Soon the Parex signs will be taken down on the branch locations throughout Latvia. Photo used courtesy of Parex Group.

RIGA — In a move to distance itself from the 2008 nationalization that helped force Latvia into accepting the International Monetary Fund loans, the Parex Group is naming its now-stabilized offshoot Citadele Bank.

The bank was planning on revealing the name at a press conference on Thursday, but the Latvian press managed to spill the beans ahead of time after the new bank’s license was granted by the Finance and Capital Markets Commission.

The new branch, which will be called Citadele Bank, named after the street that the company’s expensive Meinhard fon Gerkan-designed headquarters is located, although its legal address is 2a Republikas laukums, the street on the other side of the building.

Latvia’s government has decided to split Parex Bank, the troubled financial institution it nationalized late in 2008, into two parts in order to improve chances for a privatization and 1.5 billion lats (€1.1 billion) of Parex’s current assets will be transferred to the new bank Citadele which will service all client accounts.

Citadele’s management board will be chaired by Juris Jākobsons, who currently holding the position of the Bank’s Council Chairman. Parex Bank board members Guntis Beļavskis and Valters Ābele will be on the new Citadele board as well.

While the government intends to utilize the new bank to restart lending after the bank’s clients were cut off from credit and make the bank more attractive more privatization. Whether either of those goals will be met remains to be seen, though.

“It cannot be said that an organization where reorganization and reform is constantly taking place could quickly and effectively recommence lending and suddenly in one night acquire a second wind. This is highly unlikely,” Ģirts Rungainis, a partner at the investment brokerage firm Prudentia told the LETA news wire. “I do not expect any miracles from Citadele … at present it would be more appropriate to speak of how much the state will lose. This will be hundreds of millions, but it is still impossible to say when and exactly how much.”

Currently, 76.6 percent of the bank’s shares are held by Latvian Privatization Agency, while the European Bank for Reconstruction and Development holds the remaining shares.

Negotiations on the sale of the bank have been conducted behind close doors. International investor group VMHY has said it is interested in purchasing.

Meanwhile the bank continues to lose money at a high rate, posting a 26.7 million lat (€37 million) loss in the first quarter.

— Baltic Reports reporter James Dahl contributed to this article.

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