiency of
capital calculation procedures stipulated by the Financial and
Capital Market Commission.
[22 February 2007]
25. If a credit institution utilises the possibility referred
to in Paragraph 24 of these Transitional Provisions of this Law,
it may by 31 December 2007 prepare the debt instrument and
equities position risk capital requirements calculation laid down
in Section 35 of this Law according to the sufficiency of capital
calculation procedures stipulated by the Financial and Capital
Market Commission.
[22 February 2007]
26. If a credit institution utilises the possibility referred
to in Paragraph 24 of these Transition Provisions of this Law, it
shall not apply the requirements of Sections 36.2,
36.3, 36.4 and 101.3 of this Law
up to 31 December 2007.
[22 February 2007]
27. When using the possibility referred to in Paragraph 24 of
these Transitional Provisions of this Law, a credit institution
shall reduce the operational risk capital requirement laid down
in Section 35, Paragraph one, Clause 4 of this Law by such an
amount which is determined as such total exposure value which is
calculated in the credit risk capital requirement in accordance
with Paragraph 24 of these Transitional Provisions of this Law in
relation to the total exposure value subject to all credit
risks.
[22 February 2007]
28. If the risk-weighted exposure for all exposures is
calculated in accordance with Paragraph 24 of these Transitional
Provisions of this Law, the implementation of credit institution
restrictions on large exposures and restrictions on exposures of
persons related to the credit institution shall be ensured by the
procedures which were stipulated by the Financial and Capital
Market Commission prior to the coming into force of these
amendments.
[22 February 2007]
29. Amendments regarding the addition to this Law of Section
131.1 in relation to the requirement for the necessity
of certificate issued by the State agency "Maksātnespējas
administrācija" [Insolvency Administration] for the performance
of the duties of a credit institution administrator shall not be
applied to those credit institution administrators who have
commenced their work as a credit institution administrator prior
to the coming into force of these amendments.
[22 February 2007]
30. Section 74.3 of this Law shall come into force
on 1 July 2007. Credit institutions have the obligation to submit
to the State Revenue Service information on the sight deposit
accounts of legal persons - residents of the Republic of Latvia,
as well as non-resident permanent representations in Latvia which
are opened and not closed prior to the day of coming into force
of Section 74.3 of this Law in accordance with the
procedures and the time period laid down by the Cabinet.
[22 February 2007]
31. Amendments to Section 106 of this Law in relation to
exclusion of Paragraphs four and five, and to Section 198,
Paragraph three, as well as Section 106.1 shall come
into force on 1 January 2008.
[22 February 2007]
32. Amendments to Section 89.1 of this Law shall
apply to the statements which have been submitted to the State
Revenue Service on 1 July 2008 or later.
[29 May 2008]
33. Amendments to Section 198 of this Law in relation to
exclusion of Paragraph seven shall enter into force concurrently
with amendments to the Consumer Rights Protection Law.
[29 May 2008]
34. If the application on an administrative act of the
Financial and Capital Market Commission has been submitted to the
Administrative District Court by 1 January 2009, the decision on
the submitted application shall be taken, as well as the
initiated administrative case shall be examined and a court
ruling in this case shall be taken and appealed in accordance
with the provisions of the Administrative Procedure Law.
[23 October 2008]
35. Amendments to Sections 106.1 and 198 of this
Law in relation to commercial companies having close relationship
with a credit institution, shall apply from 1 April 2009.
[26 February 2009; 23 December 2010 / Amendment in relation
to replacement of the word "bank" with the words "credit
institution" shall come into force on 30 April 2011. See
Paragraph 39 of Transitional Provisions]
36. Provisions of Section 59.6, Paragraphs one and
two of this Law in relation to prohibitions shall not be
applicable to a credit institution, to which prior to coming into
force of this legal norm aid for commercial activity has been
provided or for which deposit restrictions have been determined
in accordance with the laws and regulations regarding aid for
commercial activity.
[22 October 2009; 23 December 2010 / Amendment in relation
to replacement of the word "bank" with the words "credit
institution" shall come into force on 30 April 2011. See
Paragraph 39 of Transitional Provisions]
37. The Cabinet shall issue the regulations laid down in
Section 63, Paragraph 3.1 of this Law until 1 July
2010.
[28 January 2010]
38. Amendments to Section 59.2, Paragraph one of
this Law shall come into force concurrently with the relevant
amendments to the Commercial Law.
[11 March 2010]
39. Amendments to the Law in relation to replacement the word
"bank" with the word "credit institution" and amendments to
Sections 1, 3, 6, 9, 11, 11.1, 12.5, 21,
35.2, 37, 44, 72.1 and 112.1 of
the Law in relation to exclusion of these Sections or some parts
thereof in relation to electronic money and electronic money
institutions, and also amendment to Section 117 shall come into
force concurrently with amendments to the Payment Service Law
governing the activities of the electronic money
institutions.
[23 December 2010]
40. Until 31 December 2012 the time period of six months shall
be applied for taking of the decision referred to in Section
112.4, Paragraphs two and ten of this Law.
[23 December 2010]
41. Credit institutions which are using the internal
ratings-based approach for calculation of the risk weighted
average shall, by 31 December 2011, ensure own funds which are
always higher than or equal to the amount of own funds indicated
in Paragraph 45 of the Transitional Provisions of this Law.
