EEMEA market round up: Parex in Baltic banking bail-out
Parex banka, Latvia’s second-largest bank, has been effectively nationalized by the authorities in Riga after a run on the bank. Under the agreement with the Latvian government, some 51% of Parex banka shares were transferred to the state-owned Mortgage and Land Bank of Latvia with a buy-back option after one year. Majority shareholders Valery Kargin and Viktor Krasovitsky will retain a 34% holding, with the 15% balance retained by minority shareholders. The state will also provide a €285 million loan to Parex. Commenting on the government’s move, Latvian prime minister Ivars Godmanis says: "It is necessary to do everything to avert disruptions of the banking and financial system." As part of that, his government is seeking between €1 billion and €3 billion from the IMF and the EC to rescue Latvia’s economy.