Teksts
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The economic activity of the Bank has been in line with the
approved restructuring plan
The year 2010 marked significant changes in the economic activity
of AS Parex banka – on 1 August, with the state aid, the
restructuring of Parex banka which had found itself in financial
difficulties was successfully implemented, and Parex banka became a
unique financial institution in Latvia – a specialized distressed
asset manager – with an ambitious aim: maximum recovery of the
state aid.
Under the International Financial Reporting Standards which are
binding upon the bank, in the accounting period Parex banka
established reserves in the amount of LVL 115.7 million for
non-secure loans. The correction has naturally affected the general
financial indicators, and Parex banka closed the year 2010 with
forecasted losses of LVL 152.7 million. It must be emphasised that
all the recovered resources are transferred to repayment of the
syndicate loan and the state investment, thus, in line with the
approved restructuring plan the operation of Parex banka is not
expected to be profitable at any time soon. At the same time the
bank strives to limit losses as much as possible and it therefore
implements thought-out and cautious operational and financial
activities by carefully evaluating all expenses.
“After the split Parex banka became a unique financial institution
in Latvia with a great responsibility towards the state and
investors. This work is not only complicated but very hard as well,
since we deal with various debtors in Baltic, CIS and offshore
countries. Attitude towards implementation of their obligations is
as various and we often encounter with deliberately dishonest
actions,” says CEO of Parex banka Christopher Gwilliam.
During the accounting period Parex banka has launched several
proceedings against clients who have failed to implement their
obligations in a long term. The management of Parex banka has said
recurrently that it will use all legitimate means to protect the
interests of the state and to combat any malicious and penal
actions.
“After having worked for eight months at Parex banka, we now see
that not all loans were used in line with the initially stated
purpose. As a result, the collateral is substantially smaller than
the loan. Actually, consequences of the careless attitude of these
borrowers lies on shoulders of the Latvian tax-payers, because
unfortunately in such cases very often the Bank has no choice but
to recognize losses,” emphasises Christopher Gwilliam.
In compliance with the Restructuring plan of AS Parex banka and the
decision of the Cabinet of Ministers, the share capital of the bank
was increased by LVL 9.7 million on 28 December 2010. The purpose
of the transaction was to meet the capital adequacy requirements.
State Joint Stock Company Privatizācijas aģentūra increased the
state’s involvement in the Bank’s share capital by acquiring the
newly-issued shares. Thereby, as at 31 December 2010 the
proportional distribution of Parex banka shareholders was as
follows: Privatizācijas aģentūra – 81.83%, European Bank for
Restructuring and Development – 14.62%, and minority shareholders –
3.56% of Parex banka shares.
By evaluating the amount of investments in Parex banka, stability
of LVL currency market, as well as liquidity ratios, on 5 May 2010
Parex banka entered into a contract with the Bank of Latvia for
early repayment of the borrowed funds in the amount of LVL 117.6
million. In December 2010 Parex banka repaid LVL 9.7 million in
interest for use of the state deposit.
As at 31 December 2010 the loan portfolio of Parex banka and the
Group was LVL 566.3 and LVL 541.6 million respectively, total
assets – LVL 789.3 and LVL 792.1 million. The amount of capital and
reserves at the end of 2010 was equal to LVL 48.5 and LVL 48.1
million.
From 1 August 2010 till the end of the accounting period, namely
within 5-month time, Parex banka had recovered LVL 58 million.
Basically this sum consisted of monetary instruments recovered
through distressed loan restructuring activities and sale of
securities, but the sales volume of the repossessed real estates
was insignificant and did not actually have any effect on the total
amount of the recovered sums. Having regard of the prevailing
situation and particularly low prices in the real estate market in
2010, in majority of cases the potential market value of the assets
in question was substantially higher than the offered one.
In order to manage the vast assets (almost LVL 800 million) of
Parex banka efficiently, in the second half of the accounting
period a great deal of attention was paid to attracting adequately
trained professionals. By the side of globally accepted standards,
Parex banka with only slightly more than 100 employees is
considered to be a very efficient organization. The success of the
modern enterprise model lies in advised attraction of outsourcing
service providers and continuous evaluation of administrative
resources.
Due to objective reasons Joint Stock Company Parex banka is
planning to submit the audited financial statements of 2010 to the
official central storage system of the mandatory information and
a/s NASDAQ OMX Riga within two months as of submission the
unaudited financial statements, i.e., by 31 May 2011. Under
provision of the law, statements have been given to a certified
auditor for examination, so as to be submitted to Parex banka
Supervisory Board for obtaining an opinion and to the shareholders
meeting for approval.
Additional information:
Marita Ozoliņa-Tumanovska
Head of Communication and Marketing Department
Telephone: 67779142 or 29287169
E-mail: Marita.Ozolina@parex.lv
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