RIGA — At a press conference Monday, Latvia’s Minister of Economy Artis Kampars said that the restructuring and break-up of the nationalized Parex Bank will be done by July 1.
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.
With the decision, which was unanimous, the government essentially approved the proposal put forward by Nomura International to create two banks, one in which the best assets would be placed, and another that would have non-core assets and liabilities.
About two-thirds, or 1.5 billion lats (€1.1 billion), of Parex’s current assets will be transferred to the new bank, which ostensibly will have a new name. This scheme, which must be approved by the European Commission, will hopefully provide the necessary clarity and attractiveness to sell the restructured bank to a strategic foreign investor, something the government wishes to do as quickly as possible.
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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