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Dec 22, 2009
Fitch Ratings confirms ratings awarded to Parex Banka

The international Fitch Ratings company has reaffirmed the ratings of Parex banka. The long-term rating of bank is at “RD” level, the short-term rating is at “RD”, the individual rating is at “F” level, and the support rating is at the level of “5”.

The affirmation of the rating reflects the extension of deposit restrictions imposed on the bank by the Latvian banking regulator. At the same time, the agency notes that the restrictions, which were imposed on the bank in December 2008, gradually have been softened, as well as considerable reduction in the amount of the restricted funds.

Fitch Ratings considers as positive the government support provided to the bank, as well as the fact that the European Bank for Reconstruction and Development has become a shareholder of the bank. The agency also notes that the bank’s operations are affected by losses, the quality of assets, the need for additional capital, and deleveraging and decline in non-resident deposits. At the same time, deposits made by residents are deemed to be more stable. Although remains weak, the bank’s liquidity continues to improve.

Upward pressure on the long-term rating could arise from removal of deposit restriction and/or from successful restructuring of Parex banka.

About Parex banka

Founded in 1992, Parex banka currently employs some 1 900 people at branches all over Latvia and offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka has signed up to the European Code of Conduct on housing loans.

Dec 18, 2009
Extraordinary meeting of Parex banka’s shareholders cancelled

Extraordinary meeting of Parex banka’s shareholders scheduled for today, 18 December, was cancelled due to technical reasons.

Currently, the Latvian Privatisation Agency is the majority shareholder of Parex banka, holding 73.4% of the Bank’s shares, but 22.4% are controlled by the European Bank for Reconstruction and Development; the remaining shares belong to minority shareholders.

Previous shareholder meeting took place on 28 August 2009.

About Parex banka

Founded in 1992, Parex banka currently employs some 1 900 people at branches all over Latvia and offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka has signed up to the European Code of Conduct on housing loans.

Dec 14, 2009
Parex banka gains 16,018 new customers

So far in 2009, Parex banka has added 16,018 new customers to its customer base. In December 2008 and the first three months of 2009, some 1,500 new clients made use of the bank’s services, according to data which were correlated on December 5. Currently, the bank has 379,971 clients, of those 5,134 legal entities and 94,862 individuals proved their trust in the bank in 2009 by increasing the level of their partnership with the bank.

The bank particularly appreciates those customers who increased their level of partnership between December 5, 2008, and the end of January in 2009 – 6,622 legal entities (institutions, organisations and companies), as well as 69,380 individuals.

Parex banka’s CEO Nils Melngailis: “We are very pleased that we have gained more than 16,000 new customers during the course of the year despite the stability crisis which the bank experienced in late 2008 and the overall economic situation in the country. Last December, more than 250 individuals and enterprises entrusted new deposits to the bank, which speaks volumes for the loyalty of our customers. These data show that our customers trust the bank, and to a certain extent demonstrate that negative publicity about the bank’s takeover and the events of the past is kept separate from the bank’s current operations.”

According to the latest information, the largest increase in the numbers of new customers occurred in June, September and November, when nearly 4,000 new clients joined the bank. The largest increase was seen in Riga (6,865 new customers), while elsewhere in Latvia, the customer base increased in the bank’s branches in Daugavpils (780), Jelgava (469) and Rēzekne (485).

About Parex banka

Founded in 1992, Parex banka currently employs some 1 900 people at branches all over Latvia and offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Currently, the Latvian Privatisation Agency is the majority shareholder of Parex banka, holding 73.4% of the Bank’s shares, but 22.4% are controlled by the European Bank for Reconstruction and Development. Parex banka has signed up to the European Code of Conduct on housing loans.

Dec 9, 2009
Parex banka’s administrative costs reduced by 41%

During the year since the new board of Parex banka took office, administrative costs of the bank have declined by 41% in comparison to average monthly indicators last year. By the end of the year, the savings will amount to LVL 31, compared to the administrative costs in 2008.

During the first 10 months of the year, communications costs were reduced by 30%, and office expenditures were cut by 60% in comparison to the same period of time in 2008. Major savings between January and October were also ensured by a 92% cut in travel costs, an 83% drop in advertising and marketing expenditures, a 75% drop in representation costs, a 72% decline in security services, and a 68% reduction in transport expenses. Spending on electricity and heat declined by 39% and 41% respectively. The average monthly wage fund at the bank has declined by 46% after a staff reduction of some 800 people and a review of all employee wages. Moving to new archival facilities allowed the bank to reduce costs by 72%, while moving to the new head office building will allow to save as much as LVL 2.7 million a year.

Tīna Ķuze, head of the Operational Sector: “Within the framework of the implementation of structural reforms at the bank, which allowed us save substantial amount of money, we assessed functions, optimised procedures, thus, making processes more effective. Furthermore, we conducted new price surveys among suppliers and certain services are now being outsourced.”

Parex banka’s main priorities during the first half-year of 2009 were to ensure sustainability and prevent the outflow of deposits, as well as to reach new agreements with the providers of syndicated loans. Afterwards, the bank entered the stabilisation phase, improving basic indicators, attracting the European Bank for Reconstruction and Development into its shareholder structure and entering into negotiations with other potential investors. Furthermore, the management of the bank has begun the work on the restructuring of the bank.

About Parex banka

Founded in 1992, Parex banka currently employs some 1 900 people at branches all over Latvia and offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Currently, the Latvian Privatisation Agency is the majority shareholder of Parex banka, holding 73.4% of the Bank’s shares, but 22.4% are controlled by the European Bank for Reconstruction and Development. Parex banka has signed up to the European Code of Conduct on housing loans.

Nov 13, 2009
Parex banka reports on the results for the first nine months of 2009

Parex banka’s unaudited financial results show that as of September 30, 2009, the loan portfolio of the bank and the Group was worth LVL 1.54 and 1.76 billion respectively, with deposits of LVL 1.62 and 1.76 billion, total assets of LVL 2.67 and 2.79 billion, and capital and reserve volumes of LVL 160.5 and 154 million.

The deposit indicators and improvements in the bank’s liquidity (a 42% indicator in October) show that clients are loyal to the bank and that trust in the institution is increasing. During the third quarter of 2009, the bank worked successfully to attract new clients and to develop new deposit products for private persons and legal entities.

During the first nine months of the year, the bank paid LVL 31.4 million to the State Treasury for its deposits, as well as to the Privatisation Agency as interest on its subordinated loan.

The bank and the Group completed the first nine months of the year with net losses of LVL 76.9 and LVL 85.3 million respectively. As was the case in the entire bank sector, these results were largely affected by provisions to cover a loss in asset value – LVL 75 and LVL 71.8 million respectively.

During the first nine months of the year, the bank has substantially optimised costs, particularly in the area of administrative expenditures. Personnel costs are down by 30%, travel expenses have been cut by 93%, advertising, marketing and representation costs are down by 85%, transport costs have been reduced by 68%, office expenses by 61%, and communications costs by 28%.

About Parex banka

Founded in 1992, Parex banka currently employs some 2,000 people at branches all over Latvia and offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Currently, the Latvian Privatisation Agency is the majority shareholder of Parex banka, holding 73.4% of the Bank’s shares, but 22.4% are controlled by the European Bank for Reconstruction and Development. Parex banka has signed up to the European Code of Conduct on housing loans.

Nov 8, 2009
Parex banka’s financial indicators have improved since takeover

Since 8 November 2008, when the Latvian state became the majority shareholder in Parex banka, the bank’s operations have substantially improved: the deposit outflow has been halted and the deposit volume has been stabilised, liquidity indicators have been improved, new customers have been attracted, and innovative products have been developed.

The bank’s liquidity indicator at the end of 2008 was 30%, while in October of this year it stood at 42%. The bank has paid LVL 41.7 million in interest to the State Treasury and the Privatisation Agency. During the course of the year, the bank has developed and offered to customers several new deposit products, including the FLEX deposit. It is a term deposit denominated in lats with the possibility of converting the currency of the deposit unlimited number of times during the term of the deposit. The 3D savings account allows companies to plan their cash flow, while the EXPRESS term deposit has a fixed interest rate and allows the depositor to receive the earned interest at the beginning of the term if so desired.

Parex banka’s CEO Nils Melngailis: “We have achieved stability, and we have worked successfully on attracting new clients and developing new products. Similarly, the deposit volumes prove the loyalty of our customers. We have also attracted a substantial number of new customers, and the stability of our financial indicators ensures a more favourable environment for attracting a strategic investor. This has been a year of serious decisions, but we have achieved the result – currently Parex banka does not differ from other banks in the Latvian banking sector in terms of financial indicators.”

Key elements in improving the bank’s financial indicators include a successful agreement on the restructuring of the bank’s syndicated loans in March of this year, as well as the involvement of the European Bank for Reconstruction and Development in the shareholder structure of the bank, thus ensuring additional stability and growth prospects for the bank.

A wide scope of activities has been done during the course of the year to optimise expenditures. Administrative costs have been slashed – personnel costs have been reduced by 30%, travel expenses by 93%, advertising, marketing and representation costs by 85%, transport costs by 68%, office expenses by 61%, and communications expenditures by 28%.

Major work has also been devoted to organizing the bank’s business and dividing it into three major directions – retail services, corporate services, and private capital management, identifying priorities for development in each of three areas. A restructuring plan of the bank has been developed and submitted to the European Commission.

About Parex banka

Founded in 1992, Parex banka currently employs some 2,000 people at branches all over Latvia and offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Currently, the Latvian Privatisation Agency is the majority shareholder of Parex banka, holding 70,3% of the Bank’s shares, but 25% are controlled by the European Bank for Reconstruction and Development. Parex banka has signed up to the European Code of Conduct on housing loans.

Nov 5, 2009
Parex banka nominated for award as best private bank in the CIS and Baltic States

In nominations for SPEAR’S Russia Wealth Management Awards 2009, the SPEAR’S Russia magazine has nominated Parex banka in the category of the best private bank in the Baltic States and CIS in respect to customers from Russia. Nominations are based on a survey of wealth management professionals, also considering the views of the Organizing Committee of SPEAR’S Russia and its independent consultants. The winners in all 19 categories, including “Russian Private Bank of the Year”, “Investment Adviser of the Year,” “Tax Adviser of the Year” and others, will be announced on November 26 in Moscow.

SPEAR’S Russia magazine hosts the Russia Wealth Management Awards held to celebrate the achievements of professionals and firms from private banking, wealth management and related industries for their successes, innovations and acumen over 2008-2009. SPEAR’S Russia Wealth Management Awards is organized by tradition and analogy with the award ceremony annually held in London by SPEAR’S UK.

Parex banka has worked in the CIS since 1993 and provides services to customers in Russia, Ukraine, Kazakhstan, Azerbaijan, Belarus and other countries. The bank offers a wide range of services, including savings accounts and credit cards, as well as complex financial solutions, tax consultations and estate planning.

Within the framework of restructuring of Parex banka, a Private Capital Management Sector has been established to work with wealthy customers and their capital, managing the total of 20 thousand such customers.

Oct 30, 2009
Working hours for Parex corporate and private banking customer service centers in Riga are changed

Starting from November 2, 2009 the working hours for the head office of Parex banka’s corporate and private banking departments at Republikas laukums 2a in Riga changes to 8:30 till 17:30.

The head office commenced serving corporate and private banking customers on September 14, 2009.

On average, Parex private banking customer center serves around 600 clients a month and mostly clients show interest in deposit products offered by the Bank.

Parex corporate banking managers rely on three fundamental principles – quality, professionalism and responsibility, which, together with Parex tailor-made and innovative products allow satisfying more customers’ financial needs every day.

Oct 27, 2009
AP Anlage & Privatbank AG is gaining profit and attracting new customers

In the first nine months of 2009, the unaudited profit of Parex banka’s Swiss subsidiary AP Anlage & Privatbank AG was CHF 400,000 (LVL 183,000), while the number of customers has increased by 11% during this period.

Deputy managing director of the bank, Valērijs Hudorožkovs: “These positive financial indicators are a great achievement at a time when the banking sector is undergoing a crisis. The bank’s growth has mostly been ensured by effective investment policies. We will continue to strengthen the bank’s business model by introducing new products that will allow clients to receive even more sophisticated financial solutions. Further growth on the basis of client loyalty, diversification of services and a high level of customer services – all of these are our medium-term goals.”

Along with private banking services, Anlage & Privatbank AG offers high-level management of private capital ensuring an individualised and flexible approach to each customer, as well as provides services in the fields of fixed income and investments in real estate in Central and Eastern Europe.

As has been reported before, the decision to cancel a deal with Latvijas Krājbanka on the sale of shares in AP Anlage & Privatbank AG was taken due to the failure of Latvijas Krājbanka to fulfil a series of relevant obligations. In accordance with the agreement, Parex banka has already repaid part of the EUR 3 million purchase sum paid by Latvijas Krājbanka.

The agreement on the purchase of the bank was concluded on April 24, 2008, and extended twice – until July 24 and then until October 24, 2009.

AP Anlage und Privatbank AG holds a strategically important position in the management of private capital of the Group, and the new circumstances will allow Parex banka a more focused development of this business segment. Thus, the attraction of investors to the Swiss bank will now be a part of Parex banka’s development strategy, which is aimed at returning to private sector and repaying the state’s funds in the shortest possible time.

Parex banka acquired AP Anlage & Privatbank AG in 2004, thus becoming the first bank among the new European Union member states to offer banking services in Switzerland. Over the course of five years, the bank’s assets have increased from CHF 12.2 million to CHF 178.1 million and the Swiss subsidiary demonstrates stable and sound profitability of the business ending each year with a profit.

Oct 26, 2009
Sale of AP Anlage & Privatbank AG is cancelled

Parex banka informs that it has cancelled the deal with Latvijas Krājbanka on the sale of shares in AP Anlage & Privatbank AG bank in Switzerland, due to the failure of Latvijas Krājbanka to fulfil a series of relevant obligations.

The agreement on the sale of the bank was concluded on April 24, 2008 and extended twice – until July 24, 2009, and then until October 24, 2009.

AP Anlage und Privatbank AG holds a strategically important position in the management of private capital of the Group, and the new circumstances will allow Parex banka a more focused development of this business segment. Thus, the attraction of investors to the Swiss bank will now be a part of Parex banka’s development strategy, which is aimed at returning to private sector and repaying the state’s funds in the shortest possible time.

Parex banka has representations, branches and subsidiaries in 13 countries, including Germany, Sweden, Estonia, Switzerland, Lithuania, Russia, and several CIS countries.

Oct 11, 2009
Entrepreneurs value the advice of friends, business press and economic experts; the advice of Government - worthless

Latvia’s entrepreneurs say that they receive their most valuable advice from friends, acquaintances, business partners, the business press, as well as different business and economic experts. Advice from the Latvian government, by contrast, is not seen as being of value, according to a survey conducted by Parex Index.

68% of respondents believe that friends, acquaintances and business partners offer very valuable or mostly valuable advice.

55% of respondents consider that Latvian business press and Internet media are also valuable sources of advice, as well as Latvian business and economics experts (52%).

Less valuable in the eyes of businesspeople is advice from foreign business and economics experts, foreign business press and Internet – respectively 37% and 36% of respondents spoke positively of these.

Commercial banks (26%) and the Latvian Investment and Development Agency (19%) have attracted slightly less attention. Only 6% listen to advice from the Latvian government.

A the same time, 50% of respondents think that the major decisions which the Latvian government has recently taken in relation to the economy have not to any major degree affected their ability to be successful in the field of export, but 41% consider that the effects of these decisions have mostly been negative.

The survey involved 750 company managers from all regions of Latvia and represent different business sectors with different levels of turnover.

About Parex banka

Founded in 1992, Parex banka currently employs some 2,000 people at branches all over Latvia and offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is the only partner of American Express in Latvia and Lithuania, allowed to issue American Express credit cards. Currently, the Latvian Privatisation Agency is the majority shareholder of Parex banka, holding 70,3% of the Bank’s shares, but 25% are controlled by the European Bank for Reconstruction and Development. Parex banka has signed up to the European Code of Conduct on housing loans.

Oct 5, 2009
Parex Asset Management bond funds show strong growth

As the debt securities market in the CIS countries showed signs of improvement, the performance of the Parex Bond and Balanced Funds have showed substantial growth, significantly regaining the losses from the previous months.

