"We are not reopening an old bank, we are opening a new bank. We will
even have a new name, though I cannot reveal it at this time," said
Kallaker, a former executive vice president of Swedbank who was
tapped by Riga's central bank to lead Komercbanka into the future.
Gundars Cers, the bank's administrator, announced last week that the
final agreements for rehabilitating Komercbanka, which closed its
doors in March, had been signed. Agreements between the bank and its
shareholders put its capital at 6.3 million lats ($10.86 million).
The central bank will require all banks to have at least 5 million
euros ($5.15 million) of capital by the end of 1999.
The Bank of Latvia and the European Bank for Reconstruction and
Development, Komercbanka's two major creditors, converted their debt
to shares. The two hold 40 percent and 6 percent of the bank's shares
respectively. The Latvian government earmarked 1 million lats for
rehabilitation and now holds a 0.7 percent stake in the bank.
Other shareholders include two syndicates that comprise Japan's Fuji
Bank and a number of Scandinavian and German banks (25 percent) and
the bank's depositors (25 percent).
Cers was expected to submit a request to a Riga court to end the
bank's insolvency process this week. Kallaker said Komercbanka should
open its doors in early October.
Kristaps Otersons, a spokesman for the Bank of Latvia, said, "Rigas
Komercbanka is one of the oldest banks, it has good experience on the
market and worked very well with its clients and is significant for
the Latvian economy."
Otersons said the Russian crisis that sank Komercbanka back in March
- the bank had 27 percent of its assets tied up in Russian T-bills
when they became worthless - was the bank's only fault.
But Kallaker said Komercbanka was otherwise an efficient and
responsible bank that deserves to be re-opened.
"This bank had good sensibilities, good systems," Kallaker said Sept.
20. "We visited many major clients and all had positive things to say
about the bank's services. I think one has to see the difference
between the Russian portfolio and its regular operation."
Some analysts, however, doubt Komercbanka will be able to regain
depositors' confidence. Public opinion polls regularly report that
public confidence in Latvia's banking system is low; usually more
than 75 percent of those polled report low or no confidence in banks.
Others fear the precedent the central bank set by bailing Komercbanka out.
"Having the state support this bank is not that encouraging for the
whole banking system," said Roberts Idelsons, managing director of
Suprema Securities in Riga. "It suggests that it's OK for a bank to
fail because the state will get it out of trouble."
The government, Idelsons said, should steer clear of interfering in
the banking sector, especially since Komercbanka exhibited signs of
fatigue back in 1995, when Latvia was shook by a banking crisis that
claimed the now defunct Banka Baltija.
"It almost went bust back then. There were huge losses on the balance
sheet, and that's part of the reason it got so heavily involved in
the [Russian] GKO market, to fill the huge holes on the balance
sheet," Idelsons said.
Idelsons also refutes claims that liquidating Komercbanka would have
dealt a heavy blow to Latvia's economy. "It essentially failed in
March and nothing has happened," he said.
When the bank re-opens next month, depositors will be allowed to
withdraw up to 1,000 lats without paying a penalty. But those who
want more will have to pay a 50 percent service charge. The charge
will gradually be reduced as time goes on and the bank gets stronger.
Depositors who take part in the rehabilitation plan will surrender
half of their deposits for bank shares.
Kallaker said the main shareholders will look into attracting a
potential strategic investor.
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