The European Central Bank has closed down another Latvian bank after ruling it had become insolvent, pulling the plug on a lender that was a vocal critic of the Baltic country’s financial authorities.

The decision by the ECB to shut down PNB Banka, which was previously called Norvik Banka and is Latvia’s sixth-largest lender with a €550m balance sheet, dealt another blow to the country’s scandal-hit banking system.

Last year, the US accused ABLV, Latvia’s then third-largest bank, of “institutionalised money laundering”, effectively leading to it being wound up by the ECB.

The Latvian regulator requested in April that the ECB take over supervision of PNB after the bank launched a legal challenge against the Baltic country’s financial watchdog in an international arbitration court — making domestic supervision of it difficult.

PNB also accused Latvia’s central bank governor, Ilmars Rimsevics, of soliciting bribes — putting it at odds with the ECB. Mr Rimsevics, who denies the charges, was suspended by the government but was later reinstated after an EU court ruled his dismissal was unfair.

The ECB said on Thursday: “The need for additional impairments of its assets led to a significant deterioration in its capital situation to the point that the bank’s assets were less than its liabilities.”

“The bank was unable to satisfy requirements for continuing authorisation and unable to provide assurances that it could comply with capital requirements in the near future,” it said, adding that PNB had been in breach of its capital requirements since the end of 2017.

After the ECB ruled that PNB was “failing or likely to fail” it informed the Single Resolution Board, which decided that the bank was not systemically important enough to require it to intervene and oversee an orderly resolution.

The bank had €472m of deposits at the end of March and any individual’s deposits of up to €100,000 will be guaranteed by Latvia’s deposit guarantee fund.

This is the fifth time that the ECB has used its power to shut down or force the fire sale of an ailing bank, after doing so with Spain’s Banco Popular and two lenders in Italy’s Veneto region.

PNB is privately owned and its Anglo-Russian chairman Grigory Guselnikov recently said on Twitter that he was selling his majority stake to a group of US and European investors.

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