RIGA - The European Bank for Reconstruction and Development (EBRD) on Sept. 3 became Parex bank's latest shareholder as it carried through on its April 16 Share Purchase Agreement and officially acquired a 25 percent plus one share ownership in the banking group, reports news agency bbn.ee.
The Latvian Privatization Agency transferred 51,444,325 ordinary shares to the EBRD. As part of a planned future capital increase at Parex the EBRD plans to purchase a further 6,062,500 shares, bringing its total investment to 57,506,825 shares, with voting rights, at an investment totaling 57.5 million lats (82.1 million euros). The bank previously extended a subordinated loan of 22 million euros, which qualifies as Tier 2 capital.
This investment will strengthen the bank's capital base and support its continued restructuring, and return to profitability and the private sector. EBRD head of Financial Institutions Nick Tesseyman said "The EBRD is very pleased to be able to support a bank that plays such an important role in the economy. As a shareholder, the EBRD will work closely together with management to further strengthen Parex bank, especially in its ability to continue financing the enterprise sector."
Chief Executive Officer of Parex Nils Melngailis added "I am pleased to welcome the EBRD to our shareholder group. Thereby, Parex has acquired a very valuable partner and shareholder experienced in bank restructuring. The attracted resources will enable Parex to further develop new services, paying closer attention to the segment of small and medium enterprises, as investments in this particular segment are vital for the economy to recover."
To date the EBRD has committed close to 450 million euros to the Latvian economy in various projects in the financial, corporate, energy and infrastructure sectors.
