A licence withdrawal by the European Central Bank (ECB) raises serious doubts about the Banking Union’s procedural framework and the division of powers between the ECB and national regulators.
Earlier this month the ECB revoked the licence of Latvia’s Trasta Komercbanka for anti-money laundering and other compliance failings, following the recommendation of local regulator Finansu un kapitala tirgus komisija (FKTK).
The bank is appealing the decision on the grounds it was not given sufficient time to defend itself, and that it is inconsistent with the FKTK’s sanctioning of the bank just weeks earlier.
Under the Single Supervisory Mechanism (SSM) FKTK is responsible for the day-to-day supervision of Trasta, a non-systemically important financial institution (Sifi), but the ECB has the final say on important issues such as licences.
DLA Piper’s Okko Hendrik Behrends who is advising Trasta...