* Latvia suspends c.bank chief, investigating bribery allegations
* C.bank Governor Rimsevics rejects claim, says won't resign
* Rimsevics says victim of smear campaign
* PM says still no evidence backing allegation (Adds further c.banker comment)
RIGA, Feb 20 (Reuters) - Latvia's central bank chief was suspended on Tuesday pending an investigation into whether he solicited a bribe, as corruption allegations and counter accusations rocked the financial sector of the euro zone country with close ties to neighbouring Russia.
The prime minister's office said Ilmars Rimsevics had been suspended from his role as the anti-corruption agency investigates allegations he asked for a 100,000 euro bribe.
Rimsevics, who was held in custody over the weekend, had earlier told a news conference he was the victim of a smear campaign because he has been leading a drive to clean up corruption in the Baltic country's banking sector.
He said he would not resign.
"I have not demanded or received any bribes," Rimsevics told the news conference. "I have become the target of some Latvian commercial banks to destroy Latvia's reputation."
U.S. allegations that a leading bank engaged in money laundering and helped breach North Korean sanctions have also turned a spotlight on Latvia's financial system in recent days.
Prime Minister Maris Kucinskis said earlier on Tuesday that the complaint against Rimsevics was made by small Latvian lender Norvik Bank. Its owner, Grigory Guselnikov, a Russian based in Britain, had not provided evidence of wrongdoing despite being "repeatedly asked", he added.
Norvik Bank did not immediately respond to a request for comment.
Rimsevics said he was a victim of "a coordinated attack by a few Latvian commercial banks" who believed he was behind tough actions by the anti-corruption agency. It has handed out fines in recent years over breaches in money-laundering rules and laws aimed at closing off funding for terrorism.
Rimsevics said the banks wanted to see him replaced with someone more compliant.
Candidates to head the anti-corruption authority are selected by the central bank governor and the finance minister.
Kucinskis said he could not rule out that the bribery allegations against Rimsevics, no details of which have been given by police or the anti-corruption authority, were an attempt to damage the reputation of Latvian authorities.
It was not immediately clear whether Rimsevics could continue to represent Latvia on the European Central Bank's Governing Council, which sets interest rates for the euro zone.
A Bank of Latvia spokesman said deputy governor Zoja Razmusa would attend a non-policy ECB meeting on Wednesday.
LACK OF TRANSPARENCY
The confusing, rival claims of wrongdoing will deepen worries about the transparency of parts of Latvia's banking sector, which have close financial links to former colonial master Russia.
The biggest banks, subsidiaries of Nordic giants like Swedbank and SEB focus on domestic lending, but there are also a number of small banks who handle mainly overseas client money.
The International Monetary Fund has repeatedly urged Latvia to be vigilant over non-resident deposits -- mostly held for clients in Russia and the CIS -- and strengthen the enforcement of rules to combat terrorism funding and money laundering.
The U.S. Treasury's Financial Crimes Enforcement Network (FinCEN) has said non-resident banking in Latvia increases the risk that criminals and shell companies could conduct fraudulent transactions or hide their financial dealings.
It called on Feb. 13 for sanctions on Latvia's third-biggest lender, ABLV Bank, which it said had "institutionalized money laundering" and helped clients avoid sanctions on North Korea.
The ECB suspended payments by ABLV this week citing liquidity concerns. ABLV, which has rejected FinCEN's allegations, sought emergency funding from the Latvian central bank, which bought 13 million euros in bonds and has agreed to provide 97.5 million euros in loans.
ABLV managers were meeting ECB supervisors on Tuesday to outline a survival plan, a key step in removing the payment moratorium.
Around 600 million euros worth of deposits -- around 22 percent of all deposits -- have left the bank since FinCEN made its allegations. While the freeze has halted those outflows, sources close to the discussion said ABLV would be given just days to come up with a credible plan.
If supervisors do not find its plans realistic and rule that it is likely to fall short of its financial obligations, they could declare the bank failing or likely to fail and hand the case over to the Single Resolution Board.
A number of other small Latvian banks have been fined in recent years for breaching money laundering rules and terrorism funding legislation, including Norvik Bank.
It was one of two lenders fined more than 2.8 million euros ($3.26 million) by Latvia's Financial and Capital Market Commission (FKTK) for allowing clients to violate European Union and United Nations sanctions on North Korea. Three others received smaller fines.
Another, Rietumu Banka, was fined in France for aiding tax avoidance and money laundering, while the European Central Bank withdrew Trasta Komercbanka's license in 2016 at FKTK's request.
The FKTK said Trasta had breached capital rules and broken anti-money laundering and terrorism financing regulations. The bank was then wound up.
On Tuesday, European Commission Vice President Valdis Dombrovskis, a former Latvian prime minister, warned that the allegations of corruption and money-laundering damaging Latvia's reputation. (Reporting by Gederts Gelzis; Additional reporting by Balazs Koranyi and John O'Donnell in Frankfurt; Writing by Simon Johnson; Editing by Catherine Evans)