During the first 9 months of 2009 Parex Eastern European Bond fund showed a performance of + 60.67%* in absolute terms, but since the inception in 2003 the value of its shares increased by 40.1%*. The fund invests primarily in corporate bonds in the CIS and Baltic countries and is U.S. dollar denominated.

Parex Eastern European Balanced Fund, which does not only consist of a diversified portfolio of fixed income instruments, but also invests in shares of enterprises in Eastern Europe, during the first nine months showed a performance of +52.45%** in absolute terms, while returns since inception of the fund in 2003 amount to +30.8%**. The Fund invests in a wide range of tools that provides additional reliability and investment protection from fluctuations in the value of the Fund. The annualized performance of the funds since inception is around 5%.

Robert Idelson, president and CEO of investment management company Parex Asset Management commented: «The performance results of Parex bond funds once again evidence that investments in Eastern European fixed income instruments can provide high returns even in times of a deep recession. As usual, those investors who did not follow the global panic trend and continued to invest in these funds - are in the winning situation now.»

Peer analysis of Parex Eastern European Bond Fund***

The bond markets in the CIS countries at the end of 2008 were negative, but in the first quarter of 2009, the markets normalized and trade activity resumed. Due to the fact that the subject of signs of growth in global markets dominated most of the second quarter of 2009, there was an active "rally" in the debt market of the CIS.

Investment recommendations, including an overview of trends and prospects in the bond markets, are published by a team of Parex Asset Management (PAM) analysts on a quarterly basis. In addition to investment outlook, a team of PAM analysts make regular reviews of the stock markets in Russia and Ukraine, bond markets of Eastern Europe, as well as produce monthly research on Latvian macroeconomic situation called “Latvian Macro Monitor”. PAM research is available online at the Company’s website www.parexam.lv.

About Parex banka

Founded in 1992, Parex banka currently employs some 2,000 people at branches all over Latvia and offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is the only partner of American Express in Latvia and Lithuania, allowed to issue American Express credit cards. Currently, the Latvian Privatisation Agency is the majority shareholder of Parex banka, holding 70,3% of the Bank’s shares, but 25% are controlled by the European Bank for Reconstruction and Development. Parex banka has signed up to the European Code of Conduct on housing loans.


* 60.67% - Parex Eastern European Bond fund’s performance as of 30.12.2008 - 1.10.2009. 40.1% - Parex Eastern European Bond fund’s performance since inception (12.03.2003 -1.10.2009).
** 52.45% - Parex Eastern European Balanced Fund’s performance as of 30.12.2008 -1.10.2009. 30.8% - Parex Eastern European Balanced Fund’s performance since inception (7.10.2003 -1.10.2009).
*** Comparison to 29.05.2008 to 24.09.09, funds Parex Eastern European Bond Fund, Evli Ruble debt, UBS Russia Bond Fund and DWS Russia Bond Fund. Historical results do not guarantee future performance. Management company: IPAS Parex Asset Management, Republikas square 2a, Riga, LV – 1010. Custodian: AS Parex banka, Republikas square 2a, Riga, LV – 1522.
Oct 5, 2009
Parex Asset Management is named the best real estate investment management company in Latvia

On October 2, international property magazine Liquid Real Estate has announced the winners of the fourth annual Euromoney Liquid Real Estate Awards . The award winners were selected by real estate market participants, based on the voting of poll participants. The award in the category of the “Best Real Estate Investment Management Company in Latvia” was awarded to Parex Asset Management (PAM) , leading investment management team in the Baltics.

“It is a great honor to be named the best firm specializing in real estate investment management and to learn that our clients and partners have evaluated our professionalism on such a high level. This award and customer recognition is certainly the result of the hard work of our Real Estate Management team throughout last 5 years successfully managing number of real estate funds investing in the region.”- comments Robert Idelson, the CEO of Parex Asset Management.

Parex Asset Management manages two closed end real estate funds in Latvia: Parex Baltic Real Estate Fund II, Baltic Distressed Property Fund and one real estate fund in Ukraine: Parex Ukrainian Real Estate Fund. The Company is committed to expand its successful track record in property investment management and is always tapping for new market opportunities clients can benefit from.

The Euromoney Liquid Real Estate Poll included the opinion of real estate developers, advisors, financial institutions and investors in 54 countries worldwide.

Liquid Real Estate is a product of the renowned Euromoney magazine and was initiated to focus on international flows of capital into real estate, as real estate is no longer the domestic business it once was, as advisers are devising sophisticated new investment vehicles to meet demand for more transparency, more liquidity and more effective tax structures in their property portfolios.

About Parex Asset Management

With over USD 1.2 billion of assets under management, Parex Asset Management, the subsidiary of Parex banka , is the largest investment company in the Baltic Region and one of the most experienced in the Central and Eastern Europe. PAM invests internationally, maintaining a complete investment product range, whilst constantly tracking the best investment opportunities in each geographic region. Through its subsidiaries and representation offices Parex Asset Management also operates in Lithuania, Russia, Ukraine and Kazakhstan. In 2007 the company was named the “Best European Investment Specialist Firm of the Year” by Funds Europe Magazine.

About Parex banka

With assets exceeding EUR 4.46 billion Parex banka is the largest independent financial institution in the Baltic States. With a track record of consistent growth since being founded in 1992, it offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. There are more than 2600 employees working in Parex banka offices across Latvia. Parex banka is the only partner of American Express in Latvia and Lithuania, allowed to issue credit cards American Express. Parex banka is assigned the following international ratings: Moody's Investors Service – Baa3 ( investment grade ), Fitch Ratings – BB+, Capital Intelligence – BBB ( investment grade ).

Oct 1, 2009
Wages of Parex banka’s management cut by 30%

Restructuring of the bank and economy of resources has allowed Parex banka to reduce its administrative costs by LVL 16 million or 31% during the first eight months of this year in comparison to the same period in 2008. The wages of bank management, including the Chairman of the Board Nils Melngailis, have been cut by 30%.

By the end of 2009, the administrative costs will be reduced by 40% in comparison to 2008. The total wage fund for the bank has been trimmed by 30%, and that applies to the management, as well.

Various optimisation processes have allowed the bank to reduce other administrative costs, as well, and to a very substantial degree – a 93% drop in business travel costs, an 85% reduction in the cost of advertising, marketing and representation, 68% less spending on transport, 61% less spending on office costs, and a 28% reduction in communications costs.

Parex banka began to work on optimisation and increased efficiency in late 2008, when the wages of the bank’s Board and Council were cut substantially. The wages of the new Board are equal to just 28% of the wages paid to members of the previous Board. In the case of the Council, they are just 17% of the former compensation.

The strategic goal for Parex banka right now is the repayment of the government investment as soon as possible, the return to the private sector, and the improvement of financial indicators in such areas as deposit volumes. In September of this year, for instance, deposits from residents have increased by some LVL 18 million, which is a key success for the bank’s team during a period of economic decline.

About Parex banka

Founded in 1992, Parex banka currently employs some 2,000 people at branches all over Latvia and offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is the only partner of American Express in Latvia and Lithuania, allowed to issue American Express credit cards. Currently, the Latvian Privatisation Agency is the majority shareholder of Parex banka, holding 70,3% of the Bank’s shares, but 25% are controlled by the European Bank for Reconstruction and Development. Parex banka has signed up to the European Code of Conduct on housing loans.

Sep 21, 2009
Parex banka’s employees open their first artwork exhibition – from Figures to Colors

On September 19, in the premises of the Museum of the History of Medicine in Riga, 1 Antonijas Street, with the financial support of Parex banka, the employees of the Bank opened their first artwork exhibition “From Figures to Colors”.

“We are a group of creative people sharing two important spheres in life: work and hobby. With pride we call Parex banka our work place and with a creativity spark in our eyes we speak about our hobby – art. The idea about the exhibition was born around Christmas 2007 and, as the time passed by, it became our objective. Now this dream we shared has come true. We would like to express our gratitude to the management of the Bank for their support in co-financing the first artwork exhibition of Parex banka’s employees. It is our wish that each and everyone finds pleasant emotions that help with advancing along the chosen path to success!”, the exhibition brochure states.

In total, 11 Parex banka’s employees participate in the exhibition with numerous works done in various techniques and representing several art genres – oil and watercolour paintings, graphic art drawings, textile and jewellery. The exhibition will be open to the visitors until October 18. The working hours of the museum are as follows: Tuesdays, Wednesdays, Fridays and Saturdays from 11.00 to 17.00, Thursdays from 11.00 to 19.00. The museum is closed on Sundays and Mondays, and on the last Friday of each month.

Welcome to the first artwork exhibition of Parex banka’s employees “From Figures to Colors” at the Museum of the History of Medicine in Riga, 1 Antonijas Street.

About Parex banka

With assets reaching EUR 4.6 billion Parex banka is the largest independent financial institution in the Baltic States. With a track record of consistent growth since being founded in 1992, it offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is assigned the following international ratings: Moody's Investors Service – Baa3 (investment grade), Fitch Ratings – BB+, Capital Intelligence – BBB (investment grade).

Sep 17, 2009
Parex banka establishes subsidiary for real estate management

Parex banka has established a subsidiary, SIA NIF (“Nekustamo īpašumu fonds”, or “Real Estate Fund”), which will professionally manage assets that are not related to the Bank’s core business. This applies to the Bank’s real estate, problematic loans, and expropriated properties. Documents to register SIA NIF were submitted to the Latvian Company Register on September 17.

Subsidiaries to this enterprise are to be established by mid-October, and each of these will deal with a particular area of real estate – commercial properties, land, and housing. This process is in line with the Bank’s confirmed restructuring policy.

Druvis Mūrmanis, Senior Vice President and head of the Corporate and Institutional Banking Sector, has this to say: “Our goal in establishing these companies is to ensure separate and professional management of properties that are not related to the Bank’s basic operations and have been expropriated. These properties will be sold over the course of three to five years, when we expect the real estate market to revive. This will allow us to recover losses which we incurred as the result of stagnation in the real estate market.”

About Parex banka

Founded in 1992, Parex banka currently employs some 2,000 people at branches all over Latvia and offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is the only partner of American Express in Latvia and Lithuania, allowed to issue American Express credit cards. Currently, the Latvian Privatisation Agency is the majority shareholder of Parex banka, holding 70,3% of the Bank’s shares, but 25% are controlled by the European Bank for Reconstruction and Development. Parex banka has signed up to the European Code of Conduct on housing loans.

Sep 16, 2009
Parex banka promotes Riga as a growing financial center

The uncommonly early autumn chill did not bother the CIS banking experts, who already have got used to more harsh market environment, as they gathered in Riga from September 10 through September 14 to participate in the eighth Annual CIS Banking Conference successfully conducted by Parex banka and gathering more than 120 leading clients and partners of the Bank. Riga welcomed the representatives of financial institutions from Azerbaijan, Belarus, Kazakhstan, Moldova, Russia, Ukraine and Switzerland to discuss the latest developments on the investment and capital markets.

The conference, traditionally, offered round table discussions on the most current issues of the region and informative sessions, at which 22 invited speakers shared their expertise on different topics. Commenting on the event, Aleksandrs Lappo, Head of the Financial Institutions Department of Parex banka said: “We managed to discuss a multitude of interesting issues and solve quite a number of the many problems that the market has imposed on us during this past year. The hottest themes at this conference, not surprisingly, were the liquidity crunch in the CIS region and the possibility to attract funds in this complex situation. Besides the speakers from Parex banka, we were honoured to have speakers from such serious institutions as Societe Generale Asset Management, Global Fund Management, Raiffesen Bank Aval, just to mention a few.”

“The developments currently observable on the international financial markets show that our selection of liquidity crisis as the main theme of the conference has been appropriate and relates to the existing market situation. The interest about this issue was very strong and we heard lots of different opinions,” Boriss Kinbers, Head of Brokerage of Parex banka added.

Aleksandrs Lappo acknowledged the successful organization of the conference and confirmed that Parex banka is moving forward and already thinking about its next conferences, which will provide new themes for discussion and see the improvement of the format. He also expressed a hope that the CIS Banking Conference of Parex banka will keep on the tradition to be a meeting place for the top banking experts of the CIS and adjacent regions and promote Riga as a growing and important financial centre.

About Parex banka

With assets reaching EUR 4.6 billion Parex banka is the largest independent financial institution in the Baltic States. With a track record of consistent growth since being founded in 1992, it offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is assigned the following international ratings: Moody's Investors Service – Baa3 (investment grade), Fitch Ratings – BB+, Capital Intelligence – BBB (investment grade).

Sep 15, 2009
Parex banka joins Latvian Chamber of Commerce and Industry

Parex banka joined the Latvian Chamber of Commerce and Industry (LTRK) on September 15 to actively participate in initiatives aimed at healing the national economy, focusing in particular on small and medium enterprises. Parex banka is the first major commercial bank to join the organisation.

Chairman of the Board of Parex banka Nils Melngailis: “The Latvian Chamber of Commerce and Industry is very active in improving the business environment in Latvia, defending the interests of businesspeople and drafting proposals on how that environment can be improved. We wish to take an active part in efforts to heal the economy. The first step is to participate in the organisation’s competence councils to prepare specific proposals on how the banking sector can operate during the current economic situation, also thinking about what needs to happen in terms of the state’s economic policies.”

Parex banka will send representatives to most of the LTRK competence councils, including Small and Medium Enterprises Council, Knowledge-based Economy Council and Services Council.

LTRK board chairwoman Žaneta Jaunzeme-Grende: “Parex banka is the first bank in Latvia to join the Latvian Chamber of Commerce and Industry, thus proving that it understands the changes that are needed in the business environment and culture, as well as the fact that businesspeople themselves must make proposals and stand together in pursuit of the necessary changes. Active participation of businesspeople in public organisations is a bridge toward these goals.”

Parex banka is also a member of the US Chamber of Commerce in Latvia and the British Chamber of Commerce in Latvia. This has allowed the Bank’s representatives to attend high-level meetings, conferences and seminars, as well as to establish and develop business contacts.

About The Latvian Chamber of Commerce and Industry

The LTRK is a non-governmental, politically neutral and voluntary organisation for companies from various sectors, which operate in Latvia. On the basis of the operating principles of similar chambers of commerce and industry elsewhere in the world, the LTRK works to ensure a favourable business environment in Latvia, identifying and defending the economic interests of Latvian companies and providing services, which facilitate entrepreneurship. The LTRK represents more than 800 companies from various sectors of the economy. It is also one of the oldest public organisations in Latvia, having celebrated its 75th anniversary this year.

About Parex banka

Founded in 1992, Parex banka currently employs some 2,000 people at branches all over Latvia and offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is the only partner of American Express in Latvia and Lithuania, allowed to issue American Express credit cards. Currently, the Latvian Privatisation Agency is the majority shareholder of Parex banka, holding 70,3% of the Bank’s shares, but 25% are controlled by the European Bank for Reconstruction and Development. Parex banka has signed up to the European Code of Conduct on housing loans.

Sep 14, 2009
Parex Bank Changes Legal Address

The Parex Bank will change its legal address on Monday, September 14. From now on it will be Republikas Square 2a in Riga, which is the bank’s new headquarters.

A new branch of the bank will open its doors at the new building on Monday, too. Clients will be able to use the bank’s services there from 8:00 AM to 8:00 PM on weekdays. The plan is to turn the branch into the bank’s primary client service centre in Riga. It will offer the widest range of banking products and services. New client service standards will be introduced so as to speed up the provision of services and to concentrate the process of client loans in a single location in Riga.

As has been reported in the past, the bank’s employees are currently moving to the new administrative building. The bank will save LVL 2.7 million a year by moving out of leased facilities in 11 buildings in the Latvian capital city. Administrative costs will also decline – the overall decline in the first half-year was LVL 12.5 million, while the bank expects to save fully LVL 30 million by the end of the year.

About Parex banka

Founded in 1992, Parex banka offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is the only partner of American Express in Latvia and Lithuania, allowed to issue American Express credit cards. In August 2009, Parex Bank signed up to the European code of ethics in the area of mortgage lending.

Sep 7, 2009
EBRD becomes shareholder in Parex banka

On 3 September 2009, 25 percent and one share of Parex banka were transferred from the Latvian Privatisation Agency to the European Bank for Reconstruction and Development (EBRD). In this initial transaction, the EBRD acquired 51,444,325 ordinary shares. As part of a future capital increase at Parex banka, the EBRD plans to purchase a further 6,062,500 shares, thus maintaining its stake of 25 percent and one share.

