Paritate rehabilitation plan approved
RIGA - The Finance and Capital Markets Commission on Aug. 31 approved plans for resumption of operations at Paritate Bank.
The commission's deputy chairman, Janis Brazovskis, said that three individuals - two Russian nationals and a Ukrainian - had offered to acquire all the bank's capital and invest funds in its rejuvenation.
Brazovskis said: "The most important thing the commission has to look at is whether the bank can be restored to solvency. In this case the rehabilitation plan looks realistic."
The potential buyers must still await permission to acquire a significant share in the bank's capital. A decision from the Finance and Capital Markets Commission may come later this week.
Paritate's court-appointed administrator, Lauris Liepa, gave further details on the rehabilitation plan, saying it involved disposing of those assets which caused the bank to become insolvent, including investments in the U.S. stock market and bad debts.
He said 70 percent of Paritate's creditors had expressed approval in principle for rehabilitating the bank.
Under the law on credit institutions, the basic rehabilitation period is three months, which can be extended for further three-month periods up to a maximum of two years.
Riga District Court declared Paritate insolvent on July 17, with the insolvency effective from June 26, because the bank's liabilities exceeded its assets.
Paritate's losses resulted from making loans to clients who provided only shares as collateral and from its own investments in the United States. With the value of securities falling, the bank's losses amounted to 5.78 million lats ($9.26 million) on June 22 and its liabilities exceeded its assets by 2.83 million lats.