[23 December 2010]
42. Credit institutions, which after 1 January 2010 have
received an authorisation from the Financial and Capital Market
Commission to use the internal ratings-based approach for
calculation of the risk weighted average, shall ensure own funds,
which are always higher or equal to the amount of own funds laid
down in Paragraph 45 of the Transitional Provisions of this Law.
The procedures for calculation laid down in Paragraph 45 or 46 of
these Transitional Provisions shall be used in calculation of own
funds.
[23 December 2010]
43. The credit institutions which use the advanced measurement
approach for calculation of the operational risk capital
requirements, until 31 December 2011, shall ensure own funds
which are always higher or equal to the amount of own funds laid
down in Paragraph 45 of the Transitional Provisions of this
Law.
[23 December 2010]
44. Credit institutions which after 1 January 2010 have
received an authorisation from the Financial and Capital Market
Commission to use the advanced measurement approach for
calculation of the operational risk capital requirements shall
ensure own funds which are always higher or equal to the amount
of own funds laid down in Paragraph 45 of the Transitional
Provisions of this Law. The procedures for calculation laid down
in Paragraph 45 or 46 of these Transitional Provisions shall be
used in calculation of own funds.
[23 December 2010]
45. Until 31 December 2011 own funds of a credit institution
shall be at least 80 per cent of the minimum own funds,
calculated in accordance with the procedures for calculation of
the sufficiency of capital stipulated by the Financial and
Capital Market Commission.
[23 December 2010]
46. The Financial and Capital Market Commission may authorise
credit institutions which after 1 January 2010 have obtained an
authorisation thereof to use the internal ratings-based approach
for calculation of the risk weighted average or to use the
advanced measurement approach for calculation of the operational
risk capital requirements, to calculate the minimum amount of own
funds referred to in Paragraph 45 of these Transitional
Provisions, applying appropriate simpler approaches for
determination of the credit risk and the operational risk capital
requirements in accordance with the procedures for calculation of
the minimum capital requirements stipulated by the Financial and
Capital Market Commission.
[23 December 2010]
47. [13 June 2019]
48. Credit institutions which are using the internal
ratings-based approach for calculation of the risk weighted
average shall continue to ensure own funds that are always higher
or equal to the amount of own funds laid down in Paragraph 50 of
these Transitional Provisions until 31 December 2012.
[22 March 2012]
49. Credit institutions which are using the advanced
measurement approach for calculation of the operational risk
capital requirements shall continue to ensure own funds that are
always higher or equal to the amount of own funds laid down in
Paragraph 50 of these Transitional Provisions until 31 December
2012.
[22 March 2012]
50. Until 31 December 2012 own funds of the credit
institutions shall be at least 80 per cent of the minimum own
funds, as calculated in accordance with the procedures for the
calculation of sufficiency of capital stipulated by the Financial
and Capital Market Commission.
[22 March 2012]
51. Amendments to Section 63, Paragraph one, Clause 11 of this
Law (stating thereof in the new wording) in the part regarding
provision of information necessary for tax administration needs
on a specific taxpayer of the state requesting information in
accordance with the international agreements ratified by the
Saeima of the Republic of Latvia, to Section 63, Paragraph
one, Clause 11.1 in the part regarding provision of
information necessary for tax administration needs on a specific
taxpayer of a foreign country in accordance with such
international agreements ratified by the Saeima of the
Republic of Latvia which provide for the provision of predictably
important information or important information, as well as
amendments to Section 63, Paragraph three (stating of the third
sentence in the new wording) shall be applicable from 1 July
2013. Until 30 June 2013 information for tax administration needs
shall be provided by credit institutions in accordance with the
international agreements ratified by the Saeima of the
Republic of Latvia to the extent laid down in Section 63,
Paragraph one, Clause 11 of this Law on the day prior to the day
when the relevant amendments (to Section 63, Clauses 11 and
11.1) come into force.
[14 March 2013]
52. Section 100.1 of this Law in relation to
payments of a credit institution to the Financial and Capital
Market Commission for funding of the activities thereof shall
come into force concurrently with the amendments to the Law On
the Financial and Capital Market Commission.
[16 May 2013]
53. Amendments to Section 1, Clauses 41 and 42, Section 135,
Section 153, Clause 2, Section 161, Paragraph four, Clauses 9,
19, and 20, and Section 166 of this Law shall not be applicable
to insolvency and liquidation proceedings of a credit institution
which have been initiated prior to the entry into force of the
relevant amendments.
[16 May 2013]
54. In relation to selection of an administrator of a credit
institution in insolvency proceedings, which have been initiated
prior to the date of entry into force of amendments to Section
131.1 (rewording of the Section), the legal provisions
that were in force on the date when the administrator was
appointed, except cases when another administrator must be
appointed in insolvency proceedings, shall be applicable.
[16 May 2013]
55. Section 65, Paragraph four of this Law shall come into
force on 1 June 2014.
[24 April 2014]
56. The requirements of Sections 35.4,
35.5, 35.6, 35.7 and
35.8 of this Law regarding the countercyclical capital
buffer shall come into force on 1 January 2016.
[24 April 2014]
57. The requirements of Sections 35.9,
35.10, 35.11, and 35.12 of this
Law regarding the capital buffer of another global systemically
important institution shall come into force on 1 January 2016.
