New bank gets license in Latvia

RIGA - The Bank of Latvia's board June 8 issued a banking license to a new bank, Baltikums.

The central bank's board approved Karlis Krastins as president of the new bank.

Krastins, age 27, previously was president of Saules Investicijas brokerage and is head of the Professional Securities Market Makers Association.

The bank's council chairman is Alexander Peshkov, who is also president and co-owner of Baltikums Finance and the non-life insurance company Baltikums.

Peshkov said Valdis Malnieks, who is employed by the Baltikums Finance Group, was recommended as first vice president, but the central bank's board did not approve his nomination, possibly because Malnieks lacks experience in banking. A new candidate for the post could be announced soon.

Baltikums submitted to the Bank of Latvia the initial package of documents to apply for the banking license on Dec. 7, 2000.

The bank's foundation share capital is 3.5 million lats ($5.64 million) and its founder is Baltikums Investicijas.

Baltikums is expected to focus on providing services to companies of the finance and insurance arm Baltikums Finance.

Peshkov said previously that in order to establish the new commercial bank, Baltikums Finance purchased VB Financial Markets, which was owned by Lithuania's Vilniaus Bankas, and renaming it Baltikums Investicijas.

The new bank is expected to launch operations in a month, Peshkov said. He said documents for the registration of the new bank at the enterprise register will be submitted as early as next week.

The Baltikums Finance Group comprises the non-life insurance company Baltikums, life insurance company Baltikums Dziviba and reinsurance company Riga Re.

Baltikums Finance also owns the private pension fund Baltikums, finance and insurance agency Baltikums, Baltikums Lizings, Baltikums Asset Management, Lithuania's non-life insurance company Baltikums Draudimas and others.

The new bank raises the number of Latvian banks to 23, to compare with 7 in Estonia and 14 in Lithuania.

However, Latvian central bank's Vice President Ilmars Rimsevics thinks that there is still room for new banks on the Latvian banking market as the competition will increase with each newcomer, subsequently reducing loan rates on the market.

Rimsevics said that at one time there were 60 banks on the Latvian market. He said that the central bank had not made it a rule not to grant any more banking licenses. As a new bank, Baltikums, met all the criteria under the Latvian regulations, and thus it was licensed.

"It is only right that people, who have honestly earned their money and complied with all prescribed requirements are given the chance to work in the market," said Rimsevics.