Banks, Latvia, Markets and Companies

Parex banka restructuring and strategy plan will be submitted to the European Commission on Monday, May 11, said Melngailis.

Newspaper Diena writes today that the Parex banka restructuring plan, drawn up by the bank's management and experts, states that the bank hopes to become profitable in 2011.

The restructuring plan says that Parex banka will be renamed, and strive to consolidate its positions on the Baltic market. The bank's main business activities will be corporate services, private depositors and private capital management. The bank will also provide loans to small and medium enterprises, albeit pursuing a cautious lending policy, Diena wrote.

The bank will focus on maximum diversification of depositors and financial resources of the bank. The bank will be renamed, and the new strategy will commence, in September.

Parex banka restructuring plan stipulates that the bank will earn LVL 37 million in profit in 2011. This year the bank's losses are projected at around LVL 60 million, and next year at approximately LVL 25 million.

The plan also mentions that the bank will require more state support yet – a deposit by the State Treasury in the form of government guarantees over the bank's Eurobonds worth EUR 123 million. Money may also have to be invested in the bank's share capital. The bank hopes that all the restrictions on the bank's operations will be lifted in July.

Parex banka restructuring plan does not deal with finding a strategic investor for the bank or selling the bank, but it says that the bank will strive to repay the government funds and return to the private sector as soon as possible. The plan says that restructuring of the bank could conclude at the beginning of the next year, it will be followed by privatization and further strategic development.