Political party Harmony Center, supported by the Greens/Farmers, has submitted amendments to the Law on the Closure of Privatization of State-owned and Municipal Property and Termination of Usage of Privatization Certificates in order to postpone the sale of Latvia’s state-owned Citadele bank, reports LETA.
Harmony Center believes that it is necessary to adopt a separate law for the bank. Harmony Center MP Andrejs Elksnins says that now is not the best time for selling the bank and the government should act in the interests of Latvia, launch talks with the European Commission and postpone the bank’s sale.
Moreover, it is necessary to prevent any possibility of squandering state property and taxpayer’s money. To achieve this, a separae law on the bank’s seizure should be drawn up and adopted, explains Elksnins.
The bill has been submitted by Harmony Center MPs Andrejs Elksnins and Janis Urbanovics. It has also been signed by Greens/Farmers MPs Augusts Brigmanis, Uldis Augulis, Raimonds Vejonis and Janis Duklavs.
At a closed meeting on July 16, the government decided to resume the sale of Citadele bank’s assets.
All for Latvia!-For Fatherland and Freedom/LNNK (VL-TB/LNNK), however, has decided to call on Prime Minister Valdis Dombrovskis (Unity) and Economy Minister Daniels Pavluts to halt all activities that deal with the sale of Citadele bank.
In order for the government’s decision to renew the sale of Citadele bank assets, to be successful, the government must hire an asset sales consultant - an international investment bank that will be tasked with developing the best strategy to find an investor in the bank, said Economy Ministry State Secretary Juris Puce in July.
Thanks to the Latvian government’s successful talks with the European Commission, there are several options to choose from to attract an investor for Citadele: one or several investors could be offered to buy government shares in the bank, or the shares could be traded on the stock exchange, the Latvian Privatization Agency said.
The government hopes to conclude the asset sales process next September or October, said Puce.
The government is acquainted with the Privatization Agency’s report on attracting private capital into Citadele bank. The report says that the objective of the Parex bank restructuring plan – the establishment of a stable financial institution - has been accomplished. Citadele bank, established in accordance with the plan, is operating successfully and profitably, but further development of the bank requires the attraction of private capital.
Therefore the government decided that the Citadele bank sales process must be resumed.
Now is the right time to renew attracting private capital into Citadele bank, because the bank is profitable, the economic situation in Latvia has stabilized and Latvia’s forthcoming accession to the eurozone creates favorable conditions for finding an investor in the bank, said Privatization Agency board chairman Ansis Spridzans.
Once an international investment bank is selected to organize the sales process, it will have to analyze the market situation and determine the best investor attraction strategy. It will be responsible for developing a strategy for the attraction of private capital, market situation evaluation, marketing activities, talks with prospective investors.
The investment bank will be selected through competition, it will have to have an impeccable reputation and experience of selling bank shares for over 100 million euros. The competition commission will include representatives from the Finance Ministry, Economy Ministry, Privatization Agency, and the competition could be announced in a few months already.
The government’s talks with the European Commission on several private capital attraction scenarios continue. The best scenario will be selected by the consultant based on the market situation, and the final decision will be taken by the government in 2014.
Citadele bank was established in 2010 to manage Parex bank’s liquid assets, and in three years’ time it has become a profitable operation.
Citadele bank posted 5.5 million lats (7.8 million euros) in profit last year, whereas Citadele corporation’s profit last year amounted to 9 million lats.
The Privatization Agency holds 75 percent of Citadele bank shares, whereas the European Bank for Reconstruction and Development owns 25 percent plus one share.