Bank Runs Starting in Latvia

Reports indicate that Latvia's largest bank may be experiencing a run on the bank as depositors rush to pull their money from the institution amid rumors that it is unsound. The Canadian Press is reporting that thousands of Latvians lined up at bank machines on Sunday to withdraw cash from Swedbank amid speculation that it is facing legal and liquidity problems. The report indicates that lines at some machines were as long as 50 people. Latvia's Prime Minister Vladis Dombrovskis told reporters that the rumors were spread with the intent to damage the country's banking system and the country's Interior Minister said that police have opened a criminal investigation. Swedbank's CEO Maris Mancinskis said that the rumors of liquidity problems were "absurd" and that depositors would have full access to their accounts through bank machines or at branch offices. According to a bank spokeswoman, depositors had withdrawn 24 million lats ($48 million) as of Monday morning which accounts for 1.5% of all deposits at the bank. Some news outlets are reporting that the run was started by rumors on Twitter which suggested that Swedbank as well as SEB were in financial turmoil and were considering withdrawing their business from Latvia. The rumors, although their veracity is in doubt, came at a time when Latvians are particularly concerned about the health of the financial system. Just two weeks ago the Latvian government was forced to take over Krajbanka and customers were deprived of their cash for days. Furthermore, it was just three years ago that Parex Bank, the country's largest, was nationalized by the government.