Banks, Financial Services, Latvia

At the same time, report shows that in 2016 Meridian Trade Bank posted EUR 4.211 mln in audited loss, which is by 26% more than a year ago, while the group’s loss rose 29% to EUR 4.818 million. At the end of last year the bank and the concern failed to meet the capital adequacy ratios, and its auditor KPMG Baltic said that it indicates that a material uncertainty exists that may cast significant doubt on the group's ability to continue as a going concern.

The auditors said that the bank and the group incurred a net loss of EUR 4.211 million and EUR 4.818 mln respectively during 2016 and a net loss of EUR 3.341 mln and EUR 3.734 mln respectively during 2015. The bank's and the group's capital adequacy ratios as of December 31, 2016, were 12.15% and 11.46% respectively, which is below the minimum capital adequacy ratio including the total reserve requirement of 12.7% set for the bank by the Financial Capital Markets Commission. „These events or conditions, indicate that a material uncertainty exists that may cast significant doubt on the group's ability to continue as a going concern,” the auditors said.

The bank said that in the first quarter of 2017, a new issue of shares was made and registered with the Enterprise Register in the amount of EUR 948,000, and the bank has attracted the required subordinated capital. According to the operational development strategy, retained earnings of the reporting period will be used to strengthen the bank's capital. Also the bank continuously works on a new investor attraction.

The bank also said that capital adequacy is monitored by the management of the group and the bank on a consistent basis and certain measure were taken to the date of the financial statements to meet the capital adequacy requirement, including the increase of the bank's share capital by EUR 948,000 and the attraction of subordinated capital of EUR 707,000. In view of that, the bank expects that based on unaudited data the capital adequacy ratio at the end of the first quarter will be at least 12.7%.

"Furthermore, the shareholders have decided to offer 51% to 100% shares of the bank to a strategic investor which is being sought with the help of a professional external adviser. During the reporting period, the bank was in active negotiations with potential investors, and it was considered an important assignment. Preference will be given to an investor who supports the bank's development. The Bank plans to attract an additional capital of EUR 3 million. The bank is presently considering proposals by three potential investors, two of whom have been notified to the Financial Capital and Market Commission," the bank said.

On December 31, 2016, Meridian Trade Bank’s assets stood at EUR 303.178 mln, down 5.5% from the end of 2015.

According to the Association of Latvian Commercial Banks, Meridian Trade Bank was the 15th largest bank by assets.

The biggest shareholder in Meridian Trade Bank is the bank’s board shareholder Svetlana Dzene who directly and indirectly holds a 33.14% stake in the bank.