Teksts
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Parex Banka Recovered 197 Million Lats Over the First Nine Months;
Activity Was in Strict Compliance With Restructuring Plan
Over the first nine months of 2011 joint stock company Parex
banka proceeded with strenuous activities in three main areas,
namely loan restructuring, debt recovery and property management.
In the reporting period several major loan restructuring deals were
successfully effected which required highly professional
performance, including the ability to find acceptable conditions
for all parties involved.
“Professional performance of CIS of loan restructuring experts
working with the CIS countries must be emphasized as instrumental
for the bank’s capability to recover entire loans initially issued
in the amount of several millions of Lats. Since its restructuring
on 1 August 2010 Parex banka has in total recovered 197 million
Lats, mainly by restructuring problematic loans and selling
securities,” points out Christopher Gwilliam, Chairman of Parex
banka’s Board.
The longsighted strategy Parex banka has continuously and
consistently managed to prevent a forced sale of its assets.
In the reporting period business activity of Parex banka has been
carried out in strict compliance with the restructuring plan and
the budget; the bank has finished the first nine months of 2011
with losses amounting to 35 million Lats. Parex banka’s losses
amounted to 120 million Lats in the same period of 2010.
These results were achieved mainly due to two material items,
namely, the excess of interest payable over interest receivable and
the provision for bad debts. Considering the fact that Parex banka
has retained solely the impaired assets with permanent recovery
problems. In many instances debt recovery proceedings were
initiated and the repayment of principal amount and interest was
continuously overdue. Hence it is legitimate that the interest
income levels generated by the Parex bank loan portfolio is
significantly lower than that of any other credit institution where
it comprises both good and problematic loans.
In the reporting period Parex banka has commenced development and
implementation of a large-scale complex project implicating sale of
the bank’s subsidiaries, leasing companies in the CIS countries.
The first results were achieved in the end of September 2011 when
the bank made an exit from the Russian leasing market by entering
into an advantageous agreement concerning sale of its Russian
subsidiaries Parex Leasing and Extroleasing. Having received the
first instalment Parex banka has already recovered more than 14.5
million US dollars and until the end of 2013 it will be
continuously receiving amounts collected from gradual sale of
problematic assets of the leasing company. Thoroughly planned
structure and terms of the transaction will provide for the cash
inflow required for repayment of the state investment and
contribute to achievement of the objectives outlined in the
restructuring plan. In total considerable amounts have been
recovered from Russian leasing companies from December 2008 to the
present date, more than 120 million US dollars. The considerable
recovered amounts were partly used to eliminate Parex banka's
liquidity crisis in the past and partly to repay the syndicated
loan of 164 million Lats guaranteed by the state, which in May 2011
was repaid by Parex banka in full and without any assistance from
the state.
Property related matters, most notably sale, take-over and
management of real estate have gained bigger significance and stake
in the Parex banka's agenda. Considering that the real estate
segment is still rather inactive and recovery is taking place at a
very slow pace, the bank is not in hurry to sell the valuable
assets contained in its portfolio. Since most items in the bank’s
loan portfolio are expected to increase in value, the bank is
efficiently managing the property taken over. As soon as the
situation in the economy and real estate market improves it is
planned to dispose off the property on possibly profitable terms in
order to obtain cash resources required for repayment of the state
investment. Along with positive developments in the market Parex
banka will be increasingly engaged in selling real estate. At the
end of the reporting period the real estate portfolio of Parex
banka comprised more than 800 items including plots of land and
industrial assets.
Additional information:
On 22 November 2011 the Cabinet of Ministers supported the model
for Parex banka’s further activity which provides for the bank’s
change of status and resignation from its credit institution
license. If Parex banka’s shareholder meeting adopts this decision,
the bank is going to resign from its credit institution license
and, in accordance with the restructuring plan approved by the
European Commission, it will continue processing assets in order
for the State to cover the maximum amount of funds invested in
bailing out the bank. The new functioning model will be introduced
after a permit is received from the Finance and Capital Market
Commission.
Parex banka’s change of status will enable to cut costs related
with maintaining its credit institution license. The structure of
Parex banka’s assets and liabilities will be preserved after its
change of status. The change of status will not bring along any
changes in liabilities for the bank's clients and, just like
previously, the bank will continue recovering issued loans and
ensure maintenance and selling of assets.
Detailed information available at:
Marita Ozoliņa-Tumanovska
Head of Communications and Marketing Department
Tel. 67779142 or 29287169
e-mail: Marita.Ozolina@parex.lv
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