OREANDA-NEWS. On January 05, 2009 In remarks to the media, Mr Nils Melngailis, Chairman of Parex banka, made the following comments, reported the press-centre of Parex banka.

What were the most important developments at Parex banka in 2008?
Despite the impact of the global financial crisis, the Bank has succeeded in demonstrating to both the Latvian Government and international financial institutions that it is fundamentally strong and that it continues to have very good future growth prospects. On this basis the Bank has received financial support and has consequently changed its ownership structure.

Even in these conditions of uncertainty the Bank and its staff maintained their record of achievement in 2008, opening new branches and strengthening the Bank’s position in key business segments such as asset management and credit cards. In fact, until the unprecedented circumstances of October 2008, Parex banka was showing a significant increase in both resident and non-resident deposits, even in a difficult economic situation. The Bank was the only large financial institution in Latvia to succeed in growing its deposits at that time.

The overall accomplishments of Parex banka in 2008 include:

- increasing its market share in the payment card segment in Latvia, especially in the credit card market, where Parex banka has taken the second position, mainly due to its exclusive agreement with American Express;

- Consolidating the position of Parex Asset Management as the regional market leader in asset management;

- Opening several new customer service centres in Latvia, in Saldus, Dobele, Aizkraukle, Aluksne and Kraslava;

- Opening new customer service centres abroad in Germany, Sweden and Estonia;

- Enhancing recognition of its internet banking services, now acknowledged as the second best amongst the Baltic banks, compared to the sixth in 2007.

What were the main developments in Latvian banking sector in 2008?
Most importantly, the vast majority of the banks, both domestic and foreign-owned, have received support from their respective governments and international financial institutions. On this basis the banking sector can continue to provide support to private individuals and enterprises, which is crucial during the recovery of the economy.

Generally, what were the main developments in the country in 2008?
The country is experiencing an economic crisis because of the global situation, but I believe that in the long run we will emerge from it stronger. The existing political system in Latvia discourages unpopular, but urgent decisions of national importance. The crisis helps to solve these issues. Now, the Latvian Government and Saeima have to make a number of commitments to society and international partners, which we trust they will adhere to strictly follow in 2009. So the current situation is a major opportunity for the people of Latvia to unite in order to overcome the consequences of the crisis.

What does the Bank expect from the coming year 2009? What are the aims of the Bank for 2009? What are the forecasts in respect to the profits, loan portfolio and deposit base growth?
The main priority of the Bank is to return to full operations as soon as possible. We will work actively in order to lift the restrictions on the bank and resume lending. In the current difficult economic situation affecting the whole population of Latvia, its enterprises and financial institutions, we cannot expect major profits in the first quarter of 2009. Furthermore, during these times we have to invest in the future development of the Bank to meet the changing needs of our clients.

What developments in the Latvian banking sector are expected next year – what will the main challenges and prospects be? How will the market develop further in regards to the profits, loans and deposits?
Currently there are quite a few preconditions established for a further consolidation of both the Latvian and Baltic banking sectors. The number of market players in the Baltics is comparatively large; thus, in the next two years the amount of banks might decrease to 10-15. Further, the banks will be forced to reduce fixed costs. Access to financial resources, such as deposits, loans from other banks and capital markets, will be a significant factor as well. Hereafter loans on favourable terms will be only be available to large and stable organizations.

What developments can we expect on the country level, and what steps does the Bank anticipate from the Government?
The Latvian Government will have a difficult task in 2009 – to fulfil the requirements of the International Monetary Fund related to reducing expenditure and ensuring state support to stimulate the national economy. If the Government succeeds in making the necessary decisions about expenditure and investment in the short term, then the first signs of recovery will be seen in the second half of 2009.

It is most important that the Latvian Government, the International Monetary Fund and other partners have committed their support to the further development of Parex banka. I envisage that in 2009 Parex banka will have a significant role in the stabilisation of the Latvian financial system and it is my belief that the Bank will make a substantial contribution to the national economy in general. Together with state institutions we will continue to develop further ideas about the use of resources in order to decrease the financing costs of state institutions, bank and enterprises.