The share purchase fee is equivalent to the share face value*. The changes in the shareholder register will be made in the immediate future. The EBRD’s investment in the equity capital together with a €22 million subordinated loan will strengthen the capital base of Parex banka and support its restructuring and return to profitability and the private sector. Nick Tesseyman, the EBRD head of Financial Institutions, said, “The EBRD is very pleased to be able to support a bank that plays such an important role in the economy. As a shareholder, the EBRD will work closely together with management to further strengthen Parex banka, especially in its ability to continue financing the enterprise sector.”

Nils Melngailis, Chief Executive Officer of Parex banka said: “I am pleased to welcome the EBRD to our shareholder group. Thereby, Parex banka has acquired a very valuable partner and shareholder experienced in bank restructuring. The attracted resources will enable Parex banka to further develop new services, paying a closer attention to the segment of small and medium enterprises, as investments in this particular segment are vital for the economy to recover.”

As reported earlier, on 16 April 2009, President of the EBRD Thomas Mirow and Prime Minister of Latvia Valdis Dombrovskis, Chairman of Parex banka’s Management Board Nils Melngailis and Chairman of Privatisation Agency Arturs Grants signed Share Purchase Agreements providing that following the increase of equity capital the EBRD will purchase 57,506,825 ordinary shares comprising 25 percent and 1 share of Parex banka’s equity capital. On 23 July 2009, Peter Reiniger Business Group Director for Central Europe and the Western Balkans from the European Bank for Reconstruction and Development visited Latvia to sign the subordinated loan agreement with Parex banka.

To date the EBRD has committed close to € 450 million to the Latvian economy in various projects in the financial, corporate, energy and infrastructure sectors.

About the EBRD

The EBRD has a great experience in the restructuring of the banking business. The entering of the EBRD into a bank is being considered as a positive signal for vitality and development potential of the institution. Support to the financial sector is a core activity of the EBRD – in 2008 the Bank signed 153 projects in financial sector for a total of 1.9 million euros. The EBRD is a shareholder in 60 banks. Today the EBRD works in 30 countries from central Europe to central Asia. The Bank’s aim is to support in the financing of projects, primarily in the private sector, that serve the transition to market economies and pluralistic democratic societies.

About Parex banka

Founded in 1992, Parex banka offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is the only partner of American Express in Latvia and Lithuania, allowed to issue American Express credit cards. Currently, the Latvian Privatisation Agency is the majority shareholder of Parex banka, holding 95,3% of the Bank’s shares. Parex banka has signed up to the European Code of Conduct on housing loans.


* The approximate EBRD’s investment will constitute 51 444 325 LVL.
Sep 7, 2009
Parex Bank Allowed to Extend Deposits in Germany

The German branch of Parex Bank has been authorised by the German federal financial services oversight institution to extend those client deposits which have expired and are affected by expenditure limitations identified by the Finance and Capital Markets Commission. Term deposits can be extended for a period that does not exceed six months. If a client wishes to extent a term deposit, then the bank must offer the client complete information about the bank’s financial situation and the limitations that have been placed upon it.

This regulatory authorisation in Germany is important for Parex Bank, because it makes it possible to maintain the overall deposit portfolio at the German branch at its current level. Previous regulatory limitations in Germany stated that all deposits which expired had to be paid out to clients within the boundaries of permitted limits, doing so on the first date of each month. These deposits could not be extended. The permission to extend existing deposits has allowed the German branch to preserve EUR 1.2 million that otherwise would have been paid out to clients at the beginning of September 2009.

Late in 2008, the Latvian Cabinet of Ministers and the Finance and Capital Markets Commission (FCMC) decided that as of 1 December of that year, Parex Bank would face limitations related to its obligations so as to protect capital sufficiency and liquidity. That happened after, on November 8, the Bank was taken over by the Government by virtue of a Cabinet of Ministers resolution, after which it received the state aid which it needed. After this, the relevant institutions in Germany declared a ban on new deposits at the German branch of Parex Bank.

The limits set by the FCMC also affect deposits that were made at the bank prior to 1 December, 2008. Both natural persons and legal entities now have a maximum level of debit operations each month. Legal entities also face other conditions – only those payments which are in accordance with their economic operations are accepted. As of 8 June, 2009, legal entities have been allowed to make payments without monitoring of economic activities to the amounts exceeding the client’s overall account balance as of 8 June, 2009.

On 18 August 2009, the FCMC allowed Parex Bank to begin issuing credit cards with credit limits under the auspices of its sales and marketing strategy in 2009 for the provision of American Express credit cards.

Parex Bank opened a branch in Berlin in October 2005. Two years later, in August 2007, it opened a client service centre in Hamburg. In June 2008, a client service centre was also opened in Munich. Currently, Parex Bank employs 23 people in Germany. It is important to note that Parex Bank participates in the deposit guarantee fund of the German Banking Association, which means that the guaranteed sum for each depositor in Germany is EUR 1.5 million. The Parex Bank branch and client service centres offer German clients term deposits, savings accounts, and Internet banking services.

Parex Bank

Parex Bank was established in 1992 and currently employs some 2,000 people at branches all over Latvia. The bank is represented with branches and subsidiaries in 13 countries, including Germany, Sweden, Estonia, Switzerland and Lithuania. Parex Bank is the sole partner of American Express in Latvia and Lithuania, which gives it the right to emit American Express credit cards. 95.3% of shares in the bank are currently controlled by the Latvian Privatisation Agency. In August 2009, Parex Bank joined the European code of ethics in the area of mortgage loans.

Aug 31, 2009
Parex banka signs up to the Code of Conduct on Housing Loans

Parex banka has signed up to the Code of Conduct on housing loans, undertaking to implement it by 1 July 2010. The purpose of the Code of Conduct* is to guarantee that consumers receive transparent and comparable information on housing loans in order to encourage cross-border competition.

The Head of Customer Service Department Agnese Paegle says: “Once the Bank resumes mortgage lending, our customers will have a guarantee that Parex banka operates according to the best practice and standards of the European Union, providing complete information about lending terms before the conclusion of the agreement.”

Banks determined to implement the Code of Ethics must publish it in the informative materials of the bank, as well as provide its branches with general information made available to customers about the loan products and lending terms, including the main payment conditions. The information volume and manner of presentation are standardized in order to allow customers make an informed choice in line with their needs.

The European Commission controls the implementation and efficiency of the Code.

Currently, 21 European states have committed to the Code of Conduct, developed by the European Mortgage Federation. Parex banka is among the first Latvian banks that have signed up to the Code. Since 30 September 2002, more than 3600 institutions issuing housing loans have joined the Code.

Additional information about the Code of Conduct is available at: http://ec.europa.eu/internal_market/finservices-retail/home-loans/code_en.htm.

About Parex banka

Founded in 1992, Parex banka offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is the only partner of American Express in Latvia and Lithuania, allowed to issue American Express credit cards. Currently, the Latvian Privatisation Agency is the majority shareholder of Parex banka, holding 95,3% of the Bank’s shares.




* The full name of the Code of Ethics - European Agreement on a Voluntary Code of Conduct for Pre-contractual Information on Home Loans.
Aug 28, 2009
Parex banka’s shareholders approve the restated Articles of Association

On 28 August 2009, the extraordinary meeting of Parex banka’s shareholders approved the restated Articles of Association of the Bank. The new edition of the Articles has been drafted in compliance with the requirements set by the Agreement with the European Bank for Reconstruction and Development (EBRD).

Pursuant to the restated Articles, henceforward any decision of the Board shall require a preliminary approval by the Council of the Bank.

Currently, Parex banka’s majority shareholder with 95.3% holding is the Latvian Privatisation Agency. The EBRD will acquire 25% and one share of the Bank.

Similarly, the Supervisory Council of Parex banka was re-elected at the meeting. In accordance with the resolution made during the meeting the following members are elected to Parex banka’s Council – Andžs Ūbelis, Michael J. Bourke, Laurence Phillips Adams, Kaspars Āboliņš and Juris Vaskāns. With the exception of Juris Vaskāns, all the elected members worked in the Council of the Bank also previously. Juris Vaskāns is a Board Member of the Latvian Privatisation Agency.

About Parex banka

Founded in 1992, Parex banka offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is the only partner of American Express in Latvia and Lithuania, allowed to issue American Express credit cards. Currently, the Latvian Privatisation Agency is the majority shareholder of Parex banka, holding 95,3% of the Bank’s shares.

Aug 19, 2009
Parex banka allowed to issue cards with credit limit

On 18 August 2009, within the framework of Parex banka’s American Express sales and marketing strategy for 2009, the Financial and Capital Markets Commission (FCMC) has allowed the Bank to issue credit cards with credit limit.

Senior Vice President Guntis Beļavskis indicates: “Methodically working to stabilize the Bank we have arrived to the next step and will resume the issue of credit cards. This certifies that the Bank has chosen the right direction of development. Nevertheless, considering the current market situation and the large proportion of overdue payments, we will initially carry out serious research and issue cards with a lesser credit limit to reduce the risk of overdue payments.”

Parex banka has issued 407 thousand payment cards accounting for 16% of the card market in Latvia. The proportion of credit cards stands at 19% of all credit cards issued in this market. Parex banka is the only partner of American Express in Latvia and Lithuania.

About Parex banka

Founded in 1992, Parex banka offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is the only partner of American Express in Latvia and Lithuania, allowed to issue American Express credit cards. Currently, the Latvian Privatisation Agency is the majority shareholder of Parex banka, holding 95,3% of the Bank’s shares.

Aug 3, 2009
Parex banka’s price list to be changed as of 01 September 2009

In order to update the bank's price list according to the current situation in the Latvian financial market, as of 01 September 2009, Parex banka will effectuate a new price list applied to such broker services as currency transactions, stock transactions, debt securities transactions, fund transactions, as well as financial instrument handling, custody and settlement services. As of 02 September 2009, further price changes will become effective pertaining settlement terms, as well as security deposit rates.

For more detailed information on the new price list please visit Parex banka’s customer service centres, call our contact centre by phone +371 6 701 0000 or visit the Bank’s homepage at www.parexgroup.com/en/fees.

Jul 30, 2009
Moody’s assigns stable outlook to Parex banka’s long-term rating

On 30 July 2009, international rating agency Moody’s Investors Service has approved Parex banka’s long-term rating at the previous level with a stable outlook; thus, accomplishing the investigation process launched by Moody’s in December 2008 with an initial assumption of a potential downgrade.

In its credit opinion Moody’s discussed Parex banka’s improved capital base and the new shareholder structure, as well as further support from the new shareholders, including the European Bank for Reconstruction and Development (the EBRD). Moody’s also approved the previously assigned financial strength rating – E, with a stable outlook and short-term rating Not-Prime.

The rating agency positively notes the accomplishments of the Bank in the stabilization process following the turbulences experienced in the fall of 2008, its cost optimisation efforts, as well as the participation of the EBRD in the Bank’s shareholder structure. Additionally, Moody’s strongly approves the state support to the Bank.

Commenting the statement, Head of Parex banka’s Finance and Treasury Sector Roberts Stuģis said: “We are pleased to receive a positive evaluation of our accomplishments from internationally recognized experts and agree with Moody’s that the current complicated economic situation has its effect on the Bank’s performance. However, the cost optimisation and fundamental reorganization will facilitate the Bank’s efforts to successfully overcome the economic breakdown, as well as restore profitability and ensure the repayment of state support funds in the shortest possible time.”

About Parex banka

Founded in 1992, Parex banka offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is the only partner of American Express in Latvia and Lithuania, allowed to issue American Express credit cards. Currently, the Latvian Privatisation Agency is the majority shareholder of Parex banka, holding 95,3% of the Bank’s shares.

Jul 29, 2009
Extraordinary shareholders’ meeting to be held on 28 August 2009

Extraordinary meeting of SC Parex banka's shareholders will be held on 28 August 2009. The day’s agenda foresees the approval of the new edition of the Bank’s Articles of Association, according to the decision of Parex banka's Management Board made on Tuesday, 28 July. The new edition of the Articles has been drafted in compliance with the requirements set by the Agreement with the European Bank for Reconstruction and Development (EBRD).

The most important changes in the Articles pertain the decision-making procedure providing that any decision of the Board requires a preliminary approval by the Council of the Bank.

Currently, Parex banka’s majority shareholder with 95.3% holding is the Latvian Privatisation Agency. The EBRD will acquire 25% and one share of the Bank.

Jul 27, 2009
Parex banka continues to strengthen relations with CIS clients and presents the Bank’s strategy to clients in St. Petersburg

On July 16, the senior management of Parex banka has held a corporate presentation for its high net worth clients in St. Petersburg, announcing further Bank’s strategy and stabilization steps, as well as informing them of the current macroeconomic trends and most attractive investment strategies in global financial markets.

“St. Petersburg is a strategic partner for Latvia, and we have established stable and long-term business relations with this city. We have similar mentality with Petersburg citizens, we also share the similar manner of business management and values. Parex representative office has been operating in St. Petersburg’s market for over ten years, thus, we have established a wide client base in this market. We intend not only to retain our standings and reputation of a safe and reliable bank with a professional team, but also to expand our product range, putting a special emphasis on providing investment and financial advisory services in this market.”- Roberts Idelsons, the Head of Private Capital Management Division of Parex banka, said.

The servicing and management of private capital of HNWIs, including those from the CIS, is one of the three principal directions in Parex banka’s activities. The Division serves over 40 000 private clients from over a hundred countries all over the world.

About Parex banka

Parex banka was found in 1992. More than 2200 people are currently employed in the branches and client service centers. The representative offices, branches and subsidiaries of the bank are located in 15 countries, including the branch offices in Berlin, Stockholm, and Tallinn. Parex banka is an exclusive authorized issuer of American Express credit cards in Latvia and Lithuania. Currently, 95.3% of the Bank’s shares are owned by the Latvian Privatization Agency.

Jul 23, 2009
Parex banka signs subordinated debt agreement with the EBRD

On 23 July 2009, Peter Reiniger Business Group Director for Central Europe and the Western Balkans from the European Bank for Reconstruction and Development visited Latvia to sign subordinated loan agreement with Parex banka. This will enable the share purchase deal to be finalised in August 2009.

Nils Melngailis, Chairman of Parex banka’s Management Board, commented on the signed subordinated debt agreement: “We are very pleased that since 29 June 2009 the EBRD is represented in Parex banka’s Supervisory Council. Moreover, with the signed agreement we are one step closer to the EBRD’s entrance in Parex banka’s share capital; thus, sending a very positive sign not only to our existing clients, but also to potential clients and investors in regards to the development and recovery potential of the Bank.”

Peter Reiniger, Business Group Director for Central Europe and the Western Balkans from the EBRD stated: "We look forward to completing our investment in Parex bank which will be our largest transaction in Latvia to date. EBRD's participation in the recapitalisation of Parex bank is an indication of our confidence in the recovery process of both the bank and the Latvian economy."

As previously announced, a prerequisite to completion of the Sale Purchase is signing of the agreement by which the EBRD will provide Parex banka with a subordinated loan of € 22 million qualifying as Tier 2 capital. Following the increase of equity capital at Parex banka the EBRD will purchase 25% and one stake in the Bank.

About Parex banka

Founded in 1992, Parex banka offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is the only partner of American Express in Latvia and Lithuania, allowed to issue American Express credit cards. The Latvian Privatisation Agency is the majority shareholder of Parex banka, currently holding 95,3% of the Bank’s shares, following the EBRD’s investment, this will be reduced to 70,3%.

Jul 17, 2009
Parex banka wraps up the results of 1H2009

According to Parex banka’s unaudited financial results as at 30 June 2009, the loan portfolio of the Bank was 1.63 billion lats, deposits – 1.64 billion lats, total assets – 2.70 billion lats, but the amount of capital and reserves in the end of June 2009 reached 183.6 million lats.

During this period of time the Bank has successfully completed the restructurization of syndicated loans, stabilized its customer base, as well as concluded the agreement on the entering of the European Bank for Reconstruction and Development into the shareholder structure of the Bank. Furthermore, the bank has also substantially decreased the administrative costs, cutting the expenses by the total of 12 million lats. The cost reduction is expected to reach 30 million lats by the end of the year. Moreover, moving the Bank's Headquarter in Riga from current 11 buildings to one office building on Republika square will save Parex Group additional 2.7 million lats.. In 1H2009 Parex banka increased its capital base to reach the liquidity and capital adequacy levels set by the regulator. Similarly, over the period of last six months Parex banka has attracted more than seven thousand new customers, especially in the sectors of retail and small and medium size enterprises.

