Latvian Mortgage Bank and Land Bank commercial packages buyer selection process is complete – four commercial asset packages have buyers that want to purchase these assets for appropriate prices thereby ensuring future development of the Mortgage Bank’s commercial department in the private sector.
The decision to sell the Mortgage bank’s commercial department is a logical follow-up to the 2009 decision of the Cabinet of Ministers to stop the functionality of the commercial department of the Mortgage Bank by 2013 and concentrate mainly on expenses for developmental institutions, Finance Ministry reports.
Swedbank presented the best offer for three commercial packages, which include private and corporate commercial loans, deposit accounts and services, as well as a leasing company. While the best offer for the 2nd level pension plan management package was presented by SEB Bank Group’s company – SEB Wealth Management. I accordance with this, contacts were signed with Swedbank and SEB Wealth Management.
There were more than 100 potential candidates in the buyer selection process. The main criteria of the selection process were: the best possible price, reputation and stability.
The contract was signed on Friday, June 22, and client transfer process will be carried out in the next six months. As it is, it is impossible to name the final amount of the transaction. It will be allowed after the complete conclusion of the deal.
A complete reassessment of the bank’s assets will be carried out in accordance with the sale of the commercial department. In accordance with Saeima’s consent the banks’ capital is to be increased by 25 million LVL to ensure equity indicator functionality. This amount is required for the successful realization of the reformation process and the complete sale of all commercial assets. Saeima’s decision to increase the bank’s capital will in no way affect this year’s budget deficit, because the money was already allocated from 2011 budget.
Because the development institution has a supportive role and does not have to compete with other market players, the part of Mortgage Bank, which is not directly related with development functions, the commercial department will be given an opportunity in the private sector.
The reformation of Latvian Mortgage Bank and Land bank into a development bank and the April 12, 2012 Cabinet of Ministers plan to convert the Mortgage Bank, provides for the detachment of the bank’s