Banks, EU – Baltic States, Financial Services, Investments, Latvia, Legislation

The amount is EUR 700,000 more than had been previously announced.

LPA reminds that retaining its 25% stake in the bank is EBRD (European Bank for Reconstruction and Development), and now, in tandem with the new shareholders, Citadele’s share capital has been increased by 10 million euros.

LPA underlines that in concluding the transaction, taking over are investors who have long-term vision of the bank's future development. Ripplewood had already declared that Citadele will become the national leader in terms of quality and range of services provided.

Ripplewood will now own 22.4% of shares but the group of investors – 52.6%.

LETA reported in March that Citadele Group last year posted a record and concluded 2014 with EUR 32.4 million in audited profit, which was 138 percent more compared to 2013.

In tandem, Citadele Bank concluded 2014 with EUR 29.2 million in audited profit, which was 91 percent more compared to 2013.

LPA had already stated that due to the bank's superlative performance in 2014, there could be alterations in its final price tag.

“Private capital from international investors will enable Citadele to develop more rapidly. Management shares a common vision with the new shareholders regarding the bank’s future: we wish to develop Citadele as the national champion in terms of quality and diversity of products and services offered in the Latvian banking sector," explains Guntis Beļavskis, Citadele’s CEO.

The aim of Citadele's shareholders, both new and the EBRD, is to help Citadele become one of the leading financial institutions in Latvia, and potentially over time into a leading institution in the Baltics, by delivering unrivalled product offerings to customers. As long-term investors, the shareholders will look to grow the bank’s balance sheet and strengthen the bank's finances, so that Citadele could further support lending and elevate the quality of its banking services in Latvia. This would bolster the banking sector in Latvia and the general economy.

Immediately upon acquisition, the shareholders increased the bank's share capital by 10 million euros. Thus, the bank's share capital now is 156.6 million euros. This additional capital will allow the bank to achieve further profitable growth.  Also, as stated before, Citadele's restructuring plan with the European Commission strictly restricted the bank's ability to grow and limited its capital level due to the presence of state-aid. Upon privatisation, these restrictions are lifted and no longer apply.

"As a result, Citadele will be able to increase its contribution to the development of the Latvian economy and provide its retail and corporate clients with even more favourable offers, thanks to the opportunities unleashed by the new shareholders. This will open up broader development opportunities and ensure greater availability of funding for retail clients and enterprises," Mr. Beļavskis emphasizes.

He stresses, "The new shareholders are world-class experts in business and finance who will impart new knowledge to the management team to develop the bank and improve services provided to its clients. We are excited that the EBRD will also continue to be one of our shareholders as it has made significant contributions to date”.

As usual, Citadele will continue to provide existing services to retail, corporate, and SME clients as well as focusing on adding new ones. Similarly, Citadele will continue to issue loans to retail and corporate clients, and continue to participate in the housing support program for purchasing homes designed by the Latvian government. Finally, Citadele will continue to be the only bank that is authorized to issue American Express cards in Latvia and Lithuania.

“Over the last few years, Citadele has become one of the most active lenders of the Latvian economy. The bank has invested 758 million euros through lending during its last four years of operations in Latvia. Furthermore, despite a retrenchment from larger competitors in 2014, Citadele was one of the few major banks in Latvia that succeeded in increasing its loan portfolio. Citadele continues to remain a stable employer and banking stalwart in Latvia, who is able to react quickly to market demands. For example, Citadele was the first bank in the Baltic States to offer mortgage loans applying the home surrender principle, and was the first bank in Latvia to participate in the government’s housing support program for families with children", Mr. Belavskis adds.