Icelandic bank pulls out of deal with Rietumu

  • 2001-10-04
  • BNS
RIGA - The planned purchase of a 12.5 percent stake in Latvia's Rietumu Bank by Iceland's largest bank, Islandsbanki-FBA has fallen through.

Erlandur Magnusson, a senior executive at Islandsbanki-FBA, said the two banks had been unable to reach agreement on several issues. "In the end the shareholders decided not to continue the process," he said.

Magnusson said the two banks would continue cooperation on a variety of projects from which both would benefit.

Aleksandrs Kalinovskis, Rietumu's vice president, said the planned deal would not take place because both banks' shareholders could not agree on the particulars of the deal, in particular on the powers of the new shareholders. The problem had not been agreeing on the price to be paid, he said, adding that issues such as shareholders' powers and seats on the council had gained too much importance.

He said Rietumu's shareholders had not been under pressure to sell their holdings in the bank, rather the question concerned its further development.

The deadline for signing the share purchase agreement had been postponed several times, the last date set being Aug. 1. But in the absence of an agreement talks continued beyond this date.

Kalinovskis said that if talks resumed in the future with Islandsbanki-FBA they would start from a "blank page."

In any case, he said, Rietumu has sufficient potential investors ready to buy shares.

Under a deal approved by the board of Islandsbanki-FBA on Dec. 4, 2000 the Icelandic bank was to purchase a 56.2 percent stake for $27 million. But in June it was announced the Icelandic bank would buy only 12.5 percent of Rietumu for $5.5 million.

Rietumu Bank became Latvia's fourth largest bank in terms of assets on July 1 this year when it took over Saules Banka.

A 45.4 percent stake in the merged bank is held by Leonids Esterkins, 33.31 percent by Anatolijs Levins, 17.74 percent by Arkadijs Suharenko and 2.72 percent by Michael Bourke.

The rest of the shareholders own less than 0.5 percent of the bank's shares.