Post date: Dec 12, 2011 4:42:33 PM
Swedbank says it can easily cope with a weekend of mass cash withdrawals in Latvia triggered by rumours of problems at the Swedish bank.
Swedbank said on Monday (December 12) it would cope easily with a weekend mass withdrawal of cash in Latvia triggered by rumours of problems at Swedish banks.
STOCKHOLM, SWEDEN (DECEMBER 12, 2011) (REUTERS) - Latvian security police said they were launching a criminal investigation into the spreading false news about the financial system.
The Swedish bank said about 20 million lats (38 million USD) was drained from Latvian cash machines, about half of which ran out of money. "We saw rumours coming out in social media in Latvia during Friday and those increased over the weekend. So on Sunday we actually saw clients going to our cash machines, withdrawing from their accounts," Swedbank's head of corporate affairs, Thomas Backteman, said in Stockholm.
"All in all out of the 300 cash machines we have in Latvia, we had 148 of them being emptied. So basically it was slightly more than 20 million lats being withdrawn, which in Swedish crowns is 26 million, all in all quite an insignificant amount of money," Backteman added after the rumours that were spread rapidly by word of mouth and text messages and then hit social networking site Twitter.
Swedbank shares were down 2.1 percent by 1251 GMT while SEB shares were 1.6 percent weaker. The wider Stockholm bourse was down 0.5 percent.
The jitters sent up the cost of insuring Latvian five-year debt to 375 basis points from 350.
Swedbank is the biggest bank in Latvia and the other two Baltic states of Lithuania and Estonia, followed by SEB. People pulled money from both banks after rumours of problems at Swedish banks spread.
Backteman said he hoped Latvian police would find the rumour-spreaders.
"We don't know, but what we do know is that the Latvian law enforcement agencies are looking into this, because it is a criminal offense in Latvia to spread these kind of rumours and that law was introduced during the severe period of the financial crisis in 2009. And we just hope that these law enforcement agencies will find anyone who is responsible for these false rumours being spread," he said.
On Monday, small queues could still be seen in the centre of capital Riga.
"You know, after Parex bank, after Savings Bank - I'm afraid, we doubt everything. A Russian saying goes - there is no smoke without fire. If the rumors go around, somewhere in the dark room a dark cat must be hiding. At least I think there is," Swedbank client, Yury Agenin told Reuters TV.
"I do not worry. My pension goes into Swedbank. My acquaintances called yesterday, said they had queued for an hour and half! Nonsense! It is dumb to stand in a queue on Sunday evening! Which bank collapses on Sunday eve? One needs to think! Why succumb to panic?" Swedbank customer, Vladimir Yelistratov said.
Spreading false rumours that threaten the stability of the banking system is a criminal offense in Latvia which carries up to two years of imprisonment for the first offense.
An economics lecturer from Ventspils was detained in 2008 during the banking crisis on suspicion of spreading rumours about a devaluation of the lat after he argued in a public discussion against keeping money in banks and in lats
Latvia, a country of 2.2 million people, has a history of post-Soviet bank failures, the latest being only this month when a mid-sized bank was put into liquidation after its Lithuanian parent was seized by the state.
In 2008, Latvia had to rescue its second-largest bank, Parex, which was owned by two local businessmen. ($1 = 0.5223 Latvian lats) ($1 = 6.7411 Swedish crowns)