Having made a detailed evaluation of assets and establishing substantial provisions for the asset value decrease, Parex banka concluded the first half-year 2009 with the total net losses of 44.5 million lats, including the established provisions in the amount of 46.6 million lats. Besides, Parex banka’s interest payment to the State Treasury for this period of time comprises 20.5 million lats.

Parex banka continues to closely monitor changes in the quality of assets to further minimize potential losses from the asset value decrease. Besides, in order to find the most effective solution for the issue of non-performing loans, the Bank has established a new structural unit that is working with clients and looking for mutually most advantageous solutions in the current economic situation.

About Parex banka

Founded in 1992, Parex banka offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is the only partner of American Express in Latvia and Lithuania, allowed to issue American Express credit cards. Currently, the Latvian Privatisation Agency is the majority shareholder of Parex banka, holding 95,3% of the Bank’s shares.

Jul 15, 2009
Mr Andzs Ubelis re-elected to chair Parex banka’s Supervisory Council

On 15 July 2009, Mr Andzs Ubelis, the Deputy State Secretary of the Ministry of Finance of Latvia, was re-elected as the Chairman of the Supervisory Council of Parex banka. He is the Chairman of Supervisory Council of the Bank since 23 December 2008. Mr. Michael J. Bourke was appointed as Deputy Chairman of Supervisory Council.

Mr. Ubelis holds a MSC of International Economics and Public Policy from Cardiff Business School of Cardiff University, MA (DEA) of European Law and Policies from the Centre of European Studies at the University of Nancy and has graduated from the International Relations Program at the University of Latvia. Since 2004 Mr. Ubelis is Deputy State Secretary of the Ministry of Finance, covering the international financial support issues. During more than 10 years of his career in the State administration Mr. Ubelis has held various positions related to management of the EU funding and European integration issues. Currently Mr. Ubelis is also Alternate of Latvian Director at European Investment Bank.

Mr Michael J. Bourke has been President of Rietumu banka for a long time. M.Bourke has gained experience in such international financial institutions as Central Bank of Ireland, International Monetary Fund and NCB Group. M.Bourke is a sertified member of the accountant association (FCCA).

Other issues covered at the Council’s meeting included changes in Council’s regulations and presentation of the Bank’s restructuring strategy, as well as Parex banka’s Management report on the Bank’s current financial situation.

As previously announced new Supervisory Council of Parex banka was elected on 29 June 2009 in the annual General Meeting of the Bank’s Shareholders. In accordance with the resolution made in the meeting the following members are elected to Parex banka’s Council – Andžs Ūbelis, Michael J. Bourke, Laurence Phillips Adams, Kaspars Āboliņš and Carl Hakan Kallaker.

About Parex banka

Founded in 1992, Parex banka offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is the only partner of American Express in Latvia and Lithuania, allowed to issue American Express credit cards. Currently, the Latvian Privatisation Agency is the majority shareholder of Parex banka, holding 95,3% of the Bank’s shares.

Jul 1, 2009
Estonian branch to launch FLEX deposit

Starting from today the Estonian branch of Parex banka is offering a new type of deposit on the Estonian marked called FLEX deposit. FLEX deposit is a term deposit in EEK that allows Customers to convert the deposit into EUR or USD. It’s also possible to increase the deposit amount up to 50% of the initial sum of the deposit.

“FLEX deposit is a unique service in the Estonian marked offered only at Parex Bank. FLEX deposit is an alternative to the regular term deposit allowing Customers to minimize their currency risks by converting their EEK deposit into EUR or USD,” said Sofia Krist, Executive Director, Parex Bank. “The current FLEX deposit EEK annual percentage yield is 8,5%,” she added.

With FLEX deposit Customers can convert the deposit made in EEK into EUR or USD and back into EEK unlimited number of times during the term of the deposit. The EEK rate of FLEX deposit is approved upon the signing of the agreement and does not change during the deposit term.

Another unique feature of the FLEX deposit is that during the deposit term it is possible to increase the deposit amount up to 50% of the initial sum of the deposit. This also can be done unlimited number of times during the deposit term.

FLEX deposit can be opened at Parex Bank’s Client Service Centers and through Parex Online Banking.

Jul 1, 2009
Parex banka’s price list to be changed as of 01 August 2009

In order to update the bank's price list according to the current situation in Latvian financial market, Parex banka plans to change its price list as of 01 August 2009. Changes in pricing will be applied to such banking services as banking operations with current account, opening of an escrow account, money transfers, currency exchange between accounts, cash operations, cash contributions and withdrawals from the account, other cash transactions, bill payment, additional banking services and service of payment cards.

For more detailed information on the new price list please visit Parex banka’s customer service centres, call our contact centre by phone +371 6 701 0000 or visit the Bank’s homepage at www.parexgroup.com/en/fees.

Jun 30, 2009
Note to Parex Asset Management IPAS clients

To the Investors of open-ended investment funds ”Parex Eastern European Balanced Fund”, ”Parex Eastern European Bond Fund”, ”Parex Eastern European Local Currency Bond Fund”, „Parex Balanced Fund”

Regarding the merger of open-ended investment funds ”Parex Eastern European Balanced Fund”, ”Parex Eastern European Bond Fund”, ”Parex Eastern European Local Currency Bond Fund”, „Parex Balanced Fund” under the management of „Parex Asset Management” IPAS.

To enhance the efficiency of Funds performance as well as to optimize Funds administration expenses, the Board of "Parex Asset Management" IPAS (Company) has made a decision to merge the open-ended investment funds under its management - "Parex Eastern European Balanced Fund", "Parex Eastern European Bond Fund", "Parex Balanced Fund" and "Parex Eastern European Local Currency Bond Fund”.

On June 19, 2009, Financial and Capital Market Commission made a decision to allow the merger of 4 (four) aforementioned open-ended investment funds under the management of Company into a single open-ended investment fund ”Parex Eastern European Fixed Income Funds” with 2 (two) sub-funds:

Sub-fund „Parex Eastern European Bond Fund” will be formed from the current open-ended investment fund „Parex Eastern European Bond Fund”. All Investors will become the Investors of sub-fund „Parex Eastern European Bond Fund”, retaining the current number of the investment certificates and the current amount of investments at the moment of merger.
The base currency of the sub-fund is USD.

Sub-fund ”Parex Eastern European Balanced Fund” will be formed by adding open-ended investment funds ”Parex Eastern European Local Currency Bond Fund” and ”Parex Balanced Fund” (ceases to exist on the day of merger – July 20, 2009) to the open-ended investment fund ”Parex Eastern European Balanced Fund”. All Investors of open-ended investment funds ”Parex Eastern European Local Currency Bond Fund” and ”Parex Balanced Fund” will become the Investors of sub-fund „Parex Eastern European Balanced Fund” retaining the current amount of investments at the moment of merger. The number of the investment certificates of Investors of open-ended investment funds ”Parex Eastern European Local Currency Bond Fund” and ”Parex Balanced Fund” within a new sub-fund ”Parex Eastern European Balanced Fund” will be proportional to the current amount of investments of each Investor at the moment of merger divided by value of the investment certificate of the open-ended investment fund ”Parex Eastern European Balanced Fund” at the moment of merger. As the base currency of the sub-fund ”Parex Eastern European Balanced Fund” is EUR, but the base currency of the open-ended investment fund “Parex Balanced Fund” is LVL, the currency will be converted on July 20, applying the market exchange rate as at July 17.
The base currency of the sub-fund is EUR.

The decision of Financial and Capital Market Commission to allow the merger of the Funds and to register a new open-ended investment fund will become effective in one month after announcing this decision to Company, ie. on July 20, 2009. In order to ensure the implementation of the decision, from 17 July to 20 July Company will suspend the issue and redemption of the investment certificates of funds undergoing merger. The issue and redemption of the investment certificates of sub-funds “Parex Eastern European Balanced Fund” and ”Parex Eastern European Bond Fund” of fund “Parex Eastern European Fixed Income Funds” will be renewed starting 21 July 2009.

The Scheme of Merger

During the merger process of the open-ended investment funds "Parex Eastern European Balanced Fund", "Parex Eastern European Bond Fund", "Parex Balanced Fund" un "Parex Eastern European Local Currency Bond Fund” the rights of investors will be abided by as the current amount of each Investor’s investments will remain unchanged, ensuring that during this period each Investor is provided with the possibility to exercise their rights in full as stated in the Fund prospectus... Fund investors have the rights to request the redemption of investment certificates, and according to Fund prospectus no commission fee will be applicable for this operation. The application of redemption of fund investment certificates can be submitted to Company no later than on July 17, 6.00 p.m. (Latvian time). Redemption of investment certificates will be carried out in the established order stated in Fund prospectus.

The documents of the open-ended investment fund “Parex Eastern European Fixed Income Funds” and announcement to the Investors of the open-ended investment funds "Parex Eastern European Balanced Fund", "Parex Eastern European Bond Fund", "Parex Balanced Fund" and "Parex Eastern European Local Currency Bond Fund” are available on our web site www.parex.lv or can be acquired by visiting our office in Riga, 14 Z.A.Meierovica boulevard , 1st floor, during business hours from 9.00 to 18.00.

Sincerely yours, “Parex Asset Management” IPAS

Jun 29, 2009
Parex banka elects new Council in annual General meeting of Shareholders

New Supervisory Council of Parex banka was elected on 29 June 2009 during the annual General meeting of the Bank’s Shareholders. In accordance with the resolution made during the meeting the following members are elected to Parex banka’s Council – Andžs Ūbelis, Michael J. Bourke, Laurence Phillips Adams, Kaspars Āboliņš and Carl Hakan Kallaker.

Representative from the EBRD, Laurence Phillips Adams was elected to Parex banka’s Council. L.Adams is a lawyer specializing in banking with a 25-year experience in financial sector; he has worked for such foreign financial institutions as ABN AMRO and Citibank.

Similarly, Michael Bourke, a former long-term president of Rietumu banka, was also elected to Parex banka’s Council. M.Bourke has an extensive experience working for the Central Bank of Ireland, International Monetary Fund and NCB Group. M.Bourke is a member of FCCA.

Furthermore, General meeting approved Parex Group’s Consolidated Annual Report 2008, elected an auditor for the next reporting periods and made amendments to the Articles of Association of Parex banka.

About Parex banka

Founded in 1992, Parex banka offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is the only partner of American Express in Latvia and Lithuania, allowed to issue American Express credit cards. Since 27 February 2009, the Latvian Privatisation Agency is the majority shareholder of Parex banka.

Jun 29, 2009
Parex Index hits all-time low in June

A gauge of business activity index Parex Index sunk in June to a 5-year low as, in comparison to March 2009, its value fell by 2.49 points dropping to 31.16 points, which, in contrast to previous monthly readings, is a relatively large decrease (see the graph below).

Changes of Parex Index since 1Q 2004

Although in 1Q2009, the Latvian entrepreneurs were increasingly optimistic about the future economic situation , the second quarter of the year saw this optimism diminish again. Both present (25.72 points) and future (36.61) indexes are negative reflecting the Latvian entrepreneurs’ pessimism regarding the current situation, and predicting the deterioration of the situation in the nearest six months. However, the value of Parex future index during the quarter declined less than the value of Parex present index - present index fell by 3.29 points, while futures index - by 1.69 points (see graph below).

Changes of Parex future and present indexes since 1Q 2004

In 2Q 2009, six out of eight Parex Index sub-indexes receded , whilst two slightly increased: the " competition in industry" sub-index has grown by 1.70 points and the " general economic activity in the country" sub-index increased by 1.11 points. In turn, the highest decrease was observed in sub-indexes “economic activity of the industry"(a drop by 4.66 points) and the “company's turnover" (a drop by 4.45 points).

Full report

About Parex Index

The first business activity index in Latvia – Parex Index – was established at the beginning of 2004 by Parex banka in cooperation with SKDS, the leading centre of market and public opinion research. The main purpose of the research is to establish a single index describing Latvian entrepreneurs subjective appraisal of the economic situation of the State. The index is calculated based on the poll and the analysis of the opinions of 750 Latvian businesses of different size and from different industries. The index reflects the opinion and the forecasts of the business community on the level of economic activity of the country and in their particular industry, as well as an evaluation of different indicators of company operations, such as profitability, turnover, financial position, number of staff, and investment level. If the index value exceeds 50 points, this is an indicator of certain level of optimism regarding the issue; in turn, the value below 50 points depicts pessimism.

About Parex banka

Founded in 1992, Parex banka offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is the only partner of American Express in Latvia and Lithuania, allowed to issue American Express credit cards. Since 27 February 2009, the Latvian Privatisation Agency is the majority shareholder (95.3%) of Parex banka.

Jun 15, 2009
Parex Bankas will refinance LTL 19.5 million for small and medium-sized enterprises

Parex Bankas won the tender organised by UAB Investicijų ir Verslo Garantijos (INVEGA) regarding the financing of very small, small and medium-sized enterprises, and is to lend LTL 100 million together with other three selected banks.

LTL 19.5 million will be allocated from the funds of Lithuanian State owned UAB Investicijų ir Verslo Garantijos (INVEGA) for the small loans extended by Parex Bankas. Small loans for very small, small and medium-sized enterprises will be extended for investments of up to LTL 350,000 and (or) to replenish current assets. Parex Bankas will extend loans for investment projects for a period of up to five years, and to replenish current assets – for a period of up to two years.

As provided in the terms and conditions of the tender announced by UAB Investicijų ir Verslo Garantijos, Parex Bankas will apply the three-month VILIBOR+0.48 interest rate to SMEs operating in Vilnius, Kaunas and Klaipėda municipalities, and the three-month VILIBOR-0.52 interest rate for enterprises operating in other municipalities. The maximum bank margin, as also provided in the terms and conditions, will not exceed 1.48 per cent.

About AB Parex Bankas in Lithuania

The network of AB Parex Bankas in Lithuania joins 29 customer service units. In Lithuania, Parex Group is represented by AB Parex Bankas, UAB Parex Faktoringas ir Lizingas (Parex Factoring and Leasing) and UAB Parex Investicijų Valdymas (Parex Investment Management). Parex Bankas has the sole official right to issue and serve American Express credit cards in Lithuania. This year, the international magazine Euromoney awarded AS Parex Banka for excellent private banking services in Latvia, and AB Parex Bankas in Lithuania received the “Best Local Bank” award. On 16 April 2009, the European Bank for Reconstruction and Development acquired 25 per cent and one share of AS Parex Banka and became the shareholder of this bank.

About Parex banka

Founded in 1992, Parex banka offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is the only partner of American Express in Latvia and Lithuania, allowed to issue American Express credit cards. Since 27 February 2009, the Latvian Privatisation Agency is the majority shareholder of Parex banka.

Jun 12, 2009
The new edition of Parex banka’s Instruction for implementation of limitations on fulfilment of liabilities will accelerate payment procession in Latvia

Parex banka has confirmed with the Financial and Capital Market Commission (FCMC) the new edition of the Instruction for implementation of limitations on fulfilment of liabilities imposed to SC Parex banka. The new version of the Instructions determines that starting from 8 June 2009 the Bank is allowed to perform debit operations for corporate clients without checking compliance with commercial activity of the client and limits on the client's funds exceeding the total balance as of 8 June 2009.

Druvis Murmanis, Parex banka’s Senior Vice-president and Head of Corporate Customer Sector, notes: “This is definitely a positive sign for the Bank's existing and potential corporate clients as it will allow to accelerate and to facilitate customer payment processing.”

The new version of the Instruction determines that the client will be able to perform debit operations without checking compliance with commercial activity to the amounts, deposited into client's account(s) starting from 8 June 2009 and exceeding client's total balance as of 8 June 2009.

On 1 December 2008, the Cabinet of Ministers of Republic of Latvia and the Financial and Capital Market Commission (FCMC) jointly decided to restrict debit payments at Parex banka in order to retain the Bank’s capital adequacy ratio and liquidity position at sufficient level after State takeover on 8 November 2008 and receiving necessary State aid.

