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Latvia’s state-owned Hipoteku un Zemes Banka AS agreed to sell some of its assets, subsidiaries and liabilities to units of Swedbank AB (SWEDA) and SEB AB (SEBA) as part of a restructuring, the Finance Ministry said.
Swedbank’s Latvian unit agreed to buy bundles of commercial loans to individuals and companies, deposits and a leasing company, the ministry said in a statement today. SEB’s Wealth Management subsidiary in Latvia agreed to acquire the lender’s pension-management business, according to the statement. Price details weren’t given.
Hipoteku, which the European Commission barred from commercial lending as a condition for state aid, had a combined net loss of about 118 million lati ($212.5 million) over 2009 and 2010. The lender, which recorded a 1.4 million-lati profit last year, also needed an additional 25 million lati capital boost due to a revaluation of assets as part of the sale of its commercial portfolio, according to the statement.
“We’ve agreed with both parties to a gradual process for client transfer purposes from Hipoteku to the acquiring banks,” Martins Krutainis, the SEB Enskilda consultant hired by the government to help manage the sale of the lender’s commercial assets, said by phone. The discount on the assets is between 10 percent and 30 percent, Krutainis said.
Two bundles of non-perfoming loans and a real-estate portfolio remain and may be sold later this year or transferred for management by the country’s asset sales department or Reverta, according to Krutainis.
The Baltic country had repeatedly delayed splitting the bank due to a lack of political consensus, the International Monetary Fund said in a staff report in June last year. The government submitted a plan to the commission after “long delays,” the IMF said. The government plans to turn Hipoteku into a state development bank.
Latvia completed a 7.5 billion-euro ($9.4 billion) lending program from a group led by the European Union and the IMF in December and is planning on adopting the euro in 2014. The country was forced to seek the loan after rescuing Parex Banka AS, the Baltic country’s second-biggest lender in 2008. The country’s economy expanded 5.5 percent last year after shrinking by almost a quarter in 2008 and 2009.
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