An agreement (the “Agreement”) allowing Parex banka to receive financial support from the Latvian Government has been signed on 10 November 2008. The Agreement has been signed by the Ministry of Finance of Republic of Latvia, state-owned Mortgage and Land bank of Latvia (“Mortgage Bank”), and Mr. Valery Kargin and Mr. Viktor Krasovitsky, majority shareholders of Parex banka. Under the terms of the Agreement 51% of Parex banka's shares will be transferred to Mortgage Bank with a buy back option after one year. Mr. Valery Kargin and Mr. Viktor Krasovitsky will remain the owners of 34% of shares but undertake to vote with these shares as instructed by Mortgage Bank. The existing minority shareholders of Parex banka will retain the remaining 15% of shares and their respective voting rights will not change. To provide additional security to Mortgage Bank Mr. Valery Kargin and Mr. Viktor Krasovitsky will pledge their remaining shares of Parex banka together with other private properties and at least LVL 14 million (EUR 20 million) deposits in Parex banka each. The new President and Chairman of Parex banka will be nominated by the Latvian Government and approved by the Financial and Capital Market Commission, the regulator of the Latvian financial sector. Mr. Inesis Feifers, Chairman of Management Board of Mortgage Bank, is likely to be appointed as the Chairman of the Management Board of Parex banka, while Mr. Martins Bicevskis, State Secretary of Ministry of Finance, is nominated as the Chairman of the Supervisory Council of Parex banka. Mr. Kargin and Mr. Krasovitsky will remain as board members. In return, the Latvian State will provide support to Parex banka, including issuing sureties for refinancing of the two outstanding syndicated loans. Subject to and in accordance with the terms of the Agreement, these sureties will be issued on the condition that the European Commission approval of such state aid is in force and allows for the issue of the respective sureties. The sureties will be issued within six months of the date on which the European Commission approves them and will be valid for a period, which does not exceed five years from the date of the issue. In addition to sureties, Parex banka will get access to an up to 10 year facility in amount of LVL 200 million (EUR 285 million), which could be used as subordinated capital. Similarly to the sureties, this facility will be issued on the condition that the European Commission approval of such state aid is in force and allows for the issue of the respective facility. The changes to the shareholder and management structures are expected to be finalised in the next two weeks subject to fulfilment of certain conditions precedent including obtaining consent from the Syndicate Lenders. Both Mortgage Bank and Parex banka will continue to operate as separate financial institutions - each with its own management and business divisions. No decisions have yet been taken as to the future development strategy of Parex banka and providing the best service to its clients remains the bank's key priority. Bringing the Latvian State as the majority shareholder of Parex banka shall improve confidence of the bank's customers, lenders and partners. As previously announced, the Government of Latvia decided to provide support to Parex banka in an extraordinary meeting held on Saturday, 8 November 2008. This decision was made to ensure the stability of Latvia's financial system. Parex banka's shareholders turned to the Government for support, as capital adequacy and liquidity indicators were affected by deepening global financial crisis coupled with unequal competition with the foreign banks, which have secured support from their respective governments. Additional information: Indra Zinkevica Head of International Communications Parex banka Phone: +371 67778571 or +371 29139449 E-mail: indra.zinkevica@parex.lv