Financial statements of Parex banka indicate that during the first six months of 2011 it has recovered over 100 million Lats and has been able to repay the State guaranteed syndicated loan worth 164 million Lats without additional help from the State. Likewise, since the split-up the Bank has recovered approximately 800 real estate objects and its small yet efficient team manages assets worth approximately 600 million Lats by servicing over 5’000 clients on a daily basis. Simultaneously the Bank exercises a consistent and farsighted policy for developing accruals for problematic loans thus ensuring additional security in the difficult economic conditions. 

The biggest challenge for Parex banka during the accounting period doubtlessly was repayment of the State guaranteed international syndicated loan worth 164 million. The Bank accumulated the necessary funds itself, without additional help from the State, thus defending the State’s and tax payers’ interests by completely settling its priority liabilities.

“I am aware that we are closely observed by the Bank’s supervising institutions and by Latvia’s society because the investments made by the State are directly related with the interests of all tax payers. Therefore I am glad that a friendlier and more understanding attitude has gradually replaced the initial scepticism toward our work. Considering that only problematic loans with serious repayment problems are left in the Bank’s balance, our work is unrewarding and difficult. However each and every one of our achievements is yet another step toward the set goal,” points out Parex Banka’s Chair Christopher Gwilliam. 
 
In accordance with the restructuring plan for Parex banka approved by the European Commission and the Cabinet of Ministers, we continued recovering the Bank’s assets, inter alia, overtaking and professional management of real estate, during the accounting period.  Since the split-up of the Bank approximately 800 real estate objects have been taken over and it is anticipated that this number will significantly increase during 2011. The Bank’s real estate portfolio consists of assets of various segments and quality therefore its future value potential is equally diverse. A detailed analysis of each asset is carried out applying prognoses for the economic growth perspectives, development of the real estate market, cash flows that the corresponding object may generate as well as other important factors elaborated by the Bank’s experts.
“A decision on selling, or, quite on the contrary, renting it out until a more beneficial situation occurs in the market is adopted only after a thorough analysis of each asset, says Parex banka’s Member of the Board Jurijs Adamovičs. “Even though by essence it would be enough to rely solely on the analysis carried out by the Bank’s experts we request additional assessment from independent experts as well. Parex banka’s continuous being a focal point of the society’s and supervising authorities’ attention determines the necessity for ensuring transparency,” explains J. Adamovičs. 
All of the overtaken real estate objects that are offered for rent or selling can be found on the Bank’s website at “Real estate”.
During the accounting period, Parex banka’s business activity has been conducted strongly in line with the budget for 2011 and with the restructuring plan. Over 100 million Lats were recovered during the accounting period, channelling the majority of these funds for repayment of the syndicated loan. In accordance with the requirements of International Financial Reporting Standards and the cautious accountancy policy exercised by Parex banka, accruals for problematic loans in the amount of 18.6 million Lats during the first six months of this year. Even though these accruals are disclosed as losses in the Bank’s balance sheet, the consistent policy for developing accruals ensures additional security in the difficult economic circumstances, thus this is a positive aspect. Depending on further development scenarios for Latvia and the global economy which may leave a significant impact on recovering certain loans, the recognized amount of accruals may be reviewed and decreased in case of a beneficial situation. Likewise, interest payments in the amount of 20 million Lats, which in accordance with the provisions of the agreement, Parex banka has to deposit in the State budget since the investments are also disclosed as expenses in the Bank’s profit and loss statement. Correspondingly, after the end of the accounting period, the State Treasury will be supplemented with a significant sum of money, i.e. 20 million Lats.
Revaluation of the Bank’s administrative expenses was continued during the first six months of this year. The diligently performed work and the balanced planning has yielded good results – administrative costs during the accounting period made up only 0.9% of the Bank’s average net value. This indicator once again speaks volumes of Parex banka’s administrative structure and its control efficiency considering that the Bank manages assets worth approximately 600 million Lats and services more than 5’000 clients on an everyday basis. 

Information about Parex banka:

After the completed restructuring, retaining only the problematic assets with serious repayment problems, Parex banka has become a unique institution in the Baltic States. On 17 May 2011 the Cabinet of Ministers supported the Strategy for Selling Parex Banka developed by Nomura International plc, an international financial consultant. Therefore a decision was adopted that Parex banka must continue implementing the business strategy elaborated by the mentioned financial consultant with for the purpose of maximum recovery of the State investment.  In order to increase and maintain the value of assets overtaken by the Bank, the priority business directions of the latter will continue to be restructuring of problematic assets, recovery of debt and professional management and selling of overtaken real estate objects. It is not planned to offer Parex banka as a whole to investors within the nearest future. 

•    Please visit Parex banka’s website to find out more: http://www.parex.lv/en
•    Financial reports of Parex banka for the first six months of 2011 are available on the Bank's website at “For investors”.


Detailed information available at:

Marita Ozoliņa-Tumanovska
Head of Communications and Marketing Directorate
Tel. 67779142 or 29287169
e-mail: Marita.Ozolina@parex.lv