Banks, Financial Services, Latvia, Legislation

KPMG Baltics demanded that bankruptcy proceedings be launched at Krajbanka, after the administrator concluded that none of the four proposals for recovery of the bank was viable. The administrator's decision was backed by the Financial and Capital Market Commission, writes LETA.

KPMG Baltics Corporate Finance Director Aivars Jurcans told reporters after the court's ruling that the administrator is delighted with both decisions – to allow KPMG Baltics to continue as Krajbanka insolvency administrator and to launch the bank's bankruptcy. However, Jurcans expressed regret that the decision was delayed nearly two months, since the administrator was counting on the bank's bankruptcy procedure to begin in March.

Jurcans pointed out that the administrator's first task will be well-planned and organized sale "Krajbanka" assets, starting with those affected by the delay the most.

According to Jurcans, the bank's largest asset group is its loan portfolio, which will be arranged according to quality and loan issue dates, and then it will be thought about how to offer the bank's loans to potential buyers. So far, they have been interested in the bank's real estate, separate portfolio parts and ATMs. Jurcans believes that the sale of Krajbanka assets could last 13 to 16 months.

KPMG Baltics and the Financial and Capital Market Commission stated earlier today that Krajbanka operations cannot be restored without state support, however, the state does not intend to provide it, substantiating their request to launch the bank's bankruptcy.

In accordance with the previously received proposals for the bank's recovery, LVL 170 million would be needed from the state to restore the bank's operations. Therefore the Finance Ministry's opinion was requested. However, the Finance Ministry and the Bank of Latvia admitted that Krajbanka is not a systemic bank and its liquidation will only slightly affect Latvia's economy. The Finance Ministry pointed out that the state is not interested in providing its support to the bank.