OREANDA-NEWS. On April 16, 2009 President of the European Bank for Reconstruction and Development (EBRD) Thomas Mirow and Prime Minister of Latvia Valdis Dombrovskis, Chairman of Parex banka's Management Board Nils Melngailis and Chairman of Privatisation Agency Arturs Grants signed Share Purchase Agreements providing that following the increase of equity capital the EBRD will purchase 57,506,825 ordinary shares comprising 25% and 1 share of the Bank's equity capital, reported the press-centre of Parex banka.

The price has been set at 1 lats per share. Further, the Shareholders Agreement defines the terms of cooperation between parties after the EBRD becomes a minority shareholder of Parex banka, as well as determines conditions for the resale of shares.

A prerequisite to enactment of the Agreement is signing of the agreement by which the EBRD will provide Parex banka with a subordinated loan of EUR22 million qualifying as Tier 2 capital. This agreement will be signed after the conclusion of Share Purchase Agreement and Shareholders Agreement. Similarly, the approval from the European Commission is required for the additional government assistance through investment in the bank's equity capital.

Nils Melngailis, Chairman of Parex banka's Management Board highlighted that this subordinated loan will allow Parex banka to continue its recovery and regain customer trust: „With the entering of the EBRD in the Parex banka's shareholder structure, we have obtained a very important and strong partner with a substantial experience in bank restructuring, being crucial under the current circumstances of global financial crisis. The signed agreement indicates not only the stabilisation of the Latvian financial system and gives a positive signal about the investment environment in Latvia, but also evaluates Parex banka's future development potential and increases the Bank's value.”

Thomas Mirow pointed that this investment by the EBRD is aimed at supporting Parex Bank during the most difficult time in its history: “Our involvement will contribute to a return of confidence in the bank and in Latvia's financial sector generally. As a shareholder the EBRD will be able to participate in the development and implementation of a strategic plan for the restructuring and refocusing of Parex's business activities.”

As previously reported, the Cabinet of Ministers conceptually approved the participation of EBRD in Parex banka's equity capital on 24 March 2009. EBRD has a great experience in the restructuring of the banking business. The entering of EBRD into the bank is considered a positive signal for Parex's revival and development.