RIGA - Parex bank is working with investment banking firm Nomura to look for new investors into the bank, taking into consideration that in this current economic slump in global financial markets, this may not be the best time for selling bank shares, reports news agency LETA. Speculating on if and when a potential investor is found, asked what portion of the financial resources the government expects to recover from its bailout of the bank, Latvian Prime Minister Valdis Dombrovskis (New Era) earlier remarked, without giving any precise figures, that it will depend on the conditions of the agreement of the sale.
Parex bank group announced a 53.9 million lats (77 million euros) loss for the first half of this year, according to the bank's report to the Riga Stock Exchange. The non-audited financial report claims that "the first half year's results were significantly affected by the creation of additional reserves, because of the loss of value in current assets." The bank has created a special work team to deal with its impaired loans.
In 2008, Parex started work on cost-cutting efforts, producing results over the first six months of 2009 saving around 2 million lats, versus the year earlier period. The bank is currently drawing up a strategy for further actions, reassessing its priorities and defining its strategic goals, as well as restructuring its operations, shows the report.
Bank priorities for the first half year were restructuring its syndicated loans, stabilizing its customer base, signing the cooperation agreement with the European Bank for Reconstruction and Development (EBRD), in addition to cutting costs.
The April 16 Share Purchase Agreement signed between the Latvian government, together with the Privatization Agency, Parex bank and the EBRD, served to bring in EBRD as a shareholder to participate in the development and implementation of a strategic plan for the restructuring and refocusing of bank activities.
EBRD's crisis response is motivated to support the banking sectors in the countries it operates in, ensuring that financing flows continue, in particular to small and medium sized enterprises, reports EBRD's Web site.
On June 30, the loan portfolio of Parex bank, and Parex bank group, was 1.63 billion lats and 1.87 billion lats respectively. Deposit levels were1.64 billion lats and 1.76 billion lats, with assets totaling 2.70 billion lats and 2.81 billion lats, respectively.
Capital and reserves for Parex, and for the group reached 183.6 million lats and 175.8 million lats, respectively. The bank paid the State Treasury 20.5 million lats in interest on deposits. Parex bank finished 2008 with a 124 million lats loss.
The Latvian Privatization Agency currently holds 95.3 percent of Parex bank shares. It is expected that the EBRD will complete its purchase agreement, and become 25 percent plus one share owner this month.