About Parex banka

Founded in 1992, Parex banka offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is the only partner of American Express in Latvia and Lithuania, allowed to issue American Express credit cards. Since 27 February 2009, the Latvian Privatisation Agency is the majority shareholder of Parex banka.

Jun 8, 2009
Parex banka resumes development in the sector of Retail & SME customer service

Latest financial data and the increasing number of new customers indicate that Parex banka is slowly regaining the loyalty of retail customers and SME and resuming its development in this sector. In the period between 31 March 2009 and 31 May 2009, the deposit portfolio of the Bank has increased by 10 million lats. The number of deposit agreements signed in May has increased and the total contract amount reached 22.32 million lats. Similarly deposits in Maxi savings accounts have increased, resulting in a 10% portfolio increase during the past two months.

The Member of the Management Board of Parex banka, Senior Vice-president of the Sector of Retail and SME customer service Guntis Belavskis underlines: "Already before the takeover of the bank in autumn, this particular banking sector managed to demonstrate an exclusive performance, offering the best banking products and the most profitable deposits to the Latvian residents. Currently more and more customers are resuming their regular activities with the bank, which allow us to hope for even better results in the coming months.”

Parex banka is also demonstrating good results in the attraction of legal entities: while 195 new legal entities were registered in the Bank in May 2008, the results of May 2009 indicate already 290 new legal entities. In total, more than a thousand new legal entities have been registered in the Bank in 2009.

About Parex banka

Founded in 1992, Parex banka offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is the only partner of American Express in Latvia and Lithuania, allowed to issue American Express credit cards. Since 27 February 2009, the Latvian Privatisation Agency is the majority shareholder of Parex banka.

May 29, 2009
Annual general meeting of SC Parex banka to be held on 29 June 2009

The annual general meeting of SC Parex banka’s shareholders will be held on 29 June 2009. The approval of the consolidated annual report will be on the day’s agenda, according to the decision of Parex banka’s Management Board made on Friday, 29 May. The Board approved the Bank’s annual report on 25 May 2009.

The annual report indicates that in 2008, Parex Group experienced an overall slowdown in growth as compared to prior years. The Group’s assets have grown 3.9%, loans have increased 6.5% on a gross basis reaching 2.15 billions lats, while the amount of the Group’s deposits represented 2.02 billion lats.

As previously announced the Privatisation Agency has made an investment of 140 750 000 lats into SC Parex banka capital; thus, fully covering the previously announced issue of shares, and issued a subordinated loan amounting to 71 527 766 euros (50 270 000 lats) on 22 May 2009.

On 23 March 2009 the Management Board of SC Parex banka has made a decision to organize a common meeting of the shareholders in the second quarter of 2009, mainly due to necessity to prepare additional documentation after successful finalization of the negotiation process with its syndicated lenders, as well as to organize to ensure effective and fast decision making process from the perspective of wise utilization of available resources.

About Parex banka

Founded in 1992, Parex banka offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is the only partner of American Express in Latvia and Lithuania, allowed to issue American Express credit cards. Since 27 February 2009, the Latvian Privatisation Agency is the majority shareholder of Parex banka.

May 28, 2009
Parex banka overachieves the cost optimisation plan by 9%

Parex banka has achieved the set objectives of the administrative cost optimisation plan and during the first trimester has even overachieved the plan for approximately 9%. Compared to the final trimester of 2008, the average monthly administrative costs of the bank have been reduced by 3 million Lats.

The largest savings were on the reduction of costs on business trips, office supplies and household goods. Furthermore, the optimisation has been applied to such areas as transport expenses, phone communication and office rental costs. Additionally, the Management of the Bank has reviewed the necessity of outsourcing; as well as other activities have been performed. The monthly salary fund has been decreased by 24%, including the salary of the Bank’s management by 45%. The salary of the Supervisory Council and the Management Board of Parex banka was substantially decreased already in December 2008, when the new Council and Board were appointed. Thus, the salary fund of the new Board is only 28% of the previous Board salary fund, while the salary fund of the new Council is only 17% of the previous Council salary fund.

Additionally, several new projects have been launched to raise the effectiveness and to achieve the Bank’s strategic objectives, for example, the development of a unified salary system, implementation of a performance based management system, as well as increase of effectiveness of the customer service process.

In February 2009, the Council of Parex banka accepted the proposal of the Bank’s Management Board to optimize the total administrative costs by 35%, including 30% reduction on personnel expenses, 31% economy on phone communications and 67% - on transport expenses. The largest savings are planned on reducing costs by 80% on consultations, researches and surveys, and by 93% on business trips.

About Parex banka

Founded in 1992, Parex banka offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is the only partner of American Express in Latvia and Lithuania, allowed to issue American Express credit cards. Since 27 February 2009, the Latvian Privatisation Agency is the majority shareholder of Parex banka.

May 26, 2009
Parex banka’s Council approves the Bank’s annual report for 2008

On 25 May 2009, the Supervisory Council of Parex banka has approved the Bank's audited financial results for 2008.

In 2008, Parex Group experienced an overall slowdown in growth as compared to prior years. The Group's assets have grown 3.9% as compared to 35.8% in 2007. Loans have increased 6.5% on a gross basis reaching 2.15 billions lats. The amount of the Group's deposits represented 2.02 billion lats.

The financial result for the year was substantially impacted by provisions established to reflect the deterioration in asset quality. The loan portfolio was deeply affected by the rapidly worsening Latvian economic situation and stagnation in the Latvian real estate sector. As a result of a prudent assessment of its portfolio in the light of current trends and given the adverse situation in the financial markets, the Management established net provisions amounting to 160 million lats. As a result, the net loss for the Group for the year ended 2008 comprised 131 million lats.

About Parex banka:

Founded in 1992, Parex banka offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is the only partner of American Express in Latvia and Lithuania, allowed to issue American Express credit cards. Since 27 February 2009, the Latvian Privatisation Agency is the majority shareholder of Parex banka.

May 22, 2009
Privatisation Agency has made an investment into Parex banka’s capital

On 22 May 2009, the Privatisation Agency has made an investment of 140 750 000 lats into Parex banka’s capital and issued a subordinated loan amounting to 71 527 766 euros (50 270 000 lats); thus, fully covering the previously announced issue of shares. The capital increase is yet to be registered with the Enterprise Register.

On 11 May 2009, the European Commission approved Parex banka’s capital increase and the issue of the subordinated loan in the aforesaid amount, facilitating the increase of Parex banka’s capital adequacy index to 11% and providing stable grounds for the future operations of the Bank.

The capital of Parex banka has been increased by means of previously made State Treasury deposit at the Bank; thus, reducing the amount of this deposit.

About Parex banka

Founded in 1992, Parex banka offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is the only partner of American Express in Latvia and Lithuania, allowed to issue American Express credit cards. Since 27 February 2009, the Latvian Privatisation Agency is the majority shareholder of Parex banka.

May 12, 2009
European Commission allows Latvia to raise share capital in Parex banka

On 11 May 2009, the European Commission allowed the Latvian Government to purchase the new issue of shares in Parex banka; thus, raising the Bank's share capital. The European Commission's approval was necessary for Parex banka to improve its capital adequacy ratio to 11%.

As previously announced, the Cabinet of Ministers conceptually approved the participation of the EBRD in Parex banka’s equity capital on 24 March 2009. Similarly the Government reached an agreement to increase Parex banka’s capital by 227 million lats – 165 million will be invested in equity capital by means of Privatisation Agency obtaining registered voting shares of the new issue for the nominal value of 1 lats, but 62 million will be invested in subordinated capital. Moreover, Share Purchase Agreements between the EBRD and Latvian Government were signed on 16 April 2009. Agreements provide that following the increase of equity capital the EBRD will purchase 57,506,825 ordinary shares comprising 25% and 1 share of the Bank's equity capital.

About Parex banka

Founded in 1992, Parex banka offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is the only partner of American Express in Latvia and Lithuania, allowed to issue American Express credit cards. Since 27 February 2009, the Latvian Privatisation Agency is the majority shareholder of Parex banka.

May 8, 2009
Government approves Parex banka’s restructuring plan

On 8 May, the Cabinet of Ministers approved Parex banka’s restructuring plan, which was developed to assert the state support in the European Commission. The document gives an overview of the development plans of the bank, which are in line with the European Commission regulations on the state support during the aid provision period.

The restructuring plan indicates that the main objective of the bank is to return to the ownership of a successful private investor, the repayment of the short-term liquidity support granted by the Latvian government, and termination of the State Treasury guarantees. It is planned that the bank will develop into a strong and competitive financial institution in the Baltic region with a wide range of products and services offered, thereby becoming attractive to the strategic investors.

Parex banka has also defined its main strategic priorities: the restructuring of work organization to reach maximum efficiency and economy, as well as provision of independent bank’s funding and capital adequacy, which would accelerate the repayment of the financial support provided by the state and the return of the bank into the private sector. Furthermore, the improvement of risk control and management, lifting of the imposed restrictions and development of a new positioning plan in the market are also on the priority list. Likewise, the document gives an outline of the most important aspects of the bank’s business plan until 2013, including financial forecasts of balance sheet, profit and loss statement.

The plan was prepared based on the current market situation; thus, the Management Board and the Council of Parex banka will evaluate the implementation of the plan taking into account the fluctuation of financial market conditions, and in case of necessity will introduce adjustments coordinating them with the bank’s main shareholders.

The decision of the government provides that by 11 May 2009 the Ministry of Finance shall ensure the submission of the state support restructuring plan to the European Commission. Subsequently the Privatization Agency shall increase the share capital of the bank in accordance with the amount of the state support approved by the European Commission.

About Parex banka

Founded in 1992, Parex banka offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is the only partner of American Express in Latvia and Lithuania, allowed to issue American Express credit cards. Since 27 February 2009, the Latvian Privatisation Agency is the majority shareholder of Parex banka.

Apr 30, 2009
Customers convinced: Parex banka to regain reputation in future

Majority of Parex banka’s customers are convinced that the Bank will regain the reputation in future and become a credible bank, according to the results of research conducted by SKDS, the leading center of market and public opinion research. 85% of the private sector customers, 80% of public sector and 70% of large corporate customers envisage such development scenario of the Bank.

The questioned customers of the Bank gave the highest evaluation to the attraction of strong Western shareholders; the entering of the European Bank for Reconstruction and Development into Parex banka’s shareholder structure was particularly approved by large corporate and public sector customers. The respondents are most skeptical about the fact that Parex banka will remain a state-owned bank also in the future.

The poll indicates that in general both private and public sector customers are satisfied with Parex banka’s service quality, tariffs and offered products; besides, the most loyal customers are Latvian small and medium enterprises.

Majority of customers consider that Parex banka’s stabilization could help to improve the overall situation in the country. However, only the public sector customers evaluate the activities of the Government in relation to Parex banka as rather positive. In general, the opinion of business customers about the Bank and its future prospects are noticeably more positive than the opinion of those entrepreneurs, who are not Parex banka’s customers.

The customer poll was conducted in March 2009 upon Parex banka’s request in order to establish the opinion of Parex banka’s business customers about the Bank and its development potentialities. The total of 301 customers were questioned, of this number 64 were large corporate customers, 197 – other private sector customers (small and medium enterprises) and 40 – public sector customers.

About Parex banka

Founded in 1992, Parex banka offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is the only partner of American Express in Latvia and Lithuania, allowed to issue American Express credit cards. Since 27 February 2009, the Latvian Privatisation Agency is the majority shareholder of Parex banka.

Apr 28, 2009
Deposits in Maxi accounts increasing

During the last month the amount of deposits in Parex banka’s Maxi accounts has increased by 2.6 million lats. Since the beginning of this year, almost 5000 Maxi accounts have been opened, 15% of them for new customers. Similarly, the total amount of money both in lats and euros accumulated by this Parex banka’s deposit product has increased. Customers’ trust in Parex banka choosing a more suitable deposit product indicates the stabilisation of economic situation and rising confidence in the future growth of the Bank.

To remind, Maxi account is a very simple cash savings account with a high interest rate, which stands at 8% for lats and 5% for EUR. Additionally, this product is widely available as there are no minimal amount or term requirements and using the Maxi account card the customer is guaranteed a 24-hour access to the accumulated funds.

Recently, rather than choosing long-term deposits, customers tend to prefer more flexible deposit products as they provide a possibility to access the accumulated funds at any time. Maxi account is especially popular among the Latvian residents in the age group between 41-60 years.

Maxi account is used for cash savings while Maxi salary card – for incomes and daily payments. The advantage of using both cards is that if the payment is made with Maxi salary card, the savings on customer’s Maxi account increase by 0.5% of the purchase sum.

About Parex banka

Founded in 1992, Parex banka offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is the only partner of American Express in Latvia and Lithuania, allowed to issue American Express credit cards. Since 27 February 2009, the Latvian Privatisation Agency is the majority shareholder of Parex banka.

Apr 27, 2009
About the contract with SC “Parex banka”

JSC "Latvijas Krājbanka" and SC "Parex banka" have agreed to prolong the purchase transaction of AP Anlage & Privatbank AG (registration number CH-130.0.007.738-0, having its legal address at Kantonsstrasse 1, Freienbach 8807, Swiss Confederation) shares until July 24, 2009.

About Parex banka

Founded in 1992, Parex banka offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is the only partner of American Express in Latvia and Lithuania, allowed to issue American Express credit cards. Since 27 February 2009, the Latvian Privatisation Agency is the majority shareholder of Parex banka.

Apr 23, 2009
Parex banka has fulfilled its goals for 1Q2009

The 1Q2009 priorities of Parex banka were: restructurization of sydicated loans, stabilization of customer base, closing of the agreement on the entering of the European Bank for Reconstruction and Development into the shareholder structure, as well as a achievement of substantial decrease in administrative costs and the development of the new strategy, states the first quarter operational results of the Bank.

As at 31 March 2009, the Bank's credit portfolio was 1.74 billion lats, deposits accounted for 1.92 billion lats and total assets stood at 2.87 billion. The amount of capital and reserves at the end of March reached 70.4 million lats. As reported earlier, on March 24 the Cabinet of Ministers decided to increase the capital of Parex banka by 227 million lats, investing 165 million in the share capital and issuing a subordinated loan of 62 million lats. Recapitalization of the Bank is a subject to approval from the European Commission.

Parex banka asserts that with the tight economic situation in progress both in Latvia and worldwide, the quality of assets is one of the most significant issues on the agenda of banks. In the end of 2008, Parex banka performed a detailed evaluation of assets and established substantial provisions for the asset value decrease and started its work at cost optimization. As a result, the monthly costs in 1Q2009 have decreased by the average of 2.4 million lats and the Bank has established additional provisions in the amount of 7.9 million lats for the asset value decrease.

In 1Q2009 Parex banka's proceeds before provisions, depreciation and taxes totalled 3.1 million lats, though the Bank closed the first quarter with total loss of 6.9 million lats. The Bank continues to closely monitor changes in the quality of assets and is currently working on the development of effective solutions to further decrease potential losses from the asset value decrease. Besides in order to find the most effective solution for the non-performing loan issue the Bank has established a new structural unit.

Moreover, Parex banka is actively working at the development of the strategy, including the evaluation of priorities and definition of strategic objectives, that will enable to restructure the business activities and provide further development and growth.

About Parex banka

Founded in 1992, Parex banka offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is the only partner of American Express in Latvia and Lithuania, allowed to issue American Express credit cards. Since 27 February 2009, the Latvian Privatisation Agency is the majority shareholder of Parex banka.

Apr 22, 2009
Latvian entrepreneurs consider tax reduction the fastest and the most effective way to propel the economy

Most Latvian entrepreneurs acknowledge that the fastest and the most effective way for the government to propel the economy of Latvia is the decrease of taxes (opinion of 43% entrepreneurs) followed by the next most frequently mentioned method - state support to entrepreneurs to keep the workplaces (28%), according to the results of Parex index research conducted in March 2009.

Comparatively smaller numbers of entrepreneurs recognize other methods as being the most suitable for the propelling the economy: 11% of the respondents consider the export facilitation as the most effective state support; furthermore, the same proportion believe that the most effective method could be the state guaranteed loans to entrepreneurs, but 3% of entrepreneurs are convinced that the fastest and the most effective way to stimulate the economy of Latvia is to carry out some other activities.

The results of Parex index research indicate that the entrepreneurs consider the sectors of agriculture and forestry (56%) and industry (52%) as the priority sectors to receive the state support.

