Latvian Mortgage Bank Needs $69 Million New Capital From Budget

Latvia’s state-owned Hipoteku un Zemes Banka AS needs 38.4 million lati ($69 million) in capital after the European Commission asked the country to repay cash that had been improperly used, the Finance Ministry said.

The mortgage lender needs the money to replace European structural funds that had been added to the bank’s capital base, Aleksis Jarocksis, a spokesman for the ministry, said today by e-mail. The capital increase will come from additional budget spending, he said. The news was reported earlier today by the Ir magazine.

The lender received a 25 million-lati capital boost in June after it agreed to sell loan portfolios and pension assets to units of Swedbank AB (SWEDA) and SEB AB (SEBA) as part of a restructuring. Hipoteku had a combined net loss of about 118 million lati in 2009 and 2010.

To contact the reporter on this story: Aaron Eglitis in Riga at aeglitis@bloomberg.net.

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net.

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