RIGA - Lithuania's Snoras Bankas last week announced that it had purchased an 83.01 percent interest in Latvijas Krajbanka (Latvia's Savings Bank) in what has become one of the biggest Baltic banking deals in recent years.
The bank reported to the Riga Stock Exchange that two shareholders sold at 2.99 euros per share, bringing the stake's approximate price to 22.6 million euros.
Snoras executives told reporters that the new owner would increase Latvia's Savings Bank's capital and aim to develop the bank. There would not be a name-change.
"Krajbanka's performance results suggest that the bank has been successful in the Latvian market, and we will develop Latvijas Krajbanka as a universal financial institution for clients in Latvia by stepping up its development, improving client service as well as maintaining Krajbanka as a Latvian bank of impeccable reputation," Snoras President Raimondas Baranauskas said.
He added that the Lithuanian bank had already received authorization from the Latvian Finance and Capital Markets Commission to purchase Latvia's Savings Bank.
Snoras is Lithuania's fourth largest financial institution and one of its fastest growing banks. Its largest shareholder is Russia's Konversbank 's 49.89 percent stake 's via the Luxembourg-registered Conversgroup Holding Company.
The bank's purchase of Latvia's Savings Bank confirms both the trend of bank industry consolidation in Latvia and the continued expansion of Russian capital in the Baltics, now EU members and thus increasingly attractive.
Latvia's Savings Bank was 12th largest in terms of assets among Latvian banks before the deal. After a shady sale of the government's remaining stake in 2003, shareholders had been at odds with one other.
Snoras officials told reporters that almost all the large shareholders in Latvia's Savings Bank sold their stakes. As of the last reporting period, the latter included a mix of off-shore entities 's Macasyng Holding B.V., Doxa Fund Limited, Alkahn Power Company Sdn Bhd. and Carbery Services Limited 's and Ventspils-based companies 's Kalija Parks, Ventbunkers and Ventamonjaks 's as well as several individual stakeholders.
"The deal means further growth and development of Latvijas Krajbanka. It is not a secret that the complicated structure of the bank's shareholders does not facilitate fast decision-making. It was a true pleasure to learn that one of the first steps will be increasing the bank's share capital," said Latvia's Savings Bank President Andris Natrins.
Other minority owners of Latvia's Savings Bank will be offered to sell their shares over the next two weeks, though Snoras officials declined to say what the price would be. "The offer will be convenient," said Vladimir Antonov, chairman of Convers Financial Group, which owns Snoras.
Speaking at a news conference in Riga, Antonov called on Latvia's Savings Bank shareholders to think well about selling their shares. "Considering that there is no longer a conflict between shareholders, they should think whether it made sense to sell the shares, because it is obvious that the bank will grow. In case of successful growth, the price for those shares on the stock exchange will rise," he said.
Antonov added that some 6,000 individuals and corporate entities still own shares in Latvia's Savings Bank, whose shares are quoted on the free list of the Riga Stock Exchange.
Regarding the listing, the chairman said that the new owners did not intend to insulate the bank due to the sheer number of formalities necessary to take the bank public again. Rating agencies and auditors "respond better to public companies," he said.
The bank's expansion plans are also set to continue. Antonov said Snoras would open a representation in Estonia this year and create a branch there next year. Since acquisition was unlikely to work in Estonia, the bank would most probably have a branch and not a subsidiary in Estonia, he explained.
He said that Snoras was also considering acquiring a bank in Russia's Kaliningrad region.
Last year Latvia's Savings Bank posted earnings of 1.3 million lats, while its share capital amounted to 9.1 million lats.
It was unclear whether Snoras bought all shareholders' stakes at the price of 2.99 euros per share. Latvia's Savings Bank refused to comment on the issue.
Former bank president Arnolds Laksa reportedly sold nearly all his shares in the bank.
Snoras Bank is part of the international Convers Financial Group that also comprises Russia's Conversbank, Conversbank Moscow and Enisey bank. At present, it has more than 200 payment offices or mini-banks, 10 branches, some 300 ATMs and 2,200 POS terminals in Lithuania.
In the first eight months of this year, Snoras earned 5.5 million lats in profit, which is 2.1 times more than over the same period last year.