OREANDA-NEWS. December 29, 2011. In compliance with the previously announced agenda, the extraordinary meeting of shareholders of joint stock company Parex banka passed a resolution on giving up the credit institution operating licence issued to Parex banka and as a result of the status change to amend the Articles of Association. The new operational model, as well as activities necessary for renaming Parex banka will be carried out after obtaining a permission from the Finance and Capital Market Commission.

“Today’s meeting of shareholders is special. It marks the beginning of a new era in the history of Parex banka and will start the transformation process. Today the shareholders have to decide on giving up the credit institution licence. The status change will enable us to concentrate the Bank’s resources and focus on our core business which is the management of distressed assets,” emphasised Jurijs Adamoviиs, Member of Parex banka’s Executive Board, in his speech to shareholders.

Taking into account that Parex banka operates as a resolution bank and does not render services characteristic of commercial banks since August 2010, the decision on status change is a well-considered and natural step. Under the tasks set in the Restructuring Plan approved by the European Commission, Parex banka continues to work with distressed assets in order to recover maximum of the state investments. Currently the Bank has focused its operation on three main sectors: loan restructuring, debt recovery and management of the repossessed real estates. Owing the intense work Parex banka has managed to recover more than LVL 200 million from the distressed asset portfolio since August 1, 2010.

The reorganization of the Bank into an asset management company will allow cutting administrative costs related to the licence maintenance, as well as to save on human and time resources that are necessary for meeting the regulatory requirements binding upon credit institutions. After the change of status the state will no longer need to capitalise its deposits which until now was necessary in order to ensure Bank’s operation in line with the regulations of the Credit Institution Law.

After giving up the banking licence Parex banka will have to settle its obligations towards private depositors. The Bank now owns enough resources to meet its obligations. This year the Bank was successful at meeting its obligations in the amount of LVL 164 million against the syndicate loan providers without attracting any state aid which was one of the restrictions that impeded the status change.

The change of status will not affect the obligations of Parex banka’s clients and the Bank will continue to recover loans and ensure successful maintenance and disposal of assets. The existing composition of Parex banka shareholders will not change: LPA – 83.07%, EBRD – 13.61%, and minority shareholders – 3.32%.

The operational model of Parex banka which envisages changing the status and giving up the credit institution licence was supported by the Cabinet of Ministers on November 22, 2011.