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EBRD to become Citadele shareholder

By Howard Jarvis. 02.08.2010

Citadele Chairman of the Board Juris Jakobsons (left) and Parex Banka Chairman of the Board Nils Melngailis
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Citadele, a bank created earlier this summer using healthy assets from Parex Banka, which was hurriedly nationalized in 2008, has gained an influential shareholder.

Citadele has signed an agreement with the European Bank for Reconstruction and Development and the Latvian Privatization Agency, in which the EBRD enters the bank’s shareholding structure with 25 per cent of the share capital plus 1 voting share.
The Latvian Cabinet of Ministers approved the sale of the shares, which were previously owned by the privatization agency, for a price equivalent to the shares’ nominal value.
According to a press release emanating from Citadele, the new bank was set up on June 30 “with a view to inspire people and businesses for development and to facilitate the growth of the region”. It will be responsible for maintaining accounts and lending to former customers of Parex Bank.
It was established by the national privatization agency on with a share capital of LVL 4 million (€5.7 million), increased exactly a month later to LVL 103 million. The bank will remain the exclusive partner of American Express in Latvia and Lithuania with rights to issue American Express credit cards.
“The creation of Citadele was a milestone, the result of a great deal of hard work by many people and an example of good cooperation between the EBRD and the Latvian government,” Peter Reiniger, managing director of the European Bank for Reconstruction and Development, commented.
“Citadele will be able to contribute to Latvia’s economic recovery by lending to small and medium-sized companies, and the EBRD looks forward to its continued support of the bank.”
The European Bank for Reconstruction and Development and Parex Bank have also signed an agreement stating that a subordinated loan issued by the EBRD to Parex will be transferred to Citadele, the total amount of which will be €22 million.
The first part of this loan has already been issued, while the other part, worth €3.6 million, will be provided in one installment, subject to final approval by the European Union.
The EBRD’s investments should bring support and expertise to further develop Citadele’s business, contribute to best practice corporate governance, and assist in the bank’s full return to the private sector.
“The entry of the EBRD into the bank Citadele’s shareholding structure shows its confidence in the new bank and approval of decisions made by the Latvian government with regard to the restructuring of Parex Banka and the transfer of the enterprise to Citadele,” Juris Jākobsons, Citadele’s chairman of the board, said. “Moreover, the signing of the agreement puts a significant cornerstone in the bank’s further development and achievement of goals set in the business plans.”


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