Riga - Account holders with Latvia's troubled Parex Banka, which is undergoing an emergency nationalization process, had the amount of money they could withdraw capped Tuesday following a decision by the Baltic country's financial regulator.

Under the new restrictions announced by the Financial and Capital Markets Commission (FKTK), individual savers and small companies will be able to withdraw up to
62,000 dollars per month, while large companies will have access to a maximum of 620,000 dollars.

"The decision was made due to the excessive outflow of deposits and other funds," FKTK spokesperson Agnese Joela told Deutsche Presse-Agentur dpa.

The amount of money that has disappeared from Parex in recent weeks is not being made public, however.

Joela confirmed that the restrictions will remain in place until June 30, 2009 but would be subject to possible revision before that date.

Parex spokesperson Indra Zinkevica told dpa the measures were "short term facilities" and that most account holders would not experience any inconvenience.

"These restrictions will not affect the daily life of private individuals," she said, adding that the atmosphere within Parex was calm.

Parex, the largest home-grown financial institution in the Baltic states, was forced to seek government assistance when it ran into liquidity problems as a result of the global credit crunch.

On November 8 the Latvian government of Ivars Godmanis announced its decision to buy a controlling stake in Parex, which was approved by the European Commission on November 26 under EC Treaty state aid rules, though the process has yet to be finalised.

"The aid is necessary to avoid a serious disturbance in the Latvian economy," the EC said.

The Latvian government plans to make Parex a subsidiary of state-owned Hipoteku Banka, but by doing so it has committed itself to covering a series of large syndicated loans Parex is due to repay next year.

Partly as a result of its commitment to Parex, the Latvian government is also in talks with the International Monetary Fund (IMF) to secure a financial aid package rumoured to be of up to 6 billion dollars. (dpa)