The requirement shall be conformed to as of 1 January 2016 at the
extent of 25 per cent, as of 1 January 2017 - at the extent of 50
per cent, as of 1 January 2018 - at the extent of 75 per cent and
as of 1 January 2019 - at the extent of 100 per cent of what is
laid down in this Law.
[24 April 2014; 29 April 2021]
58. The requirements of Sections 35.13,
35.14 and 35.15 of this Law regarding the
capital buffer of other systemically important institution shall
come into force on 1 January 2016.
[24 April 2014]
59. Section 35.18, Paragraphs three and four of
this Law shall come into force on 1 January 2015.
[24 April 2014]
60. The other accrued income indicated in the statement of
comprehensive income referred to in Section 21, Paragraph one,
Clause 3 of this Law shall be included in the initial capital as
of 1 January 2015, in accordance with the transitional provisions
laid down by the Financial and Capital Market Commission.
[24 April 2014]
61. The requirement of Section 34.3, Paragraph two
of this Law shall apply to the variable component of
remuneration, which shall be determined not later than for the
results of operation during the second half of the year 2014, and
to the fixed component of remuneration for the respective period
regardless of the date of entering into the employment contract
or authorisation agreement.
[24 April 2014]
62. The regulations referred to in Section 63, Paragraph one,
Clause 11.2 of this Law shall be issued by the Cabinet
by 31 March 2015.
[29 January 2015]
63. Section 63, Paragraph one, Clause 18 of this Law shall
come into force on 1 April 2016.
[30 November 2015]
64. Amendments to Section 89.1, the new wording of
Section 90, Paragraph one, and the new wording of Section 91, as
well as Sections 89.2 and 91.1 in relation
to extending the time period for submitting the annual account,
consolidated annual account, or report of a sworn auditor or
their copies shall be applicable starting from the reporting year
of 2015 (the year which starts on 1 January 2015 or during the
calendar year of 2015).
[30 November 2015]
65. Credit institutions shall ensure the compliance of the
persons responsible for the fulfilment of the requirements for
the prevention of money laundering or terrorism financing with
the requirements of Sections 24 and 25 of this Law by 1 January
2017.
[2 June 2016]
66. The fines collected in 2016 for activities as a result of
which the requirements of the laws and regulations in relation to
prevention of money laundering or terrorism financing have been
violated (including for the violations referred to in Section
198.1), with an order of the Minister for Finance, are
directed for increasing the appropriation for the State basic
budget programme "Resources for Unforeseeable Cases" if a
decision of the Cabinet has been taken and the Budget and Finance
(Tax) Commission of the Saeima has not objected against
increase in appropriation within five working days from the day
of receipt of the relevant information.
[2 June 2016]
67. The Cabinet shall issue the regulations provided for in
Section 66.2, Paragraph eight of this Law by 1 March
2017.
[23 November 2016]
68. A credit institution shall enforce such collection tasks,
order regarding suspending the payment operations of a taxpayer
in part or in full, or orders given by bailiffs regarding
transfer of monetary funds which have been issued by 30 June
2017, and the orders laid down in Section 66.1 of this
Law which have been notified by using the type of data exchange
laid down in Section 66.2, Paragraph two, Clauses 2
and 3 of this Law in such order as was received by the credit
institution. The credit institution shall accept the orders by
which the amount of the monetary funds laid down in such
collection tasks, order regarding suspending the payment
operations of a taxpayer in part or in full, or orders regarding
transfer of monetary funds which have been issued by 30 June
2017, or the enforceable activities are updated, for enforcement
in the order of the unique numbers assigned and shall enforce
them in such order as was laid down for the enforcement of the
initial order (order to be replaced).
[23 November 2016]
69. Section 66.2 , Paragraph two, Clauses 2 and 3
of this Law and the second sentence of Paragraph eight (in
relation to delegation to the Cabinet to determine the procedures
by which a credit institution, when enforcing the order laid down
in Section 66.1, Paragraph one of this Law, commences
and performs the data exchange by using the type of the data
exchange laid down in Paragraph two, Clause 2 of this Section) is
repealed from 1 July 2019.
[23 November 2016]
70. A credit institution shall ensure the type of data
exchange laid down in Section 66.2, Paragraph two,
Clause 1 of this Law from 1 July 2019. A credit institution may
use the type of data exchange laid down in Section
66.2, Paragraph two, Clause 1 of this Law in
conformity with the procedures laid down by the Cabinet from 1
July 2017 by informing the State Revenue Service and the Court
Administration thereof in advance. A credit institution which has
not informed the State Revenue Service and the Court
Administration of commencing electronic data exchange by using
the type of data exchange specified in Section 66.2,
Paragraph two, Clause 1 of this Law, shall use the type of data
exchange laid down in Section 66.2, Paragraph two,
Clause 2 of this Law for data exchange with the State Revenue
Service until 30 June 2019 in accordance with the procedures laid
down by the Cabinet, and the type of data exchange laid down in
Section 66.2, Paragraph two, Clause 3 of this Law -
with bailiffs in accordance with the procedures provided for in
the Civil Procedure Law which was in force until 30 June
2017.
