Parex banka has refused the license of the credit institution

29.12.2011

Latvian Parex bank was founded in 1992. Today it is among the banks that used and continue to use governmental support because of 2008 and 2011 economic crises. At the current moment the main task of the Latvian Parex banka is to return invested by the state funds in maximum amount no later than 2017.

In November 2011 the Cabinet of Ministers of Latvia approved the follow-up model Parex banka, which provides changing the status of bank and the refusal of the license of the credit institution. If it is approved by the meeting of shareholders of the bank - Parex banka will refuse the license of the credit institution, and according to the European Commission (EC) restructuring plan, will continue to develop the assets to maximize the return of funds made by the state for the bank rescue.

Recently this refusal was approved by the extraordinary general meeting of shareholders, it was also decided to amend the charter of the bank in connection with the proposed change of its status. The new name and a new model of the bank will be in force after obtaining the permission from the Commission on Financial and Capital Market.

Let’s recall that at the moment 83.07% of the bank shares are owned by the Latvian Privatization Agency, 13.61% - by the European Bank for Reconstruction and Development, and 3.32% - by minor shareholders.

Expert’s opinion

“From August 2010 already Parex banka hasn’t realized the functions of the bank, such as credit and clients deposit provision. The main activity of the bank over the last year and a half is asset management. Changing the status of Parex banka will reduce the costs associated with maintaining a credit institution license.

Upon cancellation of a license Parex banka will not need to continue to meet the requirements for capital adequacy, pay the fee to the Commission on Financial and Capital Markets Financial Stability as well as make contributions to guarantee deposits.

As for customers, the bank's change of status will not make any changes to their obligations, the bank, as before, will perform all necessary actions to return the loans, as well as to ensure the preservation and sale of assets”.

On the basis: www.parex.lv

Andrianova Irina ( the leading lawyer of legal support and banking consulting department of Honest&Bright)