Priority of 1Q 2010 - restructuring of Parex banka
Parex banka has announced the financial results for first quarter of 2010,
stating that the main focus of Parex banka‘s management was on the
restructuring of the Bank, with the principal restructuring goals of the Bank
to stabilize the enterprise's operational activities, create a stable bank with
long-term potential, and increase the interest of private investors in the
Bank.
Parex banka's restructuring plan was developed by international financial
consulting firm Nomura International plc. On 23 March, the Latvian Cabinet of
Ministers (Government) approved this restructuring plan and it was submitted to
the European Commision for approval on 31 March 2010. According to the plan a
part of Parex banka's assets will be used for the creation of a new bank with a
stable financial base, which will make it easier to attract investors and repay
the resources invested into the Bank by Latvian state institutions at the
earliest possible convenience, while the Resolution bank will be able to sell
its assets in the market over the long term, with the goal of ensuring a
maximum return on the investment made by Latvian state structures.
During the 1st quarter of 2010, Parex banka received the authorization of the
International Monetary Fund and the Latvian Financial and Capital Market
Commission (FCMC) to increase the credit limits of the Bank's largest, loyal
corporate clients. The Bank also signed an agreement with the European
Investment Bank on the granting of EUR 100 million in credit resources for
loans to small and medium enterprises, and signed a trade finance agreement
with the European Bank for Reconstruction and Development (EBRD); thus,
enabling its corporate clients to lower the cross-border deal risks.
Parex banka's liquidity indicators are improving and currently its liquidity
ratio already exceeds 60%. During the first three months of this year, the
volume of deposits in the Bank continued to increase and compiled data indicate
that the total volume of deposits at the end of March exceeded LVL 1 billion,
not including the deposits placed into the Bank by the Latvian State Treasury;
thus, enabling the Bank to anticipatory repay LVL 117.6-million loan to the
Bank of Latvia prior the final maturity. Since the beginning of this year, the
total volume of client deposits in the Bank and in the Group has grown by LVL
131.2 million and LVL 149.8 million, respectively. Although an increase in
deposits can be observed in all of the Bank's business segments, the largest
increase of LVL 59.5 million has been in the corporate client segment.
On 31 March 2010, the Parex banka's loan portfolio was LVL 1.42 billion, while
that of the Group was LVL 1.62 billion. Total assets amounted to LVL 2.44
billion for the Bank and LVL 2.59 billion for the Group. The volume of capital
and reserves was LVL 160.3 million for the Bank and 142.2 million for the Group
at the end of the 1st quarter of 2010. During the first three months of 2010,
the Bank continued to fulfil the Latvian regulations governing capital
requirements. The Bank and the Group ended the 1st quarter of this year with
total net losses of LVL 26.7 million and LVL 30.8 million, respectively.
However, the losses before provisions, depreciation and taxes were LVL 9.9
million for the Bank and LVL 10.5 million for the Group. The financial results
continued to be significantly affected by the supplemental accumulation of
asset impairment provisions of LVL 19.0 million by the Bank and LVL 20.8
million by the Group.
About Parex banka:
Founded in 1992, Parex banka currently employs around 1 800 people in Latvia.
The Bank offers universal banking services throughout the Baltic Region, the
CIS and other European nations such as Germany, Switzerland and Sweden. Parex
Group companies operate across the banking, finance, leasing, asset management
and life insurance sectors. Currently, 76,6% of the Bank's shares are held by
Latvian Privatisation Agency, while the EBRD is the owner of 19,7% of Parex
banka's shares. Parex banka has signed up to the European Code of Conduct on
housing loans. In March 2010 the Bank participated in Evaluate good service!
campaign and received the most client appraisals in financial sector.
For more information please contact:
Inga Saleniece
Corporate Communication Manager
Parex banka
Ph. +371 67778870 or +371 26564629
E-mail: pr@parex.lv
