Revived Latvian bank to be traded again

  • 2000-12-07
  • TBT staff
RIGA - The quoting of shares in Pirma Banka on the Riga Stock Exchange is likely to begin in mid-December, the bank's president Hakan Kallaker told reporters Dec. 1.

Pirma Banka is the only Latvian bank rehabilitated by the efforts of the central bank in 1999, and was then sold to the German investors. Until March 1999 shares in what was then Rigas Komercbanka were listed on the official list of the Riga Stock Exchange, but the listing was stopped after the bank was declared insolvent.

Pirma Banka was 3.463 million lats ($5.540 million) in the red after the first nine months of 2000. Despite that, its managers say the bank will make a profit next year. The bank's council chairman Guenther Dunkel said integration of the bank into Germany's Norddeutsche Landesbank (Nord/LB) has been successfully completed and at this point all steps have been taken to put the bank on a growth path.

The bank's council chairman said growth can be attained in a natural way but the bank is also aware of the ongoing consolidation process in the banking sector in Latvia.

"We are preparing to play an active role in this consolidation," said Dunkel.

He said Pirma Banka is set to take part in the consolidation process either by considering acquisitions of, or mergers with other banks, or by attracting clients from banks that would appear to be weaker in this process.

"There is no doubt about Nord/LB's intention to increase its market share. We are exploring those alternatives because natural growth takes time, but there is growing competition in the banking sector," Pirma Banka's president Hakan Kallaker told Dienas Bizness newspaper Nov. 24.

He said he would not be surprised if Nord/LB purchased another local bank in the next few months.

Experts questioned by Dienas Bizness agreed that several banks in Latvia are ready for sale.

Girts Rungainis, the co-owner of the Prudentia financial consulting company and former president of Trasta Komercbanka, said that one was Baltijas Tranzitu Banka (Baltic Transit Bank) whose shareholders were desperately looking for a buyer.

"The bank has lost its once strong position and it may result in a significant reduction of the price. From a buyer's viewpoint, the bank's advantages are some interesting corporate customers and a large number of individual clients," Rungainis said.

"Latvijas Krajbanka would be a good buy, but its shareholders may have larger game and greater ambitions in mind," Rungainis added.

Germany's Nord/LB become a strategic investor in Pirma Banka in the fall of 1999. The German bank is a part of the Nord/LB group which had 174 billion euros in assets in late 1999. Pirma Banka's balance sheet will be included in Nord/LB's consolidated balance sheet at the end of the year.