[23 November 2016]
71. Section 63.2, Section 65, Paragraph one (in the
new wording), Section 65, Paragraphs1.1 and
1.2, Section 65, Paragraph two (in the new wording),
Section 66 (in the new wording), Sections 66.1 and
66.2 of this Law shall come into force on 1 July 2017.
Until the day of coming into force of Section 63.2 of
this Law a credit institution has the obligation to provide
information to the State Revenue Service on accounts of permanent
representations of legal persons - residents, as well as
non-residents of the Republic of Latvia in Latvia in accordance
with the legal norms which were laid down in Cabinet Regulation
No. 421 of 26 June 2007, Procedures for Providing Information to
the State Revenue Service Regarding Demand Deposit Accounts of
Permanent Representation of Legal Persons - Residents and
Non-residents of the Republic of Latvia in Latvia.
[23 November 2016]
72. In addition to that laid down in Section 63.2
of this Law credit institutions shall, by 31 August 2017, on the
second working day of each calendar week provide information to
the State Revenue Service on the demand deposit accounts of
permanent representations of legal persons - residents and
non-residents of the Republic of Latvia in Latvia opened and
closed in the previous week by indicating the name (firm name),
single registration code of the customer, the number, currency of
the demand deposit account, the date of opening and closing the
account. Credit institutions shall provide the abovementioned
information according to the procedures which were laid down for
credit institutions for the provisions of such information until
30 June 2017.
[21 July 2017]
73. The authorised person referred to in Section 116,
Paragraph four of this Law or the administrator referred to in
Section 131.1 who has been appointed as the authorised
person or the administrator until the day when amendments to
Section 116, Paragraph four and Section 131.1 of this
Law which has been reworded come into force and who, in
accordance with the Insolvency Law, has a valid certificate of
the administrator of insolvency proceedings issued by the
association Latvian Association of Certified Administrators of
Insolvency Proceedings has the right to continue fulfilling
the duties of the authorised person or administrator.
[21 July 2017]
74. Amendments on supplementation of this Law with Section
186, Paragraph five and Section 195.1 in relation to
repeat application of creditors' claims and their satisfaction
shall not be applicable to the insolvency proceedings of a credit
institution which have been initiated prior to the coming into
force of the relevant amendments.
[21 July 2017]
75. Amendments to Section 135, Paragraph two of this Law
(which provide for the procedures for laying down the total
proportional remuneration of the liquidator and the assistant to
the liquidator) and Section 166, Paragraph one (which provide for
the procedures for laying down the total proportional
remuneration of the administrator and the assistant to the
administrator) shall not be applicable to the liquidation and
insolvency proceedings of a credit institution which have been
initiated prior to the coming into force of the relevant
amendments.
[1 March 2018]
76. Section 24, Paragraph 2.1 of this Law does not
apply to the persons referred to in Section 24, Paragraph one of
this Law that have been appointed in the position until the day
when Paragraph 2.1 of Section 24 comes into force.
[1 November 2018]
77. Section 34.5 of this Law shall come into force
on 1 February 2019. Section 34.5, Paragraph three of
this Law shall not apply to persons who, on the day of coming
into force of this Paragraph, are in legal employment
relationships with the credit institution and meets one or
several of the indications laid down in Section 34.5,
Paragraph three of this Law due to the fact that this person has
become insolvent or has committed any of the aforementioned
violations of the law before the day of coming into force of the
relevant paragraph.
[1 November 2018]
78. Amendments regarding the exclusion of Chapter XIII,
Restoration of a Credit Institution, and Chapter XIV, Bankruptcy
Proceedings for Credit Institutions, of this Law shall not apply
to the insolvency and liquidation proceedings of a credit
institution which has been commenced before the relevant
amendments have come into force. Legal norms that were in force
until the day when the amendments referred to in the first
sentence of this Paragraph came into force shall apply to such
insolvency and liquidation proceedings.
[1 November 2018]
79. Section 131.1, Paragraph two of this Law,
amendments to Section 168, Paragraph one and Section 169,
Paragraph one of this Law shall come into force on the same day
when the relevant amendment to the Civil Procedure Law (regarding
the cases of credit institution insolvency) comes into force. The
Cabinet shall submit the respective amendments to the Civil
Procedure Law to Saeima by 1 May 2019. The selection of
the administrator and the procedures for keeping the list of the
candidates to the position of the administrator of the credit
institution provided for in Section 131.1, Paragraph
three of this Law shall be applied from the day when the relevant
amendment to the Civil Procedure Law (regarding the cases of
credit institution insolvency) comes into force.
[1 November 2018]
80. Amendments to Section 65, Paragraph 1.2,
Section 66, Paragraph four, Section 66.1, Paragraph
one, Clause 1, the second sentence of Paragraph three and the
first sentence of Paragraph seven (the new wording) of Section
66.2 of this Law in relation to an order of the State
Revenue Service regarding suspension of payment transactions of a
taxpayer shall come into force concurrently with the relevant
amendments to the law on Taxes and Fees.
[28 February 2019]
81. Amendments to Section 159 and Section 161, Paragraph two,
Clause 12 of this Law regarding the replacement of the words
"Land Registry Office" (in the relevant number and case) with the
words "district (city) court" (in the relevant number and case)
shall come into force on 1 June 2019.
