European Bank for Reconstruction and Development (EBRD)

Yale University

EliScholar – A Digital Platform for Scholarly Publishing at Yale YPFS Resource Library 4-7-2009 EBRD Board approves finance package for Parex Bank European Bank for Reconstruction and Development (EBRD) https://elischolar.library.yale.edu/ypfs-documents2/1331  This resource is brought to you for free and open access by the Yale Program on Financial Stability and EliScholar, a digital platform for scholarly publishing provided by Yale University Library. For more information, please contact ypfs@yale.edu. 7/18/23, 9:08 AM EBRD and Parex Bankhttps://www.ebrd.com/news/2009/ebrd-board-approves-finance-package-for-parex-bank.html 1/2EBRD Board approves finance package for ParexBankBy EBRD  Press Office (mailto:Group-PressUnit@ebrd.com)@ebrd (https://www.twitter.com/ebrd)07 Apr 2009The EBRD Board of Directors has approved a financial package for Parex Bank, the second largest bankin Latvia, which has been severely affected by the economic downturn and is currently almost 85 percentstate-owned.Subject to the conclusion of legal documentation, the EBRD package would include the acquisition of 25percent plus 1 of ordinary shares of Parex Bank for LVL 59.5 million (€84.2 million) and a subordinatedloan of €22 million qualifying as Tier 2 capital. Following its capital injection the EBRD will berepresented at Parex Bank’s supervisory board with a nominee director.The Bank’s investment would be an opportunity for the EBRD to contribute to the restructuring of ParexBank and through this support the real economy in Latvia.The EBRD supports the future return of Parex bank to the private sector as a sound and strong financialinstitution.After years of rapid expansion during which Parex Bank became the largest Latvian bank without astrong foreign parent and the second largest bank in the country, the outbreak of the financial andeconomic crisis resulted in a serious loss of depositors’ confidence. This forced the bank to seek the helpof the Latvian government, which today holds just under 85 percent of Parex Bank. A new, experiencedmanagement has been appointed which enjoys the confidence of the market.Because of its size and systemic importance, the Government of Latvia, the IMF and the EU all regard therecovery of Parex Bank as crucial for Latvia’s economy. The EBRD shares this view and has thereforedecided to become a shareholder of the bank. The investment comes under the crisis response packageConfirm cookie choicesYes, use default settingsNo, let me change settings7/18/23, 9:08 AM EBRD and Parex Bankhttps://www.ebrd.com/news/2009/ebrd-board-approves-finance-package-for-parex-bank.html 2/2which the EBRD has drawn up to support the banking sectors in its countries of operations to ensure thatfinancing flows continue, in particular to small and medium sized enterprises.EBRD First Vice President Varel Freeman said: “The EBRD intends to make this investment which wouldsee Parex Bank through the most difficult time in its history. Our involvement would contribute to areturn in confidence in the bank and in Latvia’s financial sector generally. As a shareholder the EBRDwould be able to participate in the development and implementation of a strategic plan for therestructuring and refocusing of Parex’ business activities.” 

EBRD Board approves finance package for Parex Bank

https://elischolar.library.yale.edu/context/ypfs-documents2/article/2326/viewcontent/EBRDandParexBank.pdf

EBRD Board approves finance package for Parex Bank

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