Dijsselbloem Says EBRD Has Put Option on Citadele, Reverta Stake

The European Bank for Reconstruction and Development has a put option on its stakes in Latvia’s Citadele Banka AS and Reverta AS, said Dutch Finance Minister Jeroen Dijsselbloem.

“According to the information available to me, the EBRD indeed has a put agreement with the Latvian Privatization Agency on the combined stake in Citadele and Reverta,” said Dijsselbloem in written answers to questions posed by members of the Dutch parliament today. The put option is not included in the national accounts of Latvia, since it’s a guarantee, Dijsselbloem said. The put option was agreed in 2009, he said.

Latvia sought a 7.5 billion-euro ($10.3 billion) loan from a group led by the European Commission and the International Monetary fund in 2008 after taking over Parex Banka AS, the country’s second-biggest lender. Parex was later broken up into Citadele and Reverta, an asset-management company that sold off impaired assets.

The EBRD helped shore up Citadele by investing in its capital and subordinated debt and owns a 25 percent stake in the lender. It also owns 12.74 percent in Reverta. Ansis Spridzans, the chairman of the Latvian state-asset sales department, which holds the country’s stake in the two companies, declined to comment today when asked about the put option.

Latvia is planning to close a sales agreement for Citadele by the end of September, said Vladimirs Loginovs, the head of the commercial department at the state-asset sales department, today.

Bidder Identities

Ripplewood Holding LLC, Yuri Shefler and Norvik Banka AS were named as bidders for Citadele by Pietiek.com on June 17, without saying where it got the information. Latvia has declined to name the number of bidders or their identities.

After taking over Parex, the Latvian state repaid in full 775 million euros the bank owed to other banks around the world. In the future, creditors for banks that get state support may not be fully repaid as resolution and state-aid rules apply that require private investors to share in the costs.

The Latvian state supported Citadele with 174.2 million euros in the second quarter and Reverta with 789.3 million euros. Total Latvian support for Parex in 2009 was 1.7 billion euros, including capital, liquidity and guarantees, according to the state-asset sales department.

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