[28 February 2019]
82. The Financial and Capital Market Commission shall, by 1
August 2019, issue the regulatory provisions referred to in
Section 126.2, Paragraph four and Section
146.1, Paragraph three of this Law.
[13 June 2019]
83. Sections 126.2 and 146.1 of this
Law, amendments to Section 128 regarding the new wording of
Paragraphs one and two and to Section 129, Paragraph one, Section
129, Paragraph 1.1, amendments to Section 132,
Paragraph four regarding the deletion of Paragraph, amendments to
Section 137, Paragraph one, and Section 139, Paragraph two shall
not be applicable to the insolvency and liquidation (also
voluntary liquidation) proceedings initiated prior to the coming
into force of the relevant amendments. Legal norms that were in
force until the day when the amendments referred to in the first
sentence of this Paragraph came into force shall apply to such
insolvency and liquidation (also voluntary liquidation)
proceedings.
[13 June 2019]
84. The Financial and Capital Market Commission shall, by 1
August 2019, issue the regulatory provisions referred to in
Section 196, Paragraph four of this Law.
[13 June 2019]
85. The credit institution shall develop the procedure and
establish the internal channel for reporting on the violation
referred to in Section 106.2, Paragraph five of this
Law not later than by 31 March 2020.
[19 December 2019]
86. Amendments regarding the supplementation of Section 63,
Paragraph two of this Law with a sentence and the new wording of
the second sentence of Paragraph three, amendments to Section 63,
Paragraph 3.1 regarding the new wording of the third
sentence and regarding the supplementation of this Paragraph with
a sentence, and also Section 63, Paragraph 3.2 and
Section 64, Paragraph 1.1 shall come into force on 1
July 2021.
[17 June 2020]
87. Until the day when amendments to the Electronic Documents
Law which determine the use of an electronic seal as a detail of
legal force of an electronic document come into force, an
electronic document the author or one of authors of which is a
credit institution shall be valid without signature of a
representative of the credit institution, if the document has
been certified with a qualified electronic seal issued to the
credit institution as a legal person (within the meaning of
Article 3(27) of Regulation (EU) No 910/2014 of the European
Parliament and of the Council of 23 July 2014 on electronic
identification and trust services for electronic transactions in
the internal market and repealing Directive 1999/93/EC) and
concurrently all of the following conditions are fulfilled:
1) the document applies to the provision of financial services
or, with the document, the credit institution provides
information to other persons or State or local government
authorities;
2) it is not specifically provided for in the external
regulatory enactment for the document of the relevant type that
it should be signed;
3) authorisation of a member of the board of the credit
institution to other persons may not be provided for in the
document.
[17 June 2020]
88. A credit institution as a creditor is entitled to
unilaterally cancel such loan (credit) liabilities in full or
partial amount for natural persons which have not been executed
due to the economic recession of 2008 (hereinafter - the
liabilities) and fulfil all of the following conditions:
1) a loan (credit) contract has been concluded by and between
the creditor and the natural person;
2) the natural person (in relation to the lender) is not and
has not been a person affiliated with an undertaking within the
meaning of the law on Taxes and Fees;
3) the liabilities have been established by a loan (credit)
contract which has been concluded and has entered into effect
until 31 December 2008;
4) the repayment of the liabilities was ensured with an
immovable property mortgage;
5) due to debt liabilities against a creditor in accordance
with the procedures laid down in the Civil Procedure Law or
according to an agreement with a credit institution, the debtor
or pledger has lost property rights to the pledged immovable
property until 31 December 2018;
6) the loan (credit) liabilities on the day when they are
cancelled in the accounting records of the creditor in accordance
with the requirements of the international financial reporting
standards within the meaning of Regulation (EC) No 1606/2002 of
the European Parliament and of the Council of 19 July 2002 on the
application of international accounting standards have been
presented as an asset written off from the balance sheet of the
participant of the financial and capital market;
7) insolvency proceedings have not been initiated for the
relevant natural person.
[9 July 2020]
89. The rights of a creditor referred to in Paragraph 88 of
these Transitional Provisions shall also apply to the guarantee
liabilities. The guarantee liabilities shall be included in the
amount of the liabilities to be cancelled, if the guarantee has
been provided for the liabilities which conform to that laid down
in the relevant Paragraph.
[9 July 2020]
90. Also a person to whom the credit institution has ceded the
liabilities referred to in Paragraph 88 of this Regulation has
the rights referred to in Paragraph 88 of these Transitional
Provisions. The person to whom the relevant liabilities have been
ceded is entitled to use the policy referred to in Paragraph 92
of these Transitional Provisions.
[9 July 2020]
91. If an agreement regarding execution of the liabilities
referred to in Paragraph 88, 89, or 90 of these Transitional
Provisions has been entered into by and between the creditor and
the debtor (borrower or guarantor) prior to coming into force of
Paragraphs 88, 89, 90, 91, 92, 93, 94, 95, 96, or 97 of these
Transitional Provisions and this agreement has not been executed
yet, the debtor (borrower or guarantor) is offered to amend such
agreement in order to prevent that the conditions provided for
therein by which a part of liabilities is to be cancelled are
more unfavourable to the debtor (borrower or guarantor) than the
conditions for the cancellation of liabilities which would be
applied in the same situation for unilateral cancellation of
liabilities in accordance with the policy specified in Paragraph
92 of these Transitional Provisions.
