Latvia's PNB banka - formerly known as Norvik - is to be shut down, the European Central Bank announced August 15.

A release published on the ECB website said the lender was rated as "failing or likely to fail".

ECB has assessed that AS PNB Banka in Latvia was failing or likely to fail https://t.co/8An67Pv3ra — European Central Bank (@ecb) August 15, 2019

As reported by LSM, the bank's chairman Oliver Bramwell recently departed, saying the bank had a positive balance sheet and "is still competitive" after former owner Grigory Guselnikov announced June 27 he had disposed of his shareholding in the bank to a group of unnamed US and European investors.

"The European Central Bank (ECB) has assessed that AS PNB Banka in Latvia was failing or likely to fail in accordance with the Single Resolution Mechanism Regulation, " the EBC said.

"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," the ECB added.

On 12 August 2019 the ECB concluded an on-site inspection, which it said "identified a substantial provisioning shortfall and found objective elements indicating that the assets of the bank were less than its liabilities."

"The bank failed to provide evidence that it would be able to replenish its capital," the ECB added, in explaining its decision.

Eligible deposits in AS PNB Banka are protected up to €100,000 under Latvia’s deposit guarantee fund. Customers are advised to contact the Latvian banking regulator, the Financial Capital and Markets Commission (FKTK), which is the administrator for the deposit guarantee fund.

Pensioners form around two thirds of PNB's clientele, according to the bank's own information.

PNB is the sixth-largest bank in Latvia, with total assets of €550 million. The ECB took over direct supervision of AS PNB Banka on 4 April 2019, at the request of the Financial Capital and Markets Commission.

Information posted on the FKTK website said "As from 15.08.2019. at 21.00 the bank must completely cease the provision of financial services, including the execution of customer payments. Such a decision is taken to avoid the outflow of bank’s funds. This means that as from now operations of JSC “PNB Banka’s” cards, online banking and ATMs have been suspended."

"We are aware that this news is unexpected for the bank’s customers, but we can confirm that FKTK is working to find the most convenient and efficient solution to start the payout of guaranteed compensation to the customers as soon as possible, covering the customer funds deposited in the bank up to 100 000 euro. In the coming days, 99.2 % of depositors will be able to start receiving their money deposited in the bank, which will be fully covered by the funds of the Deposit Guarantee Fund,” Acting chairperson of FKTK Kristīne Černaja-Mežmale said.