According to the Latvian Ministry of Finance, the Cabinet of Ministers reviewed various models for the restructuring of the Parex banka on Tuesday, March 16. The government received a report from the Latvian Privatisation Agency (PA) on work that is being done to ensure a split of assets and the creation of a new enterprise (new bank) in a way that will be in line with the bank's future business profile. This model is recommended by government's international financial consultant, Nomura International plc, in correspondence to European Commission guidelines. The PA added that the restructuring model is being studied in depth, emphasising the fact that the splitting up of the bank will in no way affect the bank's clients and their relationship with the bank. The decision on a restructuring model is of key importance so that the restructuring of the Parex banka can be completed. After the agreement of the relevant institutions in Latvia, the Ministry of Finance will submit the plan to the European Commission for its approval. This is required because of EU procedures related to the provision of government aid to financial institutions. The splitting off of assets and obligations will begin after the European Commission approves the restructuring model. Assets unrelated to the bank's basic operations will be split off. They will be managed and sold in accordance with a pre-approved strategy. After the restructuring, the bank will be able to relaunch its lending operations. The Parex banka has already reached agreement on financing that will allow it to issue loans to small and medium companies in the Baltic States, thus playing an important role in the region's strategy for economic recovery. On January 25, the PA renewed its contract with the international investment bank Nomura International plc, which is serving as a consultant on the sale of the Parex banka. Nomura International plc is drafting the restructuring plan and will be responsible for its implementation, as well as for the sale of assets that are available for sale as a result of the restructuring. Nomura International plc analysis suggests that the existing Parex banka lending portfolio can be managed most effectively by splitting off assets that are unrelated to the new bank's future strategic development. The establishment of a new bank will allow it to strengthen its positions in the Baltic market. The restrictions on bank operations that are in place now will be lifted, and it will be possible to diversify the new bank's asset refinancing sources, thus ensuring the full repayment of the state's subsidies to the greatest possible extent. Baiba Melnace Head of Communication Division Ministry of Finance Telephone: +371 67083850; +371 29265135 baiba.melnace@fm.gov.lv