VILNIUS - The Lithuanian unit of Citadele Bank, Latvia’s state-owned retail lender, got central bank approval to cut its registered capital by almost half, reports Bloomberg. The Bank of Lithuania’s Supervisory Council decided on Nov. 23 that Citadele Bank could reduce its capital by 137.3 million litas (39.8 million euros) to 148.9 million litas and still meet all risk-related requirements.
“The bank currently has sufficient capital and seeks to use it as effectively as possible,” the Lithuanian lender said in a statement.
The Cabinet of Ministers of Latvia on Nov. 6, 2012 postponed the sale of Citadele Bank until next May. The decision was made taking into account the complicated situation in the banking sector and insufficient interest among investors. There are currently many banks on sale and only a few of these processes conclude successfully, Economy Ministry State Secretary Juris Puce has said.
Next May, when the economy minister will have to come up with a report on the situation, the government will decide whether to resume the bank’s sale.
The Nov. 23 decision was made after hearing out the bank’s representatives and consultant Nomura International.
On Aug. 8, 2008, the Latvian government decided to bail out Parex Bank’s controlling interest from its previous owners - Viktors Krasovickis and Valerijs Kargins - who through poor management and allegations of massive money-laundering operations led the bank to bankruptcy, abetted by the global financial crisis.
On Aug. 1, 2010, Citadele Bank began operations. At the same time, the technical split of Parex Bank was performed and, as a result, a part of the bank’s assets and liabilities were transferred to Citadele Bank.
Citadele operated with 2.5 million lats (3.5 million euros) in profit after provisions and taxes in the first half of 2012.
As of June 30, Citadele assets totaled 1.36 billion lats.
Citadele’s loan portfolio reached 628 million lats. The bank’s capital and reserves amounted to 85 million lats at the end of June.