Comparatively seldom entrepreneurs consider that the uppermost support must be granted to such sectors as health and social care (32%), education (25%), construction (19%), transport and logistics (15%), tourism, hotels and restaurants (13%). Very rarely entrepreneurs indicate that the state support primarily should go to such sectors as different professional and technical services (consultations, designing&planning, IT services, etc.), trade, finance, printing and publishing sectors.

About Parex Index

The first business activity index in Latvia – Parex Index – was established at the beginning of 2004 by Parex banka in cooperation with SKDS, the leading centre of market and public opinion research. The main purpose of the research is to establish a single index describing Latvian entrepreneurs subjective appraisal of the economic situation of the State. The index is calculated based on the poll and the analysis of the opinions of 750 Latvian businesses of different size and from different industries. The index reflects the opinion and the forecasts of the business community on the level of economic activity of the country and in their particular industry, as well as an evaluation of different indicators of company operations, such as profitability, turnover, financial position, number of staff, and investment level. If the index value exceeds 50 points, this is an indicator of certain level of optimism regarding the issue; in turn, the value below 50 points depicts pessimism.

About Parex banka

Founded in 1992, Parex banka offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is the only partner of American Express in Latvia and Lithuania, allowed to issue American Express credit cards. Since 27 February 2009, the Latvian Privatisation Agency is the majority shareholder of Parex banka.

Apr 16, 2009
EBRD and Latvia has signed an agreement on purchase of Parex banka’s shares

On 16 April 2009, President of the European Bank for Reconstruction and Development (EBRD) Thomas Mirow and Prime Minister of Latvia Valdis Dombrovskis, Chairman of Parex banka's Management Board Nils Melngailis and Chairman of Privatisation Agency Arturs Grants signed Share Purchase Agreements providing that following the increase of equity capital the EBRD will purchase 57,506,825 ordinary shares comprising 25% and 1 share of the Bank's equity capital.

The price has been set at 1 lats per share. Further, the Shareholders Agreement defines the terms of cooperation between parties after the EBRD becomes a minority shareholder of Parex banka, as well as determines conditions for the resale of shares.

A prerequisite to enactment of the Agreement is signing of the agreement by which the EBRD will provide Parex banka with a subordinated loan of € 22 million qualifying as Tier 2 capital. This agreement will be signed after the conclusion of Share Purchase Agreement and Shareholders Agreement. Similarly, the approval from the European Commission is required for the additional government assistance through investment in the bank's equity capital.

Nils Melngailis, Chairman of Parex banka's Management Board highlighted that this subordinated loan will allow Parex banka to continue its recovery and regain customer trust: „With the entering of the EBRD in the Parex banka's shareholder structure, we have obtained a very important and strong partner with a substantial experience in bank restructuring, being crucial under the current circumstances of global financial crisis. The signed agreement indicates not only the stabilisation of the Latvian financial system and gives a positive signal about the investment environment in Latvia, but also evaluates Parex banka's future development potential and increases the Bank's value.”

Thomas Mirow pointed that this investment by the EBRD is aimed at supporting Parex Bank during the most difficult time in its history: “Our involvement will contribute to a return of confidence in the bank and in Latvia's financial sector generally. As a shareholder the EBRD will be able to participate in the development and implementation of a strategic plan for the restructuring and refocusing of Parex's business activities.”

As previously reported, the Cabinet of Ministers conceptually approved the participation of EBRD in Parex banka's equity capital on 24 March 2009. EBRD has a great experience in the restructuring of the banking business. The entering of EBRD into the bank is considered a positive signal for Parex's revival and development.

About Parex banka

Founded in 1992, Parex banka offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is the only partner of American Express in Latvia and Lithuania, allowed to issue American Express credit cards. Since 27 February 2009, the Latvian Privatisation Agency is the majority shareholder of Parex banka.

Apr 15, 2009
Draft agreements on EBRD’s involvement in Parex banka’s equity capital approved

On 14 April, the Cabinet of Ministers approved draft Share Purchace and Shareholders agreements between the Republic of Latvia, the Latvian Privatisation Agency, the European Bank for Reconstruction and Development (ERAB) and Parex banka. Parties plan to sign both agreements on 16 April.

Draft Share Purchase Agreement provides that following the increase of equity capital the EBRD will purchase 57,506,825 ordinary shares comprising 25% plus 1 share of the Bank's equity capital. The price has been set at 1 lats per share. Further, the Draft Shareholders Agreement defines the terms of cooperation between parties after the EBRD becomes a minority shareholder of Parex banka, as well as determines conditions for the resale of shares.

A prerequisite to enactment of the Agreement is signing of the agreement by which the EBRD will provide Parex banka with a subordinated loan of € 22 million qualifying as Tier 2 capital. This agreement will be signed after the conclusion of Share Purchase Agreement and Shareholders Agreement.

Similarly, the approval from the European Commission is required for the additional government assistance through investment in bank's equity capital, and the Ministry of Finance has already made a request to the competent institutions. As previously reported, on 3 April 2009, shareholders in the Privatisation Agency at a meeting approved a decision to substantially increase the interest in Parex banka and purchase shares of the new issue as well as invest in the subordinated capital of the Bank.

To secure the fulfilment of obligations towards the EBRD, the State will issue a LVL 89 million guarantee to the Privatisation Agency. To ensure the issue of the State guarantee, the Ministry of Finance will draft new regulations issued by the Cabinet.

Last week the EBRD Board of Directors approved its participation in Parex banka. The EBRD has an extensive experience in bank restructuring, and investments of this organization in capital of such banks are perceived as a positive call signaling about bank's vital capacity and development potential.

Apr 7, 2009
EBRD Board approves finance package for Parex banka

The EBRD Board of Directors has approved a financial package for Parex banka.
Subject to the conclusion of legal documentation, the EBRD package would include the acquisition of 25 percent plus 1 of ordinary shares of Parex banka for LVL 59.5 million (€ 84.2 million) and a subordinated loan of € 22 million. Following its capital injection the EBRD will be represented at Parex banka's Council with a nominee director.
The Bank's investment would be an opportunity for the EBRD to contribute to the restructuring of Parex banka and through this support the real economy in Latvia.

EBRD First Vice President Varel Freeman said: “The EBRD intends to make this investment which would see Parex banka through the most difficult time in its history. Our involvement would contribute to a return in confidence in the bank and in Latvia's financial sector generally. As a shareholder the EBRD would be able to participate in the development and implementation of a strategic plan for the restructuring and refocusing of Parex banka's business activities.”

EBRD has a great experience in the restructuring of the banking business. The entering of EBRD into a bank is being considered as a positive signal for vitality and development potential of the institution. As it was previously announced, in January and February 2009 EBRD performed a complete due diligence of Parex banka.

About Parex banka

Founded in 1992, Parex banka offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is the only partner of American Express in Latvia and Lithuania, allowed to issue American Express credit cards. Since 27 February 2009, the Latvian Privatisation Agency is the majority shareholder of Parex banka.

Mar 31, 2009
Parex banka reports positive equity despite losses in 2008

In 2008, there was overall growth slowdown as compared to prior years. Banks’ assets have grown 8.3% as compared to 34.6% in 2007. Loans have increased 0.4% reaching 1.74 billion lats. The Banks’ deposits totalled 1.9 billion lats, of which 1.2 billion lats were customer deposits.

The Bank has 20 thousand corporate and 271 thousand private deposit customers. As at 28 February 2009, Parex banka’s market share in terms of deposits from private individuals and legal entities constituted 12.7%. The Bank’s market share in terms of assets comprised 14.7%, in terms of loans - 11.3%.

The Banks’ net earnings before provisions, amortisation and taxes totalled 23 million lats in 2008.

Roberts Stugis, Member of the Management Board, CFO, comments: “The financial results of the year were substantially impacted by provisions established to reflect the deterioration in the asset quality. The loan portfolio was deeply affected by rapidly worsening Latvian economic situation and stagnation in the Latvian real estate sector.”

As a result of prudent assessment of portfolio in the light of current trends, the Management established loan provisions in the amount of 107 million lats. Furthermore, the adverse situation in the financial markets required additional provisions for investments in securities and balances due from credit institutions, resulting in net charge of 29 million lats. Mainly as a result of above, the net loss for the Bank for 2008 comprised 124 million lats.

The Bank’s shareholders’ equity as at 31 December 2008 was positive and amounted to LVL 77.5 million.

Group’s consolidated net loss for the year was LVL 131,0 million and the shareholders equity- LVL 79.1 million.

Subsequent to year end, the Government of Latvia has resolved to increase the Bank’s capital by LVL 227 million ensuring the Bank’s capital adequacy ratio of 12%. The capital injection is subject to the approval of State aid by EU.

About Parex banka

Founded in 1992, Parex banka offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is the only partner of American Express in Latvia and Lithuania, allowed to issue American Express credit cards. Since 27 February 2009, the Latvian Privatisation Agency is the majority shareholder of Parex banka.

Mar 23, 2009
Parex banka’s annual general meeting expected in May

Management Board of Parex banka has made a decision to cancel the extraordinary meeting of Parex banka’s shareholders scheduled for 24 March 2009 and the annual general meeting planned to take place on 30 March 2009 and to organize a common meeting of the shareholders in May 2009, mainly due to necessity to prepare additional documentation after successful finalisation of the negotiation process with its syndicated lenders, as well as to organize to ensure effective and fast decision making process from the perspective of wise utilisation of available resources.

It is expected that the shareholder meeting of Parex banka will take place in May 2009, the exact date will be announced in accordance with the Regulatory Acts of the Republic of Latvia. The decision to integrate the issues planned for reviewing in extraordinary meeting of shareholders and the annual general meeting was made in order to enable the shareholders’ participation in the meeting.

About Parex banka

Founded in 1992, Parex banka offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is the only partner of American Express in Latvia and Lithuania, allowed to issue American Express credit cards. Since 27 February 2009, the Latvian Privatisation Agency is the majority shareholder of Parex banka.

Mar 19, 2009
Parex banka successfully finalises negotiations with syndicated lenders

Parex banka is glad to announce that it has successfully completed the negotiation process with its syndicated lenders, reaching an agreement on the terms of the repayment. The first payment, 30% or EUR 232,5 mln and cumulative interest to be made on Thursday, 19 March 2009, with the funds raised from the State Treasury.

„The signing of the agreement with the syndicated lenders evidences the completion of a crucial stage in the stabilisation process of the Bank. Currently, we work intensively on several development scenarios for the Bank, with significant emphasis on customer services for corporate clients and households, as well as venture capital management” – claims Nils Melngailis, the Chairman of the Board of Parex banka. Mr. Melngailis also states that the stability and strategic development potential were evaluated by the European Bank for Reconstruction and Development, which has confirmed its interest in becoming the Bank’s minority shareholder.

The agreement with the syndicated lenders foresees the following repayment schedule: 30% or EUR 232,5 mln from the loan amount will be repaid in March 2009, 40% or EUR 310 mln - in February of 2010 and 30% or EUR 232,5 mln will be repaid in May of 2011.

Parex banka has two outstanding syndicated loan agreements: the EUR 275 million credit agreement dated 21 February 2008 and the EUR 500 million credit agreement dated 29 June 2007.

About Parex banka

Founded in 1992, Parex banka offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is the only partner of American Express in Latvia and Lithuania, allowed to issue American Express credit cards. Since 27 February 2009, the Latvian Privatisation Agency is the majority shareholder of Parex banka.

Mar 18, 2009
EBRD is willing to invest 100 million Euro into Parex banka

On Wednesday, 18 March 2009, following the meeting with the Prime Minister of the Republic of Latvia Valdis Dombrovskis, the First Vice President of European Bank of Reconstruction and Development (EBRD) Varel Freeman announced that EBRD is willing to obtain minority shares of Parex banka investing 100 million Euro (70 million lats).

V.Freeman underlined that the final decision on the acquisition will be made within the coming weeks. V.Freeman acknowledged that the decision on the support to Parex banka was made since the Bank is stable and it has a very proficient management. EBRD will also prepare proposals on the further strategy and operations of the Bank.

EBRD has a great experience in the restructuring of the banking business. The entering of EBRD into a bank is being considered as a positive signal for vitality and development potential of the institution. As it was previously announced, in January and February 2009 EBRD performed a complete due diligence of Parex banka.

About Parex banka

Founded in 1992, Parex banka offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is the only partner of American Express in Latvia and Lithuania, allowed to issue American Express credit cards. Since 27 February 2009, the Latvian Privatisation Agency is the majority shareholder of Parex banka.

Mar 12, 2009
Total deposits at Parex banka exceed 1,8 bln lats

Statistical data as at 12 March 2009 indicate that notwithstanding the sharp economic slowdown in Latvia and worldwide, customers willingly use Parex banka’s services for depositing their free assets – total deposits at Parex banka have exceeded 1,8 billion lats, including 674 million lats in deposits from the State Treasury.

The deposit amount in the segments of corporate customers and private individuals is stable – the number of corporate depositors has surpassed 19 thousand enterprises. Furthermore, circa 265 thousand private individuals, including more than 244 thousand Latvian residents have entrusted their assets to Parex banka.

Moreover, the number of active credit cards issued by Parex banka has exceeded 182,632 cards as at 01 March 2009, putting Parex banka in the first place in Latvia by number of active credit cards. Circa 90 thousand of the active credit cards are Parex banka’s American Express Cards – American Express Platinum Card, American Express Gold and American Express Blue. According to the data, the total amount of active payment cards issued by Parex banka exceeds 437 thousand.

About Parex banka

Founded in 1992, Parex banka offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is the only partner of American Express in Latvia and Lithuania, allowed to issue American Express credit cards. Since 27 February 2009, the Latvian Privatisation Agency is the majority shareholder of Parex banka.

Mar 12, 2009
Parex banka continues its cost optimization program

On 12 March, Parex banka organized a public car auction within the framework of its cost optimization program. During the auction three cars were sold for the total sum of EUR 25,700, exceeding the initial price by EUR 300. Bank is planning to cut its total transport expenses by 67%, wherewith another public car auction will be organized.

Bank’s income from the closed and public car auctions comprises more than EUR 391,700, but the total initial price at these auctions was scaled up for more than EUR 21 thousand.

Additionally to the optimization of transport costs, Parex banka continues to implement its comprehensive cost optimization program. Hence in February 2009 compared with January 2009, the administrative costs of the Bank have been reduced by 478 thousand lats. The average monthly administrative costs have been optimized by 2,4 million lats in 2009, comparing to the average monthly costs in the last quarter of 2008.

In February 2009, the Council of Parex banka accepted the proposal of the Bank’s Management Board to optimize the total administrative costs by 35% or to achieve the economy of 28 million lats, including 30% reduction of personnel expenses, 31% economy on phone communications and 67% reduction of transport expenses. The largest savings are planned on reducing costs by 80% on consultations, researches and surveys, and by 93% on business trips.

About Parex banka

Founded in 1992, Parex banka offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is the only partner of American Express in Latvia and Lithuania, allowed to issue American Express credit cards. Since 27 February 2009, the Latvian Privatisation Agency is the majority shareholder of Parex banka.

Mar 10, 2009
Roberts Idelsons un Druvis Mūrmanis expected to join Parex banka’s Board

On 10 March 2009, Chairman of the Management Board of Parex banka Nils Melngailis has proposed to extend the Board by two members – Roberts Idelsons, President of Parex Asset Management, and Druvis Mūrmanis, Head of Corporate Customers Lending Division, who is currently also the Deputy Chairman of the Board.

Changes in the structure of the Board are necessary to ensure intensive work at the loan restructuring, develop new services for enterprises and provide the advancement of new business directions, including the development of private capital management services.

“Currently it is very important to ensure the development and implementation of the new business plan of the Bank in order to increase Parex banka’s value, taking the opportunity provided by the new market situation and the structure of Bank’s shareholders. Restructuring of loans and development of new services, as well as development of private capital management services, where we already are able to challenge the European banks, are very important factors; thus, it is planned to afforce the Management Board with two highly capable banking experts – Roberts Idelsons and Druvis Mūrmanis,” says N.Melngailis.

Mr.Mūrmanis has gained experince over more than ten years with Hansabanka, where he began his career as Head of Foreigh Exchange Department, followed by subsequent managerial positions including the Head of Corportae Sales and Head of Corporate Banking. It is under his leadership that Hansabanka achieved top positions in the segment of corprate banking services in Latvia. D.Mūrmanis has held top managerial positions within Hansabank Group – he has been the board member of the Group and CEO of OAO Hansabank (Russia). D.Mūrmanis holds BA of Science in Management and Economics from the University of Latvia and Executive MBA from Stockholm School of Economics.

