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Fitch Ratings-London/Moscow/Warsaw-31 March 2010: Fitch Ratings
says the
announced restructuring plan of Parex banka (Parex, rated Long-term
Issuer
Default Rating 'Restricted Default'), would be positive for
depositors if it
succeeds. The current 'RD' rating reflects the deposit
restrictions imposed on
the bank, and may be upgraded on completion of the restructuring
and the
removal of the deposit restrictions.
The announced plan envisages spinning off two-thirds of Parex's
assets into a
'new' bank, which is expected to be granted a new banking license
by the
Latvian regulator. The existing 'old' bank will retain the
banking license of
Parex. The plan has yet to be finalized. Although it has been
sanctioned by the
Cabinet of Ministers of Latvia, it is still pending approval from
the European
Commission, expected by 1 July 2010. Fitch notes there is a risk
the plan may
also be challenged in court by former shareholders or other
interested parties.
The current version of the plan as Fitch understands it assumes
that the 'new'
bank will be created as a legally independent entity and will
service existing
customer accounts. No restrictions, including deposit restrictions,
are
expected to exist on the operations of the 'new' bank. The
'new' bank will be
capitalized by the government and the EBRD and will focus on core
Baltics
business activities.
The 'old' bank will hold approximately a third of Parex's total
assets, will
preserve its ownership structure and will concentrate on
recovering
lower-quality financial assets.
Parex was the third-largest bank in Latvia by assets with a 11.4%
market share
at end-2009. Since December 2008, it has been majority-owned by the
state. The
EBRD became a minority shareholder in 2009 with a 25% + 1 voting
shares (20% of
total shares). For further details on the bank, please refer to the
credit
analysis published on 1 February 2010 at www.fitchratings.com.
Parex's current ratings are as follows:
Long-term IDR: 'RD'
Short-term IDR: 'RD'
Individual Rating: 'F'
Support Rating: '5'
Support Rating Floor: 'NF'
Senior unsecured: 'CC'/RR4
Contacts: Vladimir Markelov, Moscow, +7 495 956 7063; Artur Szeski,
Warsaw, +48
22 338 6292.
Fitch's Recovery Ratings (RR), introduced in 2005, are a relative
indicator of
creditor recovery on a given obligation in the event of a default.
An overview
of Fitch's RR methodology can be found at
www.fitchratings.com/recovery.
Media Relations: Marina Moshkina, Moscow, Tel: +7 495 956 9901,
Email:
marina.moshkina@fitchratings.com; Malgorzata Socharska, Warsaw,
Tel: +48 22 338
62 81,
Email: malgorzata.socharska@fitchratings.com; Hannah Warrington,
London, Tel:
+44 (0) 207 417 6298, Email:
hannah.warrington@fitchratings.com.
Additional information is available on www.fitchratings.com
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