Government demands more details of potential Citadele buyers

Take note – story published 10 years ago

The Latvian Cabinet of Ministers on Tuesday rejected a Privatization Agency report on the possible sale of state-owned Citadele bank, the successor to the notorious Parex bank.

Privatization Agency board chairman Ansis Spridzans said further details of investors mulling a purchase would be made available to the government in coming weeks.

While refusing to disclose the potential sums involved, Spridzans indicated the offers are "of high-quality compared with similar situations in other countries, and are in accordance with current market conditions in the banking sector.”

Latvian Public Television has reported that among the interested investors are commercial banks Rietumu and Norvik, as well as two US-based capital funds (one of which is believed to be linked to Latvian enterprise holdings), and Russian billionaire vodka magnate Yuri Sheffler, who already has Latvian assets via his indirect control of the famous Latvijas Balzams distillery.

Unofficial sources suggest three of the offers could be selected for the next round of vetting, with Sheffler having perhaps the best prospects for acquiring the bank. However, doubts have also be expressed regarding the security aspects of such a potential deal. 

While the Privatization Agency’s official report named the investors only in encrypted form, Prime Minister Laimdota Straujuma admitted that she had personally informed all Cabinet members regarding their identities to avoid any of them unwittingly coming into a conflict of interest.

Straujuma is so far the only Cabinet member who has removed herself from the vetting process, in likely acknowledgement of the fact that her son is currently a director of corporate client services at one of the possible buyers – Norvik bank.

Straujuma told Latvian Independent Television (LNT) that under no circumstances should control of the bank be allowed to revert to the owners of Parex, its failed predecessor, namely Valerijs Kargins and Viktors Krasovickis.

Citadele was established in August, 2010 as the successor to the Parex, whose owners Valerijs Kargins and Viktors Krasovickis asked for a government bail-out in the fall of 2008 following liquidity difficulties caused by the global financial crisis.

That in turn led to Latvia asking the International Monetary Fund for a 7.5 billion euro bailout that heralded years of harsh austerity measures to repay the debt. 

Citadele's restructuring plan calls for the bank to be sold by the end of 2014.

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