OREANDA-NEWS. May 25, 2012. The Baltic Institute of Corporate Governance has conducted a study called “Governance of State-owned Enterprises in the Baltic States.” The Citadele Bank received the highest rating and has been declared to be the best governed state-owned enterprise in the Baltic States.

The study was focused on the governance of state-owned enterprises in all three Baltic States. The comparison involved the 15 largest companies – the Citadele Bank, Lattelecom, Latvian State Forestry, Latvenergo and Latvian Railways from Latvia; the energy company Eesti Energia, Elering, Estonian Railways, the Tallinn Airport and the Port of Tallinn in Estonia; the Lithuanian electricity provider Lesto, the energy producer Lietuvos Energija, the Lithuanian transmission system operator Litgrid, the Klaipeda Seaport, and the Lithuanian Railways company from Lithuania.

The study focused on 78 indicators related to corporate governance, including public perceptions about the governance of state-owned enterprises in each of the Baltic States, the condition of each company, the board structure and practices at each enterprise, the experience, competence and professionalism of enterprise board members, etc. Much attention was focused on the independence of board members, the ability to prevent potential conflicts of interest, the ability to take objective decisions, and the ability to supervise the enterprise’s operations in an effective way. The study also looked at issues such as the ability of the enterprises to do work, which benefits the public, how well the state governs its enterprises, and the extent to which this nevertheless maintains the political independence of the enterprises.

The top three state-owned enterprises in the ratings were Citadele Bank, the Estonian power company Eesti Energia, and the Latvian telecoms company Lattelecom. The study says that these three companies are rapidly closing the gap on international best practice, which shows that world class standards can be achieved within a reasonably short period of time.

“Being the best governed state-owned enterprise in the Baltic States means that we must raise the bar in terms of our operations,” says Chairman of the Supervisory Board of Citadele Bank Klavs Vasks. “The results of the evaluation of Citadele’s governance system proves that if the enterprise’s board has the necessary will, then a great deal can be achieved in a very short period of time in terms of ensuring that the enterprise is governed professionally and in line with the highest governance standards. We will continue to do this work, because it is important for us to be a well-governed and responsible company which operates in accordance with public interests.”

Asked about the main factors which allowed the bank to establish essential changes to the quality of corporate governance, values and style in a comparatively short period of time – less than two years – Vasks says that the bank’s Supervisory Board and Executive Board have members who have local and foreign experience, as well as a broad range of competences in terms of various areas of the financial sector, including bank management, risk management and restructuring.

“It is very important for us to receive an evaluation from independent and competence experts in terms of what we have achieved,” says the bank’s Executive Board Chairman, Guntis Belavskis. “This evaluation shows that we built up Citadele on the proper foundations – honesty, professionalism and operations which are in line with public interests. The things that we have achieved have been very important given that we have moved ahead of companies which have shaped their governance and their reputation over the course of decades. This is an achievement not just for board, but also for all of our employees.”

The study about the Citadele Bank and its governance says that the bank’s restructuring has contributed to getting proper governance practices in place and starting the new bank off on the right foot. Positive effects have been ensured by the presence of an informed and committed outside owner – the European Bank for Reconstruction and Development – along with significant presence of independent board members with experience in distressed banks, operating within a competitive market, and a progressive state owner represented by the Latvian Privatization Agency. Another positive factor that is emphasised in the study is that Citadele has an active and functioning supervisory board, as well as the fact that the company operates in competitive markets.

In terms of the Citadele Bank’s main strengths, the study lists the presence of the EBRD as a professional bank owner and partner committed to best practice governance, benign state oversight market by minimal interference, a board committed to improvement, excellent independent board members with capacity for objective judgment, board members with banking, distressed banking and international experience, etc.

Citadele is a domestic bank in Latvia, offering banking, financial and capital management services. The Citadele Group is represented in Latvia and in 10 other countries. The vision for Citadele is to become the most valuable local financial group in the Baltic States. The Privatisation Agency owns 75% minus one share in the bank, while 25% plus one share belong to the EBRD.

The Baltic Institute of Corporate Governance

The Baltic Institute of Corporate Governance was established in August 2006 as a non-profit organisation, which actively promotes the implementation of good management principles in all three Baltic States. The institute trains and certifies professional council members for Baltic companies and offers guidelines on corporate management issues in the private sector and among state-owned companies in the three countries.

The Citadele Executive Board and Supervisory Board

The Citadele Bank’s Executive Board Chairman is Guntis Belavskis, who has a decade of experience in working with banks and more than 15 years of experience in the area of business. The other board members are Valters Abele, who has extensive experience as an auditor and financial consultant, Kaspars Cikmacs, who has 16 years of experience in the banking sector, and Philip Allard, who has 25 years of experience in the financial sector.

The Chairman of the Supervisory Board of Citadele Bank is Klavs Vasks, who has 17 years of experience in the banking sector in Latvia and internationally. He holds a master’s degree from the Riga School of Business of the Riga Technical University. The deputy chairman, Juris Vaskans, has five years of experience with banking and the financial sector. He holds a bachelor’s degree in finances from Eastern Michigan University in the United States. Member of the Supervisory Board, Girts Freibergs has more than 10 years of experience with various companies in the financial sector. He holds an MBA from the William E. Simon Graduate School of Business Administration at Rochester University in the United States. Member of the Supervisory Board, Geoffrey Richard Dunn has worked as financial director of the British Northern Rock Bank during its restructuring, directed oversight of business results at the Co-operative Financial Services company, served as financial director for the Bank of England and the international finance company S.W.I.F.T., and held various other finance-related positions at companies in Belgium and the UK. Member of the Supervisory Board, Laurence Phillip Adams represents the European Bank for Reconstruction and Development. He is a lawyer who has specialised in banking issues and has 25 years of experience in the financial sector. Adams has worked for foreign financial institutions such as the ABN AMRO Bank and Citibank.