Price not key issue in bank subsidiary's sale

  • 2010-03-25
  • By Anna Kravcova

RIGA - Latvia’s Privatization Agency is currently considering two potential offers from foreign investors who are interested in buying parts of the beleaguered Parex bank. One group, the Swiss company Institute For Innovative Trading (IFIT) headed by Peter Forster, announced on March 4 that it is interesting in snapping up Parex’s Swiss private banking and asset management subsidiary, AP Anlage und Privatbank. Just one day earlier an investment group led by Peter Hambro, who is chairman of the third-largest Russian gold mining company Petropavlovsk (formerly Peter Hambro Mining), and is a scion of a famous British banking dynasty, also declared its interest in some of the bank’s assets.

Hambro’s team, VMHY Group, wants to take over the clients and investments of the bank’s private capital management division in the Baltic states and CIS, the Parex Asset Management subsidiary, and AP Anlage und Privatbank. “The acquisition of the wealth management business of Parex bank might strongly support our development efforts,” said deputy chairman of the VMHY Group acquisition department Andrei Novikov, reports Reuters.

He said, however, that it is still “premature to discuss any figures of how much VMHY would be ready to invest to acquire the private wealth management part of Parex” and said that there is only a non-binding indication of VMHY interest. “At this time we expect to discuss with the Latvian government the specific list of assets that will form the target of sale,” said Novikov.
VMHY, says Novikov, consists of four equal partners: Peter Hambro and Pavel Maslovskiy who are the founders and major shareholders of Petropavlovsk, and Andrey Vdovin and Kirill Yakubovskiy, the latter two being the founders of Expobank, which was sold to British Barclays bank in 2008.

“We would like to have a Swiss bank... AP Anlage und Privatbank is one option for us to get [this],” said Forster. Forster said IFIT was one of four Swiss investors who are interested in acquiring a Swiss bank. The other three investors were senior bankers who were currently employed and for this reason could not reveal their identities, he said, Valuing the bank was “difficult,” he added.

Latvia’s state privatization agency is reviewing IFIT’s expression of interest, along with the one received from Hambro, with Nomura, the investment bank who has been hired to design a restructuring and sell-off plan for Parex.
Parex bank, which is 73.4 percent government owned with 22.4 percent owned by the European Bank for Reconstruction and Development, was bailed out by the Latvian government in late 2008 as it was heading for collapse. The Parex crisis itself forced the State to turn to the IMF for support due to worsening government finances in the midst of the global economic crisis.
The Latvian government’s decision on which offer to take may hinge on what the Swiss banking regulator is expected to decide. One of the unspoken rules, according to one money manager in Latvia, is that the Swiss regulator won’t approve the sale of any Swiss bank to a Russian or Ukrainian buyer.