The prime minister’s office said this afternoon Ilmars Rimsevics has been suspended from his role as the anti-corruption agency investigates allegations he asked for a €100,000 (£88,150) bribe.
Mr Rimsevics was held in custody over the weekend and has since claimed he was the victim of a smear campaign. He said he would not resign.
He said: “I have not demanded or received any bribes. I have become the target of some Latvian commercial banks to destroy Latvia’s reputation.”
However on Monday criminal proceedings against the bank chief were launched and today he was officialy removed from his post.
And Latvia has also been accused of money laundering and breaching sanctions with North Korea this week.
The European Central Bank (ECB) waded into the row, freezing payments for the ABLV bank.
And today in a new twist the country’s defence ministry suggested this afternoon the allegations may be part of an “information campaign” organised by outside agents.
They said an attempt may be underway to show Latvia is an “untrustworthy ally” and reduce the government’s power.