OREANDA-NEWS. December 19, 2008.
How do you assess the current situation at Parex banka ?
Although the bank is now stable, diligent work is still under way so it is too early to make any forecasts about the future. My first impression is that the loan portfolio of Parex banka is in no way worse than the loan portfolio of any other large bank; it is even better, reported the press-centre of Parex banka.

As with other banks, the value of our loan portfolio is affected by our prognosis of developments in the real estate market. However, the proportion of “bad” loans related to real estate in our loan portfolio is smaller if compared to the same parameter in other large banks.

The credit division of Parex banka is very carefully structured and is significantly diffrenet from the rather formal approach to lending in other banks, where as much as 90% of the property value was granted. Here, at Parex banka , the approach has never been like this and the process of issuing a loan has always included a close scrutiny of client's business and cash flow, collateral being a secondary issue. Naturally, I will do my best to keep clients, employees and journalists informed about developments at Parex banka.

What were your first tasks as the Chairman of Parex banka ?
Uppermost was communication with the top executives, employees and clients of the Bank. Despite the situation, the Bank is performing its regular operations in full, thanks largely to our employees. Secondly, it is essential to support the Government in its negotiations with the International Monetary Fund as it is important to the whole country. And thirdly, discussions with our syndicated lenders, which I have already begun.

From your point of view why are the Latvian State's negotiations with the International Monetary fund of such importance?
This is an issue of stability. If the International Monetary Fund grants financial support to the State, we will also have a better access to the necessary financial support. Currently, the Government has to grant support to all those experiencing difficulties.

In the short term it is important to ensure the liquidity of the Bank to secure the fulfilment of our short-term liabilities. Following all the unclear news over the past three weeks, the net position has been negative every day – people tend to withdraw money more than they place with the Bank. I personally have spent a lot of time talking with our major clients both residents and non-residents, to understand under what circumstances they would be ready to return to the Bank and keep their money here.

Many of the clients have said they would return to the Bank once we confirm details of the funding to be received from the Swedish Government, which will cover the space in time between the conclusion of the IMF memorandum and the actual receipt of funds by Latvia.

How much money is needed in order to stabilise the financial situation at Parex bankas ?
Time will tell but this is very much dependent on the inflow of deposits. We are actively working with our clients, and I truly hope that we will succeed in reducing the amount of financial support required. Moreover, the amount of financial resources required is highly dependent on the outcomes of negotiations between the Latvian State and IMF , as well as the clients' trust in the Parex banka .

Will you continue to look for a strategic investor for the Bank?
Currently, the foremost priority is to stabilise the situation at the Bank. Moreover it is clear that the global liquidity crunch has had adverse effects not only on Parex banka, but also on potential buyers.

Is it possible that EBRD could become a strategic investor in the Bank?
Similarly to the International Monetary Fund one of the main tasks of the European Bank for Reconstruction and Development is to provide support to the Governments and enterprises experiencing hard times; hence, I do not exclude a possibility that EBRD could become an investor in Parex banka .

Could you comment on your previous experience prior to your appointment as the Chairman of Parex banka ?
My previous working experience is related to the management of large enterprises, search of investors, as well in the banking sector. The decision to accept the position of Parex banka's Chairman was made relatively quickly as it was important to come on board, managing the Bank and starting communication with clients and employees, as soon as possible to prevent any further effects on the Bank. Time will tell how the situation will develop, but, taking into account current circumstances, I believe that the situation will stabilise.

There will naturally be a few challenges along the way but I look forward to being part of Parex banka's future growth.