RIGA - A deal to bring in the European Bank for Reconstruction and Development as an investor into Parex Bank should be finalized by the end of July, says Parex bank President Nils Melngailis after a joint meeting of Latvian Parliament's Public Expenditure and Audit Committee and its Budget and Finance Committee, reports news agency LETA.
Melngailis says that efforts as well will continue to find additional investors for the bank.
The Latvian Privatization Agency currently has a 95.3 percent stake in Parex, with the bank's minority shareholders controlling the remaining 4.7 percent. The EBRD will become a Parex shareholder once the deal is finalized.
The EBRD will acquire a 25 percent plus 1 share of common shares, investing 59.5 million lats (85 million euros), plus provide a subordinated loan totaling 15.5 million lats, which would qualify as Tier 2 capital.
The Parex bank group's net losses for 2008 totaled 131 million lats. The bank continued its losses into the first quarter of this year, reporting 6.9 million lats in the red.
In cost cutting moves, total staff costs are expected to be reduced by 38 percent, or 16 million lats, by the end of 2009, compared with the beginning of the year, says acting head of public relations Inga Saleniece. Cuts should be achieved through staff reductions and salary cuts.