RIGA - Parex Bank on July 9 signed a deal to receive a 117 million euro syndicated loan, the largest in Latvia's banking history.
The loan, which will be granted by a syndicate of 25 international banks, will have an interest rate of Euribor plus 0.7 percent and a term of one year, with the possibility of extension.
The size of the loan is some 42 million euros more than originally planned and amounts to some 72 percent of the bank's own capital and reserves, which attests to the bank's reputation in international banking circles.
"The growth dynamic of attracted funds, the decrease in interest rates and the geographical breadth of the syndicate's participants are evidence of our progress on world markets," said Valery Kargin, president and co-owner of the bank, adding that the low rate of the loan will give Parex a comparative advantage on the local lending market.
Kargin said the bank intended to use the funds for the development of small and medium enterprises, with some 30 percent going toward financing transit and logistics and telecommunication spheres. Another 30 percent will be used to finance the energy and industrial sectors, he said.
This syndicate includes 25 international banks. An agreement for organizing the loan was signed in May with Netherlands-based ING, London-based Standard Bank London and Japan's Mizuho Corporate Bank, and it includes HSH Nordbank AG, Copenhagen branch, Bayerische Landesbank and Raifefeisen Zentralbank Osterreich AG.
The syndicated loan is the fifth for Parex Bank, which returned the previous loan of 47 million euros last month.
Standard Bank London representative Davis Savin called the deal a "great transaction" and joked that the loan was a tribute to Latvia's fine showing in the Europe 2004 soccer tournament.
Parex Bank, Latvia's largest financial institution in terms of assets, continues to be one of the most dynamic banks of the 23 registered in Latvia. Earlier this year it bought a Swiss bank, Anlage & Privatbank, and opened a representative office in Japan.
In recent months the bank's two owners, Valery Kargin and Viktor Krasovitsky, have held two private equity emissions, during which they sold some 12 percent of the bank's shares and attracted some 64 new shareholders. The two still control some 88 percent of its stock.
Kargin has stated the bank's mid-term goal was to have its stock listed on a major stock exchange, possibly London.
Last year the bank posted a net profit of 13.4 million lats (20 million euros), up 44 percent on 2002.
