Latvijas Krajbanka management has called on bank shareholders to invest 1.8 million lats (2.7 million euros) in the bank's subordinated capital, the bank's Council Chairman Ilmars Razumovskis confirmed to Dienas Bizness, the daily Latvian business newspaper.
He said it would allow the bank's equity capital to increase, which would facilitate broader development opportunities for the bank.
Razumovskis said an agreement reached between the shareholders several years ago envisaged forming up to 4 million lats of subordinated capital to Krajbanka.
To date, resources have been lent to the bank by the Dutch company Macasyng Holding, whose investment is 2.2 million lats.
Razumovskis would not give his prediction of the expected shareholder decision but noted the minority shareholder of the bank — the Latvian Privatization Agency — already has decided not to invest funds in the subordinated capital.
Shareholders have to submit their response to the proposal by July 21.
The question of replacing investment by Macasyng Holding with 1.9 million newly issued bank shares, raising Krajbanka share capital to 11 million lats, has been on the agenda of several general meetings of the bank shareholders since 2001, but a decision has stillnot been made.
In May, Krajbanka ranked seventh among Latvia's banks by assets.