European court rejects former Parex owners' claim

Take note – story published 2 years ago

The European Court of Human Rights (ECHR) has dismissed a case brought by former shareholders of Parex bank, which collapsed in 2008.

The court ruled that in the cases Krasovickis v. Latvia and Kargins v. Latvia the complaints of the applicants were inadmissible. The proceedings in these cases are therefore to be terminated.

The ECHR agreed with an earlier conclusion of the Latvian Constitutional Court (ST) in 2015.

Former poster child of the so-called 'Baltic tiger' economies, Parex banka collapsed during the 2008 financial crisis, dragging the entire state to the verge of bankruptcy and necessitating an IMF bailout. At that time, the government of Ivars Godmanis decided to save the bank, take over 51% of the shares and invest 200 million lats in the bank. On November 10, Minister of Finance Atis Slakteris, President of the Mortgage Bank Inesis Feiferis signed an investment agreement that saved the bank and allowed owners Valerijs Kargins and Viktors Krasovickis to continue operating it.

However, after signing the contract, the money from the bank began to flow out even faster, while Parex did not suspend disbursements and lending. By the time this was finally done on December 1, hundreds of millions of euros had flowed out of the bank.

In total, the state invested 1.7 billion euros in Parex, part of which has been recovered, but more than 600 million euros remain unrecovered.

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