The pension management company IPAS INDEXO (hereinafter - INDEXO), which has been working on a new bank project since the middle of last year, has almost completed the preparations for the establishment of the bank. This includes the building of IT infrastructure, implementation of payment functionality, establishment of compliance procedures, development of services for retail, design and testing of a mobile application, as well as formulation of credit policy and creation of a credit application processing model. The team of the new bank is also constantly expanding. Together with this announcement, INDEXO publishes its planned growth plan until 2027. 

Before obtaining the license and starting the bank's operations, INDEXO plans to raise 12.5 million euros in a new share issue to ensure the necessary investments for lending, reserves and the growth of operations. It is expected that the new share issue will take place in December of this year and be completed at the beginning of next year, with the share price of the new issue set in the range of 11 to 15 euros. 

INDEXO has already submitted a complete package of documents for banking license application to the Bank of Latvia, which is currently under consideration in cooperation with the European Central Bank. After obtaining the license, INDEXO will start offering services to individuals, and this could happen shortly after receiving the license, tentatively in the first quarter of next year. Services for businesses will follow from 2025. 

"We have almost completed the establishment of the bank, and now the last step remains - raising capital for banking operations. In analogy, I can say that we have built the airplane and only need to fuel it.  We want to bring change to the banking market just like we disrupted the pension system 6 years ago and achieved lower fees and better products for Latvian people," says Valdis Siksnis, Chairman of the Board of INDEXO and one of the founders. 

"Latvian banking market simply underserves the Latvian economy – with low credit levels, high loan interest rates and low innovation. Considering Latvia's development over the past decade, it seems incredible that the credit-to-GDP ratio is at its historically lowest point. If in 2011 the proportion of loans issued in Latvia to GDP was 82%, then in the first half of this year, it was only 27%. This is dramatically low, and Latvia has the second lowest credit-to-GDP ratio in the entire Eurozone, surpassed only by Ireland. In the Eurozone, the ratio of household debt to income was 96.4% in 2021, while in Latvia it was only 29.9%. This has a significant impact on Latvia's economic growth, or more accurately, the lack of growth, as the Latvian economy has been stagnant for a long time, and this year it is actually shrinking," continues V. Siksnis. 

The capital raise is subject to shareholders meeting decision on November 23 

"During the IPO, we planned that the bank would need to raise additional 11 million capital soon after the start of operations. However, during the licensing process, it has become clear that the bank's full capital needs for the first 36 months need to be resolved before starting operations. INDEXO has convened a shareholder meeting, taking place on November 23, where shareholders will be asked to decide on raising additional required capital. If shareholders support this decision and additional funds will be raised, the bank's capital will be sufficient to make a significant impact in the existing banking market. In the latter years, the bank's development will be funded from the company's own resources - both from the profits of pension management and banking operations. This does not exclude raising capital in the future if we see opportunities for faster development, but it is not planned in the published growth model for the next few years," continues V. Siksnis. 

The new bank plans to establish considerable presence in the market by the end of 2027, plans to be profitable from the second year on   

By the end of 2027, INDEXO plans, with the new capital, to attract around 118 thousand clients to INDEXO Bank, while the planned volume of issued loans in 2027 is 362 million. 

“We know the growth rate of our pension operations and we have the experience to expand customer base with an innovative and high value product. We aim to have a fast market entry, that will produce results early on, which will, in turn, help us to generate value for our shareholders,” continues V. Siksnis. 

INDEXO Bank to benefit from strong pension business growth 

"We are building INDEXO Bank on the foundation of our successful pension management operation. Since our initial public offering (IPO) in July 2022, we have additionally attracted 320 million euros in assets under management and increased the number of clients by 42 thousand. Currently, 124 thousand clients trust us with more than 840 million euros of their pension savings, making us the third largest 2nd pillar pension manager in Latvia by assets under management. Moreover, our pension management is profitable. This is a fundamentally important cornerstone for the future development of the bank, as our shareholders are and will be shareholders in both the pension management company and the bank, which is a subsidiary of the pension management company," says Henrik Karmo, a member of the INDEXO Board and one of the founders.  
 

Disclaimer: Approval from the European Central Bank is required for obtaining a banking license. New share issue is subject to approval of the issue prospectus by the Bank of Latvia. The opinions contained herein regarding estimated or anticipated future results or future activities are forward-looking statements which reflect current analysis of existing trends, information and plans. Forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ from the plans and estimates.  
 
 
About INDEXO 

INDEXO is an asset management company licensed by the Bank of Latvia, which offers modern 2nd and 3rd pillar pension saving plans in Latvia. INDEXO is the fastest growing pension management company in Latvia with more than 124 thousand customers and more than EUR 840 million in assets under management. 

INDEXO was established in 2017 by a group of 30 experienced business representatives and managers with an aim to fight for a better financial environment in Latvia. INDEXO vision is to become a financial services group, offering modern and customized services that empower Latvian people to take care of their financial wellbeing. 

Additional information is available at www.indexo.lv. 
 
Contact information: 
Ieva Bauma  
IPAS "Indexo" 
Board Member, Marketing Manager 
Email: ieva.bauma@indexo.lv 
Phone: +371 28636789