Desmond-backed Latvian bank sees €80m French fine slashed to €20m

An €80m fine levied by French authorities against a Latvian bank that’s one-third owned by Irish billionaire financier Dermot Desmond has been slashed to €20m.

Rietumu Banka was found guilty in 2017 in France of aggravated money laundering by providing assistance, as a bank, to placement, concealment or conversion operations of the proceeds of an offence.

A Paris court had ordered the bank to pay an €80m fine and damages. Rietumu and other defendants were also sentenced to pay a combined €10m to the French government in damages and €100,000 in court expenses. The bank was also ordered to cease operations in France for five years. Rietumu appealed the ruling.

It had previously made a €34m provision in relation to the legal action. The French appeal court has now reduced the fine to €20m, but retained the five-year ban on the bank operating in France.

Rietumu Banka has said it remains “convinced of its innocence” and will consider an additional appeal once it has reviewed the French court’s ruling.

The bank said last year that the amounts it had been ordered to pay by French authorities “appear inflated and ungrounded, based on the understanding of the French criminal law by the bank and its legal advisers”.

In 2018, Rietumu terminated its banking relationship with more than 4,000 corporate customers it classified as being a "prohibited risk”.

The move came after the United States accused the Baltic country’s then third-largest bank, ABLV, of “institutionalised money laundering”.

Rietumu Banka saw its group profit after tax tumble to €10m last year from €21m in 2019.

“As a result of the uncertain environment in the region, the bank has substantially scaled down its commercial lending in the Commonwealth of Independent States (former Soviet republics) and currently has become more active in lending of medium-large scale corporates in the Baltics,” it noted in its annual report.

“In addition, the group focused on reducing concentration risks of large lending projects,” it added.

“This resulted in the lending portfolio being diversified over a large group of medium-sized loans rather than the portfolio being concentrated in a smaller group of larger loans.”

Rietumu Banka had assets of €1.47bn at the end of 2020, half the amount it had in December 2017.

Mr Desmond first took a stake in the bank in 2005.