The bank is one-third owned by financier Dermot Desmond.
Rietumu Banka was hit with the fine in 2017 following an investigation begun by French authorities in 2011.
It was found guilty of aggravated money laundering by providing assistance, as a bank, to the placement, concealment or conversion operations of the proceeds of an offence. In addition to the €80m fine, Rietumu Banka was ordered to cease banking activities in France for five years.
“The amounts the bank was sentenced to pay appear inflated and ungrounded based on the understanding of the French criminal law by the bank and its legal advisers,” said Rietumu Banka.
The bank initiated an appeal against the ruling in 2017. It reiterated in its annual report published this week that while there can be no assurance as to the ultimate outcome of the appeal, the bank believes it has a “meritorious defence” and will “vigorously defend its position”.
However, it said this week that it expects the legal case – which will also involve Latvian authorities – to continue for another two to three years.
Rietumu Banka has previously made a €20m provision to cover the cost of the French fine and legal expenses.
Mr Desmond owns his stake in the bank via his Boswell investment vehicle. He initially acquired a holding in Rietumu Banka in 2005.
Its newly-published annual report confirms that the group generated a net profit after tax of €37.4m in 2018, compared to €33.5m in 2017.
Its directors said that 2018 had been a year of “remarkable change” for the bank.
“The bank successfully managed to considerably restructure its business model, which resulted in the closure of a significant part of its client base and subsequently a significant fall in assets,” they noted. It axed a quarter of its workforce last year.
In 2018 the bank terminated relationships with more than 4,000 corporate customers it re-classified as being in a ‘prohibited risk’ category.
The move came after the United States accused the Baltic country’s third-largest bank, ABLV, of “institutionalised money laundering” earlier in the year.
The US Treasury Department’s Crimes Enforcement Network claimed that ABLV had links to North Korea’s ballistic missile programme, an allegation the bank had strenuously denied.
But the US moved to freeze ABLV out of the US banking system. The US probe prompted investors to start pulling funds from ABLV and caused significant turmoil in the Latvia’s financial sector.
Rietumu said the changes to its business model implemented last year were “partly in response to these events” and were necessary “to protect the bank’s reputation and future development”.