Depositors protection

Abstract of the Deposit Guarantee Law of the Republic of Latvia 

The Deposit Guarantee Law of the Republic of Latvia, hereafter referred to as the Law, was passed on 21 May 1998 and is effective starting from 1 October 1998.

The main objective of this Law is to protect depositors' interests by forming a special fund and ensuring payment of a guaranteed amount in case of bankruptcy or liquidation of a particular lending institution.

(this abstract regards lending institution as a bank, branch of a foreign bank, or savings and loan institution, registered in Latvia)

For the purpose of protecting depositors’ interests, a special fund is formed, which is composed of state budget funds and contributions made by lending institutions, as set by the Law. The fund is managed by the Financial and Capital Market Commission of the Republic of Latvia.

According to the Law, each depositor has the right to receive a definite guaranteed amount in case of bankruptcy or liquidation of the lending institution which the depositor has placed its funds with.

According to the latest amendments, effective from 17 October 2008, the guaranteed amount applicable to total deposits is equal to the deposit amount, but not more than EUR 50 000. The guaranteed amount is paid in LVL, applying the Bank of Latvia currency exchange rate.

If depositor has placed several deposits with one lending institution, all these deposits are summed and considered a single deposit with this particular lending institution.

The Law applies to all Latvian banks, branches of foreign banks, and savings and loan institutions. The Law provides special conditions in respect of foreign banks operating in Latvia and branches of Latvian banks operating abroad.

The Law does not provide for payment of the guaranteed amount in respect of deposits made by lending and other financial institutions, central banks, state-financedinstitutions, persons related to lending institutions; deposits connected to laundering of funds derived from criminal activity; deposits placed at excessive interest rates or with other conditions (performance under which caused the bankruptcy); deposits forming the lending institution equity, according to regulations; and deposits related to transactions involving certificates of deposit, and bonds.

Cleint’s monetary funds, placed at account in any currency with AS “Aizkraukles banka” are protected by the state guarantee system. Please read a short abstract of the “Deposit Guarantee Law” below.

Disclaimer: these abstracts represent a brief informative overview only. We recommend getting familiar with the complete official version of the Law in the official language.