RIGA (BNS) – The Latvian government considered Latvijas Hipoteku un Zemes Banka's development concept for the next five year period and decided to retain the mortgage bank in state hands.
The concept stated the bank developed very rapidly between August 1996 and April 1999 and has achieved good banking indicators, but its potential is not used fully.
The working group developing the proposals recommended two various development plans for the bank to the government.
One of the plans that was backed by the bank's management and supported by the government envisages that the bank continues operating as a united state-owned commercial bank, dealing with lending to small- and medium-sized businesses, mortgage lending and emission of mortgage bonds.
Under this proposal the bank will actually be turned into a "business development bank/agency" since it will be entitled to perform a part of project management functions of programs and projects approved by the state.
This proposal envisages foreign investment in the bank before the end of the year, to increase the subordinated capital against state guarantees.
The second plan envisaged that mortgage lending and emission of mortgage bonds should be separated from the business development operations of the bank setting up a special mortgage bank as a new credit institution.
