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Saturday 23.06.2018 | Name days: Līga
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Rungainis: there is no point to save Krajbanka

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Girts Rungainis

There is no economic point to perform a complete recovery of the insolvent JSC Latvijas Krajbanka, IBS Prudentia partner Girts Rungainis is sure.

He points that saving of the bank would have a positive effect on society and economy of Latvia, however, we have to understand that investments which are necessary for the bank’s recovery are too big.

According to Rungainis, investments around 250 million lats should be assessed as an excess amount for rcovery of a bank the biggest value of which – clients and brand – is gone. Also estimate losses and quality of remaining assets should be assessed by objective considerations, as the amount needed for the bank’s recovery could turn out to be bigger.

«Even if one has free means at amount of 300 -350 million euro (210-250 million lats) to invest in an insolvent bank, it is hard to imagine the economic point to recover it, just to make happier people of Latvia,» emphasizes Rungainis.

The expert adds that theoretically it is possible to take over certain assets and real estates of Krajbanka, thus recovering the brand, but not at higher value than around two million lats. This was the way how was performed recovery of Barings Bank in United Kingdom which collapsed in 1995.

At the same time Rungainis states that there is a possibility to write off part of deposits of biggest investors and non-residents, to perform recovery of the bank as in late 90s with the Riga Commerce Bank. However, in Krajbanka’s case it is unlikely, because the bank is much bigger and losses – much greater.

It was already reported that Finance and Capital Market Commission on Monday, January 23, received JSC Latvijas Krajbanka insolvency solution submitted by the bank’s insolvency administrator SIA KMPG Baltics. In the application KPMG asks to continue negotiations with potential investors seven more days.KPMG also asked for an opportunity to finish review of received recovery proposals, in order to make sure their economic basis and advantage for the bank’s creditors, informs FCMC.

Ref: 102.110.110.197


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