[9 July 2020]
92. A credit institution shall, in accordance with Sections
34.1and 34.2 of this Law, approve a policy
and procedure based on objective and justified criteria for
unilateral cancellation of loan (credit) liabilities, including
complete or partial cancellation of liabilities, and publish it
on the website of the credit institution.
[9 July 2020; 29 April 2021]
93. A credit institution shall, until 1 July 2022, constantly
assess and document the conformity of the liabilities to be
cancelled with Paragraphs 88, 89, 90, and 91 of these
Transitional Provisions and decide on unilateral cancellation of
liabilities.
[9 July 2020]
94. A creditor shall send a notification on unilateral
cancellation of liabilities to the Credit Register and to such
credit bureau the participant of which it is, and also to the
debtor (borrower or guarantor) to the address which is available
to the creditor.
[9 July 2020]
95. A credit institution or a person to which the credit
institution has ceded the liabilities referred to in Paragraph 88
of these Transitional Provisions shall, once a year, inform the
State Revenue Service of the persons whose liabilities have been
unilaterally cancelled thereby and of the amount of liabilities
cancelled for such persons.
[9 July 2020]
96. The legal norms included in Paragraphs 88, 89, 90, 91, 92,
93, 94, and 95 of these Transitional Provisions which provide for
the rights and obligations in relation to unilateral cancellation
of a loan (credit) shall be applicable until 31 December
2022.
[9 July 2020]
97. Also a credit institution registered in another Member
State which is operating in the Republic of Latvia with the
intermediation of a branch is entitled to apply the legal norms
included in Paragraphs 88, 89, 90, 91, 92, 93, 94, 95, and 96 of
these Transitional Provisions which provide for such rights and
obligations in relation to unilateral cancellation of a loan
(credit) for natural persons which have not been executed due to
the economic recession of 2008.
[9 July 2020]
98. Section 10.1 of this Law in the new wording
shall come into force on 1 July 2021.
[29 April 2021]
99. The Financial and Capital Market Commission shall, by 30
June 2021, issue the provisions referred to in Section
10.1, Paragraph twenty of this Law.
[29 April 2021]
100. The Financial and Capital Market Commission shall examine
a submission to the Financial and Capital Market Commission which
has been submitted until 30 June 2021 and applies to the planned
outsourced service in accordance with such provisions of Section
10.1 of this Law which were in force on the day when
the submission was submitted.
[29 April 2021]
101. A credit institution shall ensure that it executes the
requirements laid down in Section 10.1 of this Law (in
the new wording) by 1 March 2022.
[29 April 2021]
102. Sections 49.2, 49.3, Section
101.3, Paragraph 4.4, Clause 11, Paragraphs
five and six of this Law in the new wording shall come into force
on 28 June 2021.
[29 April 2021]
103. Amendments to Sections 35.29,
35.30, and 35.31 of this Law (in relation
to the leverage ratio buffer requirement) and Sections
35.34, 35.35, and 35.36 of this
Law shall come into force on 1 January 2023.
[29 April 2021 / The abovementioned amendments shall be
included in the wording of the Law as of 1 January 2023.]
104. Amendment to Section 34.2, Paragraph one of
this Law regarding its new wording in relation to the credit
spread risk of the non-trading book shall be applied starting
from 28 June 2021.
[29 April 2021]
105. A third-country group which includes more than one credit
institution or investment firm of a Member State and the total
asset value of which in the European Union on 27 June 2019 was at
least EUR 40 billion, and which continues its activities on the
day of coming into force of Section 33.4 of this Law
shall, in accordance with the requirements of the abovementioned
Section, establish a parent company in the European Union by 30
December 2023.
[29 April 2021]
106. The holding company referred to in Section
33.3 of this Law which carried out activities on 27
June 2019 and continues activities on the day of coming into
force of Section 33.3 of this Law shall receive a
permit in accordance with the procedures laid down in the
abovementioned Section within six months from the day of coming
into force of Section 33.3.
[29 April 2021]
107. Until the day when such amendments to laws come into
force by which it is determined that the property remaining after
termination of the activities of a capital company and exclusion
thereof from the Commercial Register pertains to the State, the
resolution specified in Section 63, Paragraph one, Clause 24 of
this Law shall be applied only in relation to the provision of
information to capital companies which, in accordance with
Section 314.1, Paragraph two and Section 317,
Paragraph two of the Commercial Law, have been excluded from the
Commercial Register, and other legal persons which are not
capital companies and have been excluded from the relevant
register kept by the Enterprise Register.
[27 May 2021]
108. A credit institution shall provide information on capital
companies which, in accordance with Section 314.1,
Paragraph two and Section 317, Paragraph two of the Commercial
Law, have been excluded from the Commercial Register until the
day of coming into force of Section 63, Paragraph one, Clause 24
of this Law, on the basis of a request of the State Revenue
Service to which the information provided by the Enterprise
Register on the abovementioned capital companies excluded from
the Commercial Register has been appended.
[27 May 2021]
109. Section 64 of this Law shall also be applied to such
employees of the Financial and Capital Market Commission whose
legal relationship have been terminated until the day of coming
into force of the Law on Latvijas Banka.