Mr. Idelsons is President and CEO of Parex Asset Management. In this capacity he has been responsible for client investment portfolios exceeding US$ 700m, including a real estate investment portfolio of US$ 10m. He received his Masters degree in Finance and Credit from the University of Latvia. Prior to joining Parex Group, Mr. Idelsons served as Managing Director of A/S Suprema, the Latvian subsidiary of a leading pan-Baltic investment bank, Evli. He has also been a member of the Supervisory Board of the Riga Stock Exchange (part of OMX Group).

Guntis Beļavskis, Senior Vice President and Head of Customer Services Division, Roberts Stuģis, Senior Vice President and Head of Finance and IT Sector, Valters Ābele, Head of Credit Risk Division and Vladimirs Ivanovs, Vice President, Customer Service Department have been already appointed to the Board of the Bank. The Management Board of Parex banka is chaired by Nils Melngailis.

About Parex banka

Founded in 1992, Parex banka offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is the only partner of American Express in Latvia and Lithuania, allowed to issue American Express credit cards. Since 05 December 2008, the state-owned Mortgage and Land Bank of Latvia has been the majority shareholder of Parex banka.

Mar 6, 2009
Parex banka confirms its Code of Conduct

On 5 March 2009, Parex banka’s Management Board has confirmed its Code of Conduct, an inner procedure of the Bank regulating the principles of professional ethics in Parex banka. As stated in the Code, ethical action is an initiative to achieve long-term work and lasting mutual confidence in cooperation with customers and partners, and among the employees of the Bank.

Parex banka’s Ethics and Disciplinary Committee will ensure implementation of the regulations of the Code. In cooperation with the Management of the Bank, this Committee will analyze and monitor adherence to the requirements of the Code, as well as evaluate possible violations. Cases of violation and conflicts of interest will be scrutinized as closely as other disciplinary cases. Applying appropriate procedures, members of the Committee will answer the questions of the employees.

The Code has been elaborated by virtue of comparative advantages and values of Parex banka highlighted by employees, customers and outside consultants, namely – business orientation, competitiveness and credibility. The Code defines common basic principles of ethics to be abided by all employees of the Group in their everyday work activities.

About Parex banka

Founded in 1992, Parex banka offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is the only partner of American Express in Latvia and Lithuania, allowed to issue American Express credit cards. Since 27 February 2009, the Latvian Privatisation Agency has been the majority shareholder of Parex banka.

Mar 3, 2009
Latvian Government appoints advisor for the sale of Parex banka

Latvian Government has announced that it has selected Nomura International plc, the global investment bank, as strategic advisor for the sale of its stake in Parex banka.

Nils Melngailis Chairman of Parex banka commented: “The selection of the advisor in the sale of State’s interest in Parex banka is very important; therefore, we are pleased that such a professional and experienced investment bank has been appointed. This marks a significant stage in Parex banka’s further development.”

The Latvian Government announced its intention to sell its interest in Parex banka in December 2008. During the selection process, a number of investment banks expressed their interest and commitment to advise on this transaction.

In accordance with the decision made by the Latvian Government on 24 February 2009, on 27 February 2009 changes were made in Parex banka’s register of shareholders and the Privatisation Agency has become a shareholder of 85,14% shares of Parex banka. Nomura will act as sell side financial advisor and provide advice and assistance Latvian Privatisation Agency.

Nomura has had a presence in Central and Eastern Europe since 1991 and extensive expertise of M&A activity in the region. Its understanding of the Baltic banking sector and dynamics of the local market will be central to the successful execution of this transaction.

About Parex banka

Founded in 1992, Parex banka offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is the only partner of American Express in Latvia and Lithuania, allowed to issue American Express credit cards. Since 05 December 2008, the state-owned Mortgage and Land Bank of Latvia has been the majority shareholder of Parex banka.

Mar 2, 2009
ATMs of Parex banka and Mortgage Bank unified into a common network

Parex banka and Mortgage Bank signed an agreement to unify the ATM service networks of both banks. As a result of the closed agreement the common network comprises 202 ATMs.

Parex banka has already joined a common ATM service network with GE Money Bank and Latvian Savings Bank. Under this alliance the customers of respective banks using Parex banka’s ATMs for money withdrawals are not charged additional commission. The same conditions apply to the customers of Mortgage Bank withdrawing money at the ATMs of Latvian Savings Bank, Rietumu Bank and SEB, and to the customers of latter banks withdrawing money at Mortgage Bank’s ATMs.

All cash withdrawal mashines of Parex banka and Mortgage Bank are a subject of the agreement signed by both banks. However, cash deposits into customer’s account will be allowed only at the cash machines of the account bank. Currently, Parex banka has 10 cash deposit machines operating in the largest shopping malls and the Bank’s customer service centers.

“Within the newly formed structure we are jointly looking for the course of collaboration that would provide additional opportunities to our clients. Cooperation in the area of payment cards and unification of the ATM service network, increasing the efficiency of both banks, is the first step,” considers Guntis Belavskis, the Senior Vice President and Member of Parex banka’s Board.

Deputy Chairman of Mortgage Bank and a Member of Parex banka’s Council Rolands Panko says, that “this opportunity was used to improve the customer service, as well as to cut the payment card service expenses.”

The ATMs of Parex banka are concentrated in Riga and other major cities. Most of the Mortgage Bank’s ATMs are located in the regions, district centers and rural municipalities.

About Parex banka

Being founded in 1992, Parex banka offers universal banking services throughout the Baltic region, the CIS and other European countries such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is the only partner of American Express in Latvia and Lithuania, allowed to issue American Express credit cards. Since 05 December 2008 the State owned Mortgage and Land Bank of Latvia is the majority shareholder of Parex banka.

About Mortgage Bank

Mortgage Bank is state-owned bank with the main function as a development bank. In cooperation with private commercial banks the main priority of Mortgage Bank is support to small and medium enterprises and promotion of economic activity in all regions of Latvia. The Mortgage Bank group includes Hipoleasing, Hipo Funds, HipoNIA and Risk Investment Company.

Feb 27, 2009
Negotiation process with Parex banka’s syndicated lenders extended

Parex banka and its syndicated lenders today reached an agreement to extend the negotiation process between them until 19 March 2009, in order to restructure the loans and changes in the repayment terms in accordance with the proposal submitted by the Bank.

Nils Melngailis, Chairman of Parex banka’s Management Board, who is leading the negotiation process on behalf of the Bank and the Latvian State, commented: “This is a complex process which requires the preparation of legal documentation by the Bank and its syndicated lenders, comprising 60 international financial institutions. In this situation the extension of negotiations reflects the lenders’ wish to reach an agreement with Parex banka on the proposed changes in repayment terms and conditions. We will continue to work on the covenants of the common agreement up to 19 March.”

As previously announced Parex banka submitted a proposal to its syndicated lenders with an offer to change the terms of their existing loan agreements on 5 February 2009. The particular terms of the proposal involve a 20% or EUR 155 million cumulative interest payment by the end of March 2009, a EUR 387 million payment in February 2010 and the remaining EUR 232.5 million payment in January 2012.

Parex banka has two outstanding syndicated loan agreements: the EUR 275 million credit agreement dated 21 February 2008 and the EUR 500 million credit agreement dated 29 June 2007.

About Parex banka

Being founded in 1992, Parex banka offers universal banking services throughout the Baltic region, the CIS and other European countries such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is the only partner of American Express in Latvia and Lithuania, allowed to issue American Express credit cards. Since 05 December 2008 the State owned Mortgage and Land Bank of Latvia is the majority shareholder of Parex banka.

Feb 25, 2009
Privatisation Agency enters negotiations for the conclusion of Parex banka’s Share Purchase Agreement

On 25 February 2009, the Privatisation Agency informed that it has entered into negotiations with the Mortgage and Land Bank of Latvia for the conclusion of Parex banka’s Share Purchase Agreement. Parties agreed that the agreement will be signed and become effective in the immediate future. Approval from the Financial and Capital Market Commission is a prerequisite to conclude the deal.

Henceforth, a specially formed interinstitutional work group under the guidance of the Finance Minister will resolve all questions pertaining the negotiations with the lead consultant Nomura Inetrnational plc, increase of Parex banka’s capital, as well as the proposals of possible investors, including the European Bank for Reconstruction and Development, to participate in the equity capital of Parex banka, while the Privatisation Agency will carry out necessary routine activities involving management of shares.

As reported, on 24 February 2009, Government made a decision to transfer state-owned 85,14% of Parex banka’s shares into holding of the Privatisation Agency to ensure further professional actions and prepare the Bank for capital increase and further selling. Under this decision the Privatisation Agency shall take over Parex banka’s shares owned by the Mortgage and Land Bank of Latvia upon the conclusion of purchase agreement.

About the Privatisation Agency

The Agency is experienced in forfeiting of state shares of credit institutions like Latvian Savings Bank, Latvijas Unibanka. The Privatisation Agency has organised international offers of shares of several Latvian enterprises (GDR – Unibanka, Latvian Gas and Latvian Shipping Company). Similarly, the Privatisation Agency has collaborated with notable international institutions and world class consultation companies like Nomura International plc, Pricewaterhouse Coopers, Ernst&Young, EBRD, UBS, KPMG, Villiams de Broe. The Agency has concluded 172 capitalization agreements for the total amount of LVL 11 152 217.01, as well as sold shares of 321 companies for the total amount of LVL 455 675 200.83.

About Parex banka

Being founded in 1992, Parex banka offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is the only partner of American Express in Latvia and Lithuania, allowed to issue American Express credit cards. Since 05 December 2008 the State owned Mortgage and Land Bank of Latvia is the majority shareholder of Parex banka.

Feb 17, 2009
The Deal on Sale of AP Anlage und Privatbank AG Extended

On 28 January 2009 it was announced that the deal between SC Parex banka and SC Latvijas Krajbanka on sale of AP Anlage und PrivatBank AG in Switzerland has been extended until 24 April 2009. Accompanied with Chairman's of Parex banka visit to Freienbach, Switzerland, the Bank acknowledges that Swiss subsidiary is integral part of its business activity and further development.

In accordance with agreement between SC Latvijas Krajbanka and SC Parex banka , SC Krajbanka the deadline of conclusion of the deal has been extended until 24 April 2009. Overall tendencies and conditions in the global financial markets underlie the decision to extend the deadline.

In its turn, AP Anlage und Privatbank AG has reported preliminary business results for 2008 showing significant increase by 32% in the number of its clients and overall positive net profit in 2008 despite vulnerable market conditions. Parex banka has acquired AP Anlage und Privatbank AG in February 2004 and since 2005 the Swiss subsidiary of Parex banka demonstrates stable and sound profitability of the business.

Nils Melngailis Chairman of Parex banka comments: „ AP Anlage und Privatbank AG is an integral part of Parex Group as it broadens the scope of services provided by the Group's companies.”

About Parex banka

Being founded in 1992, Parex banka offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is the only partner of American Express in Latvia and Lithuania, allowed to issue American Express credit cards. Since 05 December 2008 the State owned Mortgage and Land Bank of Latvia is the majority shareholder of Parex banka .

Feb 17, 2009
State to Guarantee Repayment of Parex Banka’s Syndicated Loans

On 17 February, in the meeting of the Cabinet of Ministers the Government supported the provision of State guarantee for the roll-over repayment of Parex banka’s syndicated loans in line with the agreement negotiated between Parex banka and syndicated lenders. Guarantee will be effective provided that the banking syndicates agree to the restructuring and the extension of the term of the loans.

Parex banka’s proposal to the syndicated lenders envisages the following loan repayment schedule: 20% of the principal amount are scheduled for repayment by March 2009 with the remaining sum to be split in two payments – 50% in February 2010 followed by 30% in January 2012.

To further stabilize operations of the Bank, the Government also supported the concept of strengthening the Bank’s capital base and instructed the Ministry of Finance to draw up specific proposals on the acquisition of newly issued shares to ensure that the capital adequacy of the Bank meets the requirements of the Credit Institution Law.

Similarly, by February 24, the Ministry of Finance will present to the Cabinet of Ministers the position of the possible participation of European Bank for Reconstruction and Development (EBRD) in Parex banka’s equity capital. The EBRD showed interest in Parex banka already in the end of 2008, and in January 2009 it conducted due diligence on the Bank. The EBRD has an extensive experience in bank restructuring, and investments of this organization in capital of such banks is perceived as a positive call signaling about bank’s vital capacity and development potential.

As reported earlier, to stabilize the financial system of Latvia, the Government took control of Parex banka transferring 84,83% of Bank’s shares to state-owned Mortgage and Land bank of Latvia.

Feb 16, 2009
The audited annual results for year 2008 to be available after 1Q 2009

Parex banka will comment on the audited financial results for year ending 31 December 2008 after receiving the audited annual report for 2008. Currently, Ernst & Young performs audit of Parex Group’s annual financial reports for 2008; the process is to be finalized by 31 March 2009.

As Parex banka’s Council has approved the proposal by the Management Board to optimize the administrative costs by 35% in 2009, saving additional LVL 28 million, which provides a certain optimism that the annual results for year 2009 will be better.

At this point the main priority of the Bank is to conclude the negotiation process with syndicated lenders and finalize the negotiation process with FCMC and Cabinet of Ministers on possibility of lifting the restrictions on debit operations. The next steps of Parex banka’s Management include the elaboration of the Bank’s overall development strategy, envisaging Parex banka as safe and well-performing Pan-Baltic Bank. The development of the operational strategy is a warranty to the State’s investments. Furthermore, it ensures that Parex banka will be attractive to potential strategic or financial investor.

About Parex banka

Being founded in 1992, Parex banka offers universal banking services throughout the Baltic region, the CIS and other European countries such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is the only partner of American Express in Latvia and Lithuania, allowed to issue American Express credit cards. Since 05 December 2008 the State owned Mortgage and Land Bank of Latvia is the majority shareholder of Parex banka.

Feb 13, 2009
The Council of Parex banka accept the cost optimization by 35%

On Thursday, 12 February 2009, the Council of Parex banka accepted the proposal of the Bank’s Management Board to optimize the total administrative costs by 35% in 2009. The Council was also informed on performed cost optimization by the Bank reaching 2.4 million lats in January 2009.

It is expected that the total administrative expenses of the Bank will be cut by 35%, including 30% reduction of personnel expenses, 31% - of phone communications and 67% reduction of transport expenses. The largest savings are planned on reducing costs by 80% on consultations, researches and surveys, and by 93% for business trips.

The Council of Parex banka reviewed the information on the financial situation of the Bank and the proposals for elimination of the shortcomings identified in due diligence report by PricewaterhouseCoopers. During the meeting the Council approved the risk management policy of the Bank, considered the current status of negotiations with syndicated lenders, as well as reviewed other issues.

About Parex banka

Being founded in 1992, Parex banka offers universal banking services throughout the Baltic region, the CIS and other European countries such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is the only partner of American Express in Latvia and Lithuania, allowed to issue American Express credit cards. Since 05 December 2008 the State owned Mortgage and Land Bank of Latvia is the majority shareholder of Parex banka.

Feb 10, 2009
Parex banka resumes active work with depositors, profitability of Maxi account – 8%

Services related to deposits and management of funds have traditionally been Parex banka’s strength. Continuing to improve its positions in this segment, on 21 November, Parex banka has launched a new deposit campaign and increased interest for the most successful deposit products:

min.1 m3 m6 m9 m12 m
50 LVL8.2 (8.20)*8.5 (8.44)9.5 (9.32)10.0 (9.68)10.5 (10.03)
100 USD4.5 (4.50)4.7 (4.68)6.0 (5.93)6.3 (6.17)6.8 (6.60)
100 EUR6.0 (6.00)6.3 (6.27)7.0 (6.90)7.5 (7.32)8.1 (7.81)

Savings accountMaxi account
LVL8.08.0
USD4.5
EUR5.75.7

The interest rate for a 1 year deposit has been increased to 10,5%, while the profitability of Maxi account in LVL now stands at 8% instead of previous 7%, which certainly is a notable merit for numerous loyal Maxi account customers.

