Parex Banka Leaves the Russian Leasing Market Recovering More Than USD 120 Million

Consistently and purposefully continuing to work on the determined tasks, Parex banka has concluded a beneficial transaction on selling Parex Leasing and Extroleasing, its Russian subsidiaries, to a company that belongs to Unicorbank Group (Russia). The first payment already recovered more than USD 14.5 million. Until the end of 2013 Parex banka is going to continue receiving payments from gradual selling of the leasing company’s problematic asset portfolio. The carefully thought-out structure and conditions of the transaction will ensure the flow of funds necessary for repayment of the State investments thus facilitating accomplishment of the goals determined in the restructuring plan. The funds recovered from Russian leasing companies are significant – over USD 120 million have been received since the State became the chief shareholder of Parex banka.   

Selling of Parex Leasing and Extroleasing was conducted in accordance with the restructuring plan approved by the Cabinet of Ministers and the European Commission. The plan provided for termination of activity of Parex banka’s leasing companies in the CIS by 31 December 2013 by means of selling or winding them up. The plan did not anticipate investment of additional funds in development and maintenance of business activity of these companies.   

“Considering the directions of activity and restrictions determined in the restructuring plan, gains from selling Parex Leasing and Extroleasing are significantly larger than we could expect from continuing the companies’ business activity in a limited period of time followed by their subsequent wind-up. Therefore I am glad that we were able to use the beneficial situation in our favour and conclude the planned transaction in a time when the market is generally more advantageous for buyers than sellers. Presently we are actively reviewing the opportunities of selling our leasing companies in Ukraine and Azerbaijan,” says Christopher Gwilliam, Parex banka’s Chair.

In accordance with the set tasks, since 2009 Parex banka has been assessing the opportunities of selling its leasing companies located in the CIS. A total of approximately 200 applicants have been reviewed. Several potential buyers expressed their interest in purchasing Parex Leasing and Extroleasing, including Unicorbank, whose offer was acknowledged as the best.    

The decision on selling both subsidiaries was passed after a group the Bank’s of specialists and an independent international expert company carried out an in-depth analysis of possible business development scenarios, including comparison of cash flows that Extroleasing and Parex Leasing could generate until termination of their activity in the end of 2013 with the economic benefits from immediate selling at a correspondingly determined price.  Such important factors as location of Extroleasing and Parex Leasing in the CIS and the business and legal risks arising from this fact as well as expected costs of the companies' wind-up were considered in the calculations. Similarly, great attention was paid to the applications for purchasing assets, assessing the offered price, business partner’s reputation, sufficiency of funds, legality of the indicated funds and other significant factors in accordance with the procedures approved by the Bank.  As a result, Unicorbank’s offer was found as the optimum one which complies with the determined selling criteria and enables Parex banka to recover a significant share of the funds invested by the State.   

Video (Christopher Gwilliam about Parex Leasing and Extroleasing selling process): http://www.youtube.com/watch?v=xrXsz-uRmWI

About Parex banka:
Since 1 August 2010 when Parex banka launched its activity as a solution bank, simultaneously discontinuing provision of such classical bank services as account and deposit services, loans and others. The main goal of Parex banka is to recover State investments to the maximum amount possible.
In May 2011 Parex banka successfully implemented the first of its very important tasks: it repaid the last instalment of the international syndicated loan guaranteed by the State in the amount of 164 million Lats. Bank repaid this sum from its own funds thus releasing the State and taxpayers from voluminous liabilities.
Majority shareholders of Parex banka are the State of Latvia which is represented by Privatization Agency and the European Bank for Reconstruction and Development (EBRD).
Please visit Parex banka’s website to find out more: www.parex.lv.


Detailed information available at:

Marita Ozoliņa-Tumanovska
Head of Communications and Marketing Department
Tel. 67779142 or 29287169
e-mail: Marita.Ozolina@parex.lv