Citadele readies for sale

RIGA - Citadele Bank, the state-owned Latvian retail lender formed after Parex Bank’s collapse, may be sold in the first quarter of 2012, Finance Minister Andris Vilks said on Oct. 31. “There is interest, obviously,” Vilks said in an interview on the sidelines of a conference in Stockholm, reports Bloomberg.
“This bank is already profitable - the Nordic banks are interested,” he added.

Citadele was split from Parex, once the Baltic nation’s second-biggest lender, after a run on deposits triggered a government rescue in 2008. Latvia then turned to a group led by the European Union and the International Monetary Fund for a 7.5 billion euro bailout loan package and passed tax increases and spending cuts equal to about 16 percent of gross domestic product to narrow the budget deficit.

Nordic lenders Swedbank, SEB, Nordea and DnB Nord ASA were the four biggest lenders in Latvia in the second quarter, according to the Association of Latvian Commercial Banks. DnB Nord and Nordea are interested in buying Citadele, pietiek.com reported last October, citing a document from Nomura International Plc, an adviser to the government. Both banks declined to comment on Oct. 31.

Citadele may be sold for 103 million lats (147.1 million euros), Chairman Juris Jakobsons told business daily Dienas Bizness in an Oct. 10 interview. Moody’s Investors Service placed its Ba3 rating on review for a downgrade on Sept. 20 after non-performing loans jumped to 19 percent of the bank’s overall credit portfolio from 4 percent when it was created last August.
The Latvian government was to decide this week on whether to split up mortgage lender Hipoteku un Zemes Bank, which the government recapitalized during the global financial crisis, Vilks said. “We’re going to sell the commercial assets next year,” he said.

Latvia has committed to splitting up the lender and selling its commercial assets, while maintaining what remains as a development bank. The government submitted a restructuring plan to the European Commission on April 15 after “long delays,” the IMF said in a June 8 staff report.