[23 September 2021]
110. Amendments to this Law regarding the replacement of the
words "Law on the Financial and Capital Market Commission" with
the words "Law on Latvijas Banka" in the entire Law, replacement
of the words "Financial and Capital Market Commission" with the
words "Latvijas Banka" in the entire Law, replacement of the
words "regulatory provisions" with the word "provisions", except
for Transitional Provisions, replacement of the word "appeal"
with the words "contesting and appeal" in Section
10.1, Paragraph nineteen, Section 59.2,
Paragraph four, Section 101.2, Paragraph five, Section
101.3, Paragraph eight, Section 123, Section 129,
Paragraph four, Section 148, Paragraph four, and Section
208.1, Paragraph one of this Law, amendments to
Section 6, Paragraph three, amendment regarding the deletion of
Section 7, amendment regarding the new wording of Section 8,
Paragraph one, amendments to Section 50, Paragraph two, Section
61, Paragraph two, Section 63, Paragraph one, Section 64,
amendment regarding the new wording of the introductory part of
Section 100.1, Section 101, Paragraph two, amendment
regarding the deletion of Section 106, Paragraph three, amendment
regarding the new wording of Section 108, Paragraphs two and
three, amendments regarding the deletion of Section 108,
Paragraphs four and five, Section 111, Section 112.5,
Paragraph 1.1, Section 129, Paragraph three, amendment
regarding the new wording of Section 137, Paragraph one,
amendment regarding the deletion of Section 146, Paragraph five,
amendments to Section 159, Paragraph one and Section 161,
Paragraph two, Clauses 9 and 14, amendment regarding the new
wording of Section 198, Paragraph one, and also amendments to
Section 199 shall come into force concurrently with the Law on
Latvijas Banka.
[23 September 2021 / The abovementioned amendments shall be
included in the wording of the Law as of 1 January 2023.]
111. The regulatory provisions issued by the Financial and
Capital Market Commission on the basis of this Law, until the day
of coming into force of the Law on Latvijas Banka, shall be
applied until the day of coming into force of the relevant
regulations of Latvijas Banka, but not longer than until 31
December 2024.
[23 September 2021]
112. The Enterprise Register shall, in relation to the
documents referred to in Section 89.1, Paragraph two
of this Law received until the day of coming into force of
amendments to Section 89.1, Paragraph three of this
Law, not later than within five working days, publish a
notification in the official gazette Latvijas Vēstnesis
that copies of the annual statement or consolidated annual
statement and the documents appended thereto are available in
electronic form in the Enterprise Register.
[23 September 2021]
113. Amendments to Section 21, Paragraph four and Section
59.1, Paragraph one of this Law which stipulate the
obligation to publish notifications on the website of the
Enterprise Register shall come into force on 1 July 2023.
[23 September 2021 / The abovementioned amendments shall be
included in the wording of the Law as of 1 July 2023]
Informative Reference to Directive
of the European Union
[26 May 2005; 9 June 2005; 22
February 2007; 29 May 2008; 26 February 2009; 11 March 2010; 23
September 2010; 23 December 2010; 15 March 2012; 22 March 2012;
24 May 2012; 14 March 2013; 16 May 2013; 24 April 2014; 11 June
2015; 21 July 2017; 28 February 2019; 19 December 2019; 17 June
2020; 29 April 2021]
This Law contains norms arising from:
1) [14 March 2013];
2) Directive 2000/12/EC of the European Parliament and of the
Council of 20 March 2000 relating to the taking up and pursuit of
the business of credit institutions;
3) [23 December 2010];
4) Directive 2001/24/EC of the European Parliament and of the
Council of 4 April 2001 on the reorganisation and winding up of
credit institutions;
5) Council Directive 2003/48/EC of 3 June 2003 on taxation of
savings income in the form of interest payment;
6) Directive 2002/87/EC of the European Parliament and of the
Council of 16 December 2002 on the supplementary supervision of
credit institutions, insurance undertakings and investment firms
in a financial conglomerate and amending Council Directives
73/239/EEC, 79/267/EEC, 92/49/EEC, 92/96/EEC, 93/6/EEC and
93/22/EEC, and Directives 98/78/EC and 2000/12/EC of the European
Parliament and of the Council;
7) Directive 2005/1/EC of the European Parliament and of the
Council of 9 March 2005 amending Council Directives 73/239/EEC,
85/611/EEC, 91/675/EEC, 92/49/EEC and 93/6/EEC and Directives
94/19/EC, 98/78/EC, 2000/12/EC, 2001/34/EC, 2002/83/EC and
2002/87/EC in order to establish a new organisational structure
for financial services committees;
8) Directive 2004/109/EC of the European Parliament and of the
Council of 15 December 2004 on the harmonisation of transparency
requirements in relation to information about issuers whose
securities are admitted to trading on a regulated market and
amending Directive 2001/34/EC;
9) Directive 2006/48/EC of the European Parliament and of the
Council of 14 June 2006 relating to the taking up and pursuit of
the business of credit institutions (recast).
