Latvian Government Agrees to Break Up Parex Banka, Put Units Up for Sale
The Latvian government agreed to break up Parex Banka AS, the lender it took over in 2008, creating a retail bank and an asset-management company.
The government asked the “privatization agency to establish a new credit institution,” out of Parex Banka, the Finance Ministry said in a statement today. The plan to split the bank must still receive approval from the European Commission, the statement said. Economy Minister Artis Kampars told reporters today that the bank may be split by the beginning of next month.
Parex was Latvia’s second-biggest lender before a run on deposits prompted the state to take it over. The government put in about 1 billion lati ($1.7 billion) in deposits, capital increases and other investment to shore up the bank. The bank’s collapse exacerbated an economic slump that forced the country to turn to a group led by the European Commission and the International Monetary Fund for a 7.5 billion-euro ($9.1 billion) bailout.
Peter Hambro, chairman of Petropavlovsk Plc, and a group of investors submitted a bid for parts of Parex, including the Swiss subsidiary, on March 3. Peter Forster, chief operating officer of the Swiss-based Institute for Innovative Trading AG, and a group of investors, are interested in acquiring the Swiss subsidiary.
Nordea AB, DnB Nord Banka, PKO Bank Polski SA, Alfa Bank, Raiffeisen Bank were among banks mentioned as possible buyers of the new Parex, newspaper Diena said on March 23, citing a consultant’s report.
The Latvian state-asset sales agency owns 77 percent of Parex and the European Bank for Reconstruction and Development has 20 percent. The remainder is owned by minority shareholders.
To contact the reporter on this story: Aaron Eglitis in Riga at aeglitis@bloomberg.net
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