RIGA - Latvian state-owned Parex bank, which was broken up into two companies this past August, posted 120 million lats (171.4 million euros) in losses in the first nine months of this year, whereas the group’s total losses reached 103 million lats, the bank’s spokeswoman Marita Ozolina-Tumanovska said, reports news agency LETA. “Parex bank’s operations in the first nine months were affected by serious changes, because, for the first time in the history of Latvia, a large-scale bank restructuring project was implemented to help not just the largest Latvian bank, Parex bank, but, in the opinion of financial experts, the entire banking sector and the national capital of Latvia.” She added.
“Overall, the bank’s operations continue in accordance with plans and the restructuring plan approved by the European Commission, which foresees inevitable losses. Nevertheless, thanks to the hard work and effort by the bank’s professional staff, the bank has recovered 20 million lats in just two months since the break-up,” said Parex board chairman Chris Gwilliam.
Parex bank and Parex Group’s credit portfolio was 630.6 million lats and 638 million lats, respectively, as of Sept. 30 this year, total assets - 859.7 million lats and 866.4 million lats, respectively. Capital and reserves were 74.5 million lats for Parex bank and 78.4 million lats for Parex Group.
Taking into consideration the amount of assets managed by Parex bank, the bank gives particular attention to hiring high-quality specialists and the development of a professional team for asset management, said Ozolina-Tumanovska.
As money is gradually recovered from the existing Parex bank loan portfolio, it is planned that money flows generated by the bank will be sufficient to repay the next syndicated loan installment without state assistance. Under agreement reached with the syndicated lenders in March 2009, Parex bank has already repaid 70 percent of the total loan amount, and the remaining 30 percent - 163 million lats - is to be paid in May 2011.
On Aug. 1, Parex bank’s liquid assets were transferred to Citadele bank. Parex bank now only deals with debt recovery and does not perform standard banking operations.
Citadele bank, in its first months of operation, up to Sept. 30, has suffered 7.7 million lats in losses. Citadele Group’s losses are at 6.7 million lats.
The bank’s report points out that the losses were within “previously planned limits,” and that “initial operational results were negatively influenced by a number of restructuring factors.” Management expects the situation to change already at the beginning of 2011, with a profit expected for next year.
Assets at Citadele were 1.4 billion lats with deposits of 1.1 billion lats.