OREANDA-NEWS.March 19, 2012. The Financial and Capital Market Commission (FCMC) supported Parex banka’s request to voluntarily give up the credit institution licence, and took a favourable decision on the licence cancellation. Thus the last formalities that prevented from the status change are removed and according to the decision of the shareholders’ meeting the company may now undertake all actions necessary, reported the press-centre of Parex Banka.

“This is a desired and significant decision that will enable reorganization of Parex banka into a professional distressed asset management company – the only one in the Baltic region. Status change is important because of two main reasons: firstly, we will be able to do our core business more efficiently and secondly, administrative expenses related to maintenance of the credit institution licence will no longer be applicable,” says CEO of Parex banka Christopher Gwilliam.

“At the same time I want to remind that the status change will have no impact on the amount and structure of the existing obligations, and we will continue to recover state investments with all legitimate means,” emphasises Christopher Gwilliam.

Parex banka has repeatedly specified that the decision to change the status voluntarily has been taken after comprehensive assessment of the potential operational models of the bank. It was taken into account that since August 1, 2010 Parex banka has ceased to render such services characteristic of commercial banks as crediting and servicing deposits. At the moment, Parex banka is mainly focused on development of the distressed assets: loan restructuring, debt recovery and real estate management. Therefore it is not necessary to maintain the status of the bank in order to reach the bank’s objective, which is recovery of state investments. By giving up the licence Parex banka will no longer need to meet several requirements binding on credit institutions, e.g. capital adequacy ratio requirements.

One of the obstacles to overcome was Parex banka’s obligations to syndicated lenders that were settled in May 2011 without additional support from the state, as well as obligations to private depositors. The latter were also settled from funds of Parex banka.


Additional information:

On December 28, 2011 the General Meeting of Parex banka shareholders passed a resolution on giving up the credit institution licence. It was also decided that the Management Board of Parex banka will undertake all actions necessary to implement the status change, including asking permission from FCMC.

On 22 November 2011 the Cabinet of Ministers supported the operational model of Parex banka which envisaged the status change. Along with other essential factors it was marked that because of status change it will no longer be necessary to capitalize state deposits as the Restructuring plan had established.