Gwilliam continues restructuring efforts

  • 2011-10-05
  • From wire reports

RIGA - In unwinding what had become a secretive spider web of a banking empire clouded by accusations of massively fraudulent operations, and in continuing efforts to recover the substantial funds injected by the state into the collapsed Parex Bank, subsidiaries in Russia have been sold to a company that belongs to Unicorbank Group (Russia), reports Already the first payment of the sale, for Parex Leasing and Extroleasing, brought in more than 14.5 million dollars.
By the end of 2013, Parex will continue to receive payments from the gradual sale of the leasing company’s troubled asset portfolio, said the bank’s spokeswoman Marita Ozolina-Tumanovska.

“The transaction’s well-thought-out structure and conditions will ensure the necessary means to recover the state investment, successfully fulfilling the goals of the bank’s restructuring plan,” explained Ozolina-Tumanovska.
Parex has already recovered more than 120 million dollars from its Russian leasing companies since the state became its majority shareholder.

The transaction was carried out in accordance with the bank’s restructuring plan, which was previously approved by the Cabinet of Ministers and the European Commission. The plan stipulates that the bank’s leasing companies in CIS countries must be sold or liquidated by Dec. 31, 2013.
Parex Bank board chairman Christopher Gwilliam emphasized that, considering the directions of activity and restrictions determined in the restructuring plan, the gains from selling Parex Leasing and Extroleasing are significantly larger than the bank could expect if the companies’ business activity continued for a limited period of time, followed by their subsequent wind-up.

Gwilliam also pointed out that the bank is currently actively considering selling its leasing companies in Ukraine and Azerbaijan.
Ozolina-Tumanovska explained that Parex has been assessing the sale of its leasing companies in CIS countries since 2009. The bank has reviewed a total of approximately 200 applications. Several prospective buyers expressed interest in purchasing Parex Leasing and Extroleasing. Unicorbank’s offer was the best one.
“The decision to sell both subsidiaries was made after an independent analysis of various business scenarios, carried out by the bank’s specialists and an independent international expert company. The experts compared Extroleasing and Parex Leasing potential cash flows until the end of 2012 with the economic benefits from their immediate sale,” said Ozolina-Tumanovska.

Such important factors as the companies’ location, commercial and legal risks in regard to their location, as well as the potential cost of the companies’ liquidation were considered. The experts also assessed the offered price, business partner’s reputation, sufficiency of funds, legality of the indicated funds and other significant factors in accordance with the procedures approved by the bank.

As a result, Unicorbank’s offer was found to be the most optimal and in compliance with the criteria for the sale of the leasing companies, enabling Parex Bank to recover a significant share of the state investment.