10) First Council Directive 68/151/EEC of 9 March 1968 on
co-ordination of safeguards which, for the protection of the
interests of members and others, are required by Member States of
companies within the meaning of the second paragraph of Article
58 of the Treaty, with a view to making such safeguards
equivalent throughout the Community;
11) Directive 2003/58/EC of the European Parliament and of the
Council of 15 July 2003 amending Council Directive 68/151/EEC, as
regards disclosure requirements in respect of certain types of
companies;
12) Directive 2007/44/EC of the European Parliament and of the
Council of 5 September 2007 amending Council Directive 92/49/EEC
and Directives 2002/83/EC, 2004/39/EC, 2005/68/EC and 2006/48/EC
as regards procedural rules and evaluation criteria for the
prudent assessment of acquisitions and increase of holdings in
the financial sector;
13) Directive 2007/64/EC of the European Parliament and of the
Council of 13 November 2007 on payment services in the internal
market amending Directives 97/7/EC, 2002/65/EC, 2005/60/EC and
2006/48/EC and repealing Directive 97/5/EC;
14) [24 May 2012];
15) Directive 2009/110/EC of the European Parliament and of
the Council of 16 September 2009 on the taking up, pursuit and
prudential supervision of the business of electronic money
institutions amending Directives 2005/60/EC and 2006/48/EC and
repealing Directive 2000/46/EC;
16) Directive 2009/111/EC of the European Parliament and of
the Council of 16 September 2009 amending Directives 2006/48/EC,
2006/49/EC and 2007/64/EC as regards banks affiliated to central
institutions, certain own funds items, large exposures,
supervisory arrangements, and crisis management;
17) Directive 2010/76/EU of the European Parliament and of the
Council of 24 November 2010 amending Directives 2006/48/EC and
2006/49/EC as regards capital requirements for the trading book
and for re-securitisations, and the supervisory review of
remuneration policies;
18) Council Directive 2010/24/EU of 16 March 2010 concerning
mutual assistance for the recovery of claims relating to taxes,
duties and other measures;
19) Directive 2010/78/EU of the European Parliament and of the
Council of 24 November 2010 amending Directives 98/26/EC,
2002/87/EC, 2003/6/EC, 2003/41/EC, 2003/71/EC, 2004/39/EC,
2004/109/EC, 2005/60/EC, 2006/48/EC, 2006/49/EC and 2009/65/EC in
respect of the powers of the European Supervisory Authority
(European Banking Authority), the European Supervisory Authority
(European Insurance and Occupational Pensions Authority) and the
European Supervisory Authority (European Securities and Markets
Authority);
20) Council Directive 2011/16/EU of 15 February 2011 on
administrative cooperation in the field of taxation and repealing
Directive 77/799/EEC; and
21) Directive 2011/89/EU of the European Parliament and of the
Council of 16 November 2011 amending Directives 98/78/EC,
2002/87/EC, 2006/48/EC and 2009/138/EC as regards the
supplementary supervision of financial entities in a financial
conglomerate.
22) Directive 2013/36/EU of the European Parliament and of the
Council of 26 June 2013 on access to the activity of credit
institutions and the prudential supervision of credit
institutions and investment firms, amending Directive 2002/87/EC
and repealing Directives 2006/48/EC and 2006/49/EC;
23) Directive 2014/59/EU of the European Parliament and of the
Council of 15 May 2014 establishing a framework for the recovery
and resolution of credit institutions and investment firms and
amending Council Directive 82/891/EEC, and Directives 2001/24/EC,
2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU,
2012/30/EU and 2013/36/EU, and Regulations (EU) No 1093/2010 and
(EU) No 648/2012, of the European Parliament and of the
Council;
24) Directive 2013/34/EU of the European Parliament and of the
Council of 26 June 2013 on the annual financial statements,
consolidated financial statements and related reports of certain
types of undertakings, amending Directive 2006/43/EC of the
European Parliament and of the Council and repealing Council
Directives 78/660/EEC and 83/349/EEC;
25) Directive (EU) 2017/2399 of the European Parliament and of
the Council of 12 December 2017 amending Directive 2014/59/EU as
regards the ranking of unsecured debt instruments in insolvency
hierarchy;
26) Directive (EU) 2015/849 of the European Parliament and of
the Council of 20 May 2015 on the prevention of the use of the
financial system for the purposes of money laundering or
terrorist financing, amending Regulation (EU) No 684/2012 of the
European Parliament and of the Council, and repealing Directive
2005/60/EC of the European Parliament and of the Council and
Commission Directive 2006/70/EC;
27) Directive (EU) 2018/843 of the European Parliament and of
the Council of 30 May 2018 amending Directive (EU) 2015/849 on
the prevention of the use of the financial system for the
purposes of money laundering or terrorist financing, and amending
Directives 2009/138/EC and 2013/36/EU;
28) Directive (EU) 2019/878 of the European Parliament and of
the Council of 20 May 2019 amending Directive 2013/36/EU as
regards exempted entities, financial holding companies, mixed
financial holding companies, remuneration, supervisory measures
and powers and capital conservation measures;
29) Directive (EU) 2019/879 of the European Parliament and of
the Council of 20 May 2019 amending Directive 2014/59/EU as
regards the loss-absorbing and recapitalisation capacity of
credit institutions and investment firms and Directive
98/26/EC.
The Law shall come into force on the day of its
publication.
The Law has been adopted by the Saeima on 5 October
1995.
Acting for the President,
Chairperson of the Saeima A. Gorbunovs
Rīga, 24 October 1995
1 The Parliament of the Republic of
Latvia
Translation © 2022 Valsts valodas centrs (State
Language Centre)