Guntis Beļavskis, Senior Vice-President of Parex banka commented: “It is our first and foremost wish that those customers, who reposed their trust in Parex banka despite the circulating rumours, would be confident about their choice. Together with Latvian Mortgage Bank, the Financial and Capital Market Commission and the Government we have stabilised the situation at the Bank over a very short period of time. Now we have to proceed with doing what we can do best. The lost confidence cannot be regained in a day or a week, but we have embarked upon this way.”

Recently, the number of newly concluded deposit agreements has increased sharply and the funds placed on Maxi accounts have swelled. The profitability showings of Maxi account have reached and in some cases even outpaced the indices of term deposits of other banks; thus, this product is perceived as very potential by the Bank.

Parex banka would also like to remind that the customers, who had prematurely closed their deposits at the Bank and withdrew their funds from savings accounts and Maxi accounts due to the market nervousness, are welcome to address their customer service managers to return their deposits on accounts and get a refund of the paid commission.


* Interest rate indicated in brackets is applied in case client prefers to receive interest on a monthly basis.
Feb 5, 2009
Parex banka submits proposal to its syndicated lenders

On 05 February 2009, Parex banka submitted a proposal to its syndicated lenders with an offer to change the terms of their existing loan agreements. The proposal anticipates that 70% of the total outstanding loan will be repaid during the first 12 month term beginning with a 20% payment in February, 2009. The remaining payment of 30% is due in January, 2012.

Nils Melngailis, Chairman of Parex banka’s Board emphasises: “In light of the global financial crisis and the difficult circumstances in Latvia in particular, we believe the proposal is fair. It is strategically important that the Bank resumes full operations as soon as possible, including resuming lending.”

The particular terms of the proposal involve a EUR 155 mln and cumulative interest rate payment on 18 February 2009, a EUR 387 mln payment in February 2010, with the remaining EUR 232,5 mln due in January 2012.

Parex banka has two outstanding syndicated loan agreements: the EUR 275 million credit agreement dated 21 February 2008 and EUR 500 million credit agreement dated 29 June 2007.

About Parex banka

Being founded in 1992, Parex banka offers universal banking services throughout the Baltic region, the CIS and other European countries such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is the only partner of American Express in Latvia and Lithuania, allowed to issue American Express credit cards. Since 05 December 2008 the State owned Mortgage and Land Bank of Latvia is the majority shareholder of Parex banka.

Feb 3, 2009
PricewaterhouseCoopers has completed due diligence on Parex banka

PricewaterhouseCoopers (hereinafter - PWC) has announced the results of the due diligence on Parex banka's finances, taxes and IT as assigned by Parex banka's shareholders.

Auditors' task was to specifically evaluate the situation at Parex banka (hereinafter – the Bank) on the takeover date. The report particularly emphasizes that PWC has not audited Bank's operations and financial situation after the date of appointment of the new Management Board of the Bank on 5 December 2008. All the risks indicated in the report had been identified by the new Management Board of the Bank during the first weeks of its activities and the prevention plan has been developed. Most of the issues falling under the terms of reference of the Board have already been solved.

The report acknowledges that part of the risks have been entailed by both global and local economic crisis, which has had an impact on operations of all Latvian commercial banks and may not be considered exceptional and affecting Parex banka alone.

However, the report displays several most important factors that have had an effect on the Bank over the period of time until 30 November 2008:

Liquidity: The report indicates that in 2008 a risk of liquidity support in the form of additional deposits from the State Treasury existed in case of difference between the incoming money flow from loans and the outflow of deposits in line with the payment schedules. The State Treasury has provided support to the Bank in 2008 and currently the Bank is in negotiations with the syndicated lenders who, according to the existing agreements, are entitled to request the repayment of the loans granted to the Bank. The prior business model of the Bank was based on the availability of short-term resources allowing speedy growth and providing good profit. Historically the liquidity of the Bank was guaranteed by the security portfolio, which became practically nonmarketable and lost its value as a result of the global economic crisis. Inaccessibility of tradable instruments alongside with the decrease of deposits triggered the liquidity crunch of the Bank. The outflow of deposits has gradually declined compared to November and December 2008 as well as January 2009 compared to December 2008;

Reserves for loans: According to the report, as at 30 November 2008, Bank's reserves for doubtful loans were insufficient; however, it is noted that since the new Board has taken office on 5 December 2008, the necessary reserves have been accurately analysed and accumulated. Additionally, the auditing firm Ernst & Young is working on Bank's financial report for 2008, which is expected to be completed on 31 March 2009 and will report the state of the Bank as at 31 December 2008. The additionally accumulated reserves demand the increase of Bank's capital, that will allow Bank to re-establish its status of a reliable partner of both customers and other banks;

Dependence of loan repayment on the real estate market trends: Mortgage secured loans are a constitutive part of the loan portfolio. According to the Bank's policy, provided that the customer pays off the loan in due time and no amendments are made to the terms; no additional loan evaluation is required during the tenor of the loan. Thus, assessments in Bank's possession acquired at the time of granting the loan might not reflect accurate current value of collateral. It must be noted that the Bank requested co-funding from the client and the credits have been repaid in the negotiated terms;

High concentration of customers outside European Union countries: a substantial part of borrowers and attracted deposits are from non-EU countries, which have also been heavily affected by the economic crisis. Due to the diversification of risks and greater profit potentialities the policy of the Bank till now envisaged active cooperation with the said customers. For instance, according to the financial report for 2007, as at 31 December 2007, 25% of Bank's liabilities (including deposits) and 16% of issued loans were related to non-EU countries. Taking into account that the network of Bank's branches outside Latvia providing services to private customers and small and medium-sized enterprises is not wide, the conclusion can be made that large corporate clients have formed a relatively high concentration of loans and deposits in the respective portfolios of the Bank. However, it must be noted that these concentration levels are in line with the requirements determined by the FCMC.

About Parex banka

Being founded in 1992, Parex banka offers universal banking services throughout the Baltic region, the CIS and other European countries such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Parex banka is the only partner of American Express in Latvia and Lithuania, allowed to issue American Express credit cards. Since 05 December 2008 the State owned Mortgage and Land Bank of Latvia is the majority shareholder of Parex banka.

Jan 30, 2009
Parex banka continues negotiations with its syndicated lenders

Currently the management of Parex banka is engaged in a negotiation process with its syndicated lenders. All parties are interested in arriving at a mutually beneficial solution, but it would be premature to make any forecasts about the outcome of the negotiation process at this point. All parties are abiding by a common decision to comply with a confidentiality agreement in order not to influence the results of the negotiations. As soon as any agreement between Parex banka and the lenders will be made, the results will be announced by the parties.

Jan 26, 2009
Parex open pension fund delivers the highest returns among the private pension plan providers in Latvia

The performance of Parex Open Pension Fund’s pension plans in LVL and USD since inception was among the highest among all private pension plans in Latvia, according to the data as of December 31, 2008. Parex Balanced and Active 3-rd tier pension plans in Lats showed positive results of 5,45% and 5,50% since inception respectively, whereas Parex Active USD plan showed the result of – 5,37%*.

“Parex Asset Management, the company managing assets of the 3-rd tier Parex pension plans has shown superior professionalism in portfolio management even in such complicated market conditions, showing the top performance results among peers.”, - noted Mr. Jurijs Punculs, the Chairman of the Board of Parex Open Pension Fund.

The net asset value of Parex Open Pension Fund amounted to LVL 14.6 mln and the Fund had 52 529 participants, as at December 31, 2008. The number of participants in Parex Open Pension Fund has increased by 9986 clients throughout 2008.

О Parex bankа

Parex banka was established in 1992 and currently employs over 2200 staff members across its branches and customer services centres. Parex Group is represented in 15 countries of the world, via a wide network of representative offices, branches and subsidiaries, as well as has branches in Berlin, Stockholm, Tallinn, Vilnius and Freienbach, (Switzerland). Parex banka is the unique partner of American Express in Latvia and Lithuania, with an exclusive right to issue American Express credit cards.

Jan 12, 2009
Parex banka begins 2009 with an increase in term deposits

In the first week of 2009 Parex banka has concluded more than a thousand new term deposit agreements; thus, the total amount of deposits at the Bank has considerably increased. Private individuals have been especially active in terms of depositing their funds at the Bank and the volume of deposits in this particular segment has shown a daily growth.

Since the indicator of depositors at Parex banka is solid in both the resident and non-resident segments, it is possible to assert that the latest activities of the Bank not only have motivated its existing and loyal clients, but also have succeeded to attract new clients.

The interest of clients is closely related to the term deposit interest rates offered by Parex banka, which for a one-year deposit in Lats now stands at 12,5%, EUR – 8,1%, but USD – 6,8%.

Jan 9, 2009
Parex Index: optimism of Latvian entrepreneurs diminishes

A significant weakening of optimism in the attitude of Latvian entrepreneurs towards the economic situation of the country is revealed by the results of the business activity research Parex Index, conducted in December 2008. Furthermore, entrepreneurs expect to receive the State support during the time of economic constraints. In December, the index decreased by 6,15 points hitting a new record-low – 35,26 points. This has been the most drastic change in the mood of entrepreneurs since the establishment of Parex Index in 2004.

“Developing our banking services we will definitely use the results of this research as the priorities of both private individuals and businesses have changed. These data will also be useful to the Latvian Government in planning the allocation of the European Union and IMF funds to stimulate the development of national economy,” Nils Melngailis, Chairman of Parex banka, says.

In December 2008, the index dropped by almost fifteen points below the 50-point neutral rating threshold. Over the course of last eight quarters the evaluation in general has decreased by almost 25 points but since the end of 2006 the overall rating has been moving down steadily.

In December, both the present (34,06 pts) and the future (36,46 pts) indexes were negative reflecting a pessimistic view on the development of economy not only currently but also for the next half-year. Compared to the previously seen – a more optimistic – future vision of the entrepreneurs, in the latest research it is exactly the future index that shows the most dramatic decrease (by 7,46 pts), an indicative of a negative evaluation of the harsh end of the year in the banking sector as well as in the economy in general.

Assigning only 14,59 points, the Latvian entrepreneurs have been the most critical about the overall economic activity in the country. They believe that the economic activity in the respective sector (26,01 pts), turnover (33,31 pts), financial position (34,04 pts) and cost-efficiency (34,05 pts) of the enterprise have also declined sharply. Somewhat better indexes have been assigned to the investment volume (43,62 pts) and the number of employees (42,25 pts) in the enterprise. Competition in the respective sector is still seen as relatively high – 52,09 points.

Equally, majority or 59,3% of the Latvian entrepreneurs believe that the Government must support the ailing enterprises, according to the additional question – Do you believe the Latvian Government should follow the lead of other European Union countries and USA and support local enterprises that have landed in difficulties due to the global economic crisis? – included in the poll. Additionally, 28,8% of the respondents think that the Government should rather support enterprises in difficulties; thus, the total of 88,1% of the Latvian entrepreneurs consider that the State should support the ailing businesses.

3,6% of the respondents, providing their answers to the above-mentioned additional question, believe that the Government should rather not support the struggling enterprises, but 2,4% of the entrepreneurs are even more categoric and consider that the State should not support such businesses. 5,9% of the Latvian busines people did not have an opinion on this question.

Answers provided to the second additional question – How has the acquisition of the controlling stake in Parex banka by the Latvian State changed your attitude to Parex banka and the use of its services? – show that following the December events, 50,7% of the entrepreneurs have not changed their attitude to Parex banka, but the attitude of 4,7% has even somewhat improved, while 0,5% report a significant improvement of attitude.

At the same time, 18,8% of the respondents feel that their attitude to Parex banka has somewhat worsened, but 9,6% admit a significant worsening of attitude. 15,7% found it difficult to specify the answer to the given question.

About Parex Index

The first business activity index in Latvia – Parex Index – was established at the beginning of 2004 by Parex banka in cooperation with SKDS, the leading centre of market and public opinion research. The main purpose of the research is to establish a single index describing Latvian entrepreneurs subjective appraisal of the economic situation of the State. The index is calculated based on the poll and the analysis of the opinions of 750 Latvian businesses of different size and from different industries. The index reflects the opinion and the forecasts of the business community on the level of economic activity of the country and in their particular industry, as well as an evaluation of different indicators of company operations, such as profitability, turnover, financial position, number of staff, and investment level. If the index value exceeds 50 points, this is an indicator of certain level of optimism regarding the issue; in turn, the value below 50 points depicts pessimism.

Jan 5, 2009
Chairman of Parex banka envisages plans for 2009
  • Welcomes support of Government and IMF
  • Envisages consolidation of banking sector
  • Sees potential for recovery in second half of year

In remarks to the media today, Mr Nils Melngailis, Chairman of Parex banka, made the following comments.

What were the most important developments at Parex banka in 2008?
Despite the impact of the global financial crisis, the Bank has succeeded in demonstrating to both the Latvian Government and international financial institutions that it is fundamentally strong and that it continues to have very good future growth prospects. On this basis the Bank has received financial support and has consequently changed its ownership structure.

Even in these conditions of uncertainty the Bank and its staff maintained their record of achievement in 2008, opening new branches and strengthening the Bank’s position in key business segments such as asset management and credit cards. In fact, until the unprecedented circumstances of October 2008, Parex banka was showing a significant increase in both resident and non-resident deposits, even in a difficult economic situation. The Bank was the only large financial institution in Latvia to succeed in growing its deposits at that time.

The overall accomplishments of Parex banka in 2008 include:
- increasing its market share in the payment card segment in Latvia, especially in the credit card market, where Parex banka has taken the second position, mainly due to its exclusive agreement with American Express;
- Consolidating the position of Parex Asset Management as the regional market leader in asset management;
- Opening several new customer service centres in Latvia, in Saldus, Dobele, Aizkraukle, Alūksne and Krāslava;
- Opening new customer service centres abroad in Germany, Sweden and Estonia;
- Enhancing recognition of its internet banking services, now acknowledged as the second best amongst the Baltic banks, compared to the sixth in 2007.

What were the main developments in Latvian banking sector in 2008?
Most importantly, the vast majority of the banks, both domestic and foreign-owned, have received support from their respective governments and international financial institutions. On this basis the banking sector can continue to provide support to private individuals and enterprises, which is crucial during the recovery of the economy.

Generally, what were the main developments in the country in 2008?
The country is experiencing an economic crisis because of the global situation, but I believe that in the long run we will emerge from it stronger. The existing political system in Latvia discourages unpopular, but urgent decisions of national importance. The crisis helps to solve these issues. Now, the Latvian Government and Saeima have to make a number of commitments to society and international partners, which we trust they will adhere to strictly follow in 2009. So the current situation is a major opportunity for the people of Latvia to unite in order to overcome the consequences of the crisis.

What does the Bank expect from the coming year 2009? What are the aims of the Bank for 2009? What are the forecasts in respect to the profits, loan portfolio and deposit base growth?
The main priority of the Bank is to return to full operations as soon as possible. We will work actively in order to lift the restrictions on the bank and resume lending. In the current difficult economic situation affecting the whole population of Latvia, its enterprises and financial institutions, we cannot expect major profits in the first quarter of 2009. Furthermore, during these times we have to invest in the future development of the Bank to meet the changing needs of our clients.

What developments in the Latvian banking sector are expected next year – what will the main challenges and prospects be? How will the market develop further in regards to the profits, loans and deposits?
Currently there are quite a few preconditions established for a further consolidation of both the Latvian and Baltic banking sectors. The number of market players in the Baltics is comparatively large; thus, in the next two years the amount of banks might decrease to 10-15. Further, the banks will be forced to reduce fixed costs. Access to financial resources, such as deposits, loans from other banks and capital markets, will be a significant factor as well. Hereafter loans on favourable terms will be only be available to large and stable organizations.

What developments can we expect on the country level, and what steps does the Bank anticipate from the Government?
The Latvian Government will have a difficult task in 2009 – to fulfil the requirements of the International Monetary Fund related to reducing expenditure and ensuring state support to stimulate the national economy. If the Government succeeds in making the necessary decisions about expenditure and investment in the short term, then the first signs of recovery will be seen in the second half of 2009.

It is most important that the Latvian Government, the International Monetary Fund and other partners have committed their support to the further development of Parex banka. I envisage that in 2009 Parex banka will have a significant role in the stabilisation of the Latvian financial system and it is my belief that the Bank will make a substantial contribution to the national economy in general. Together with state institutions we will continue to develop further ideas about the use of resources in order to decrease the financing costs of state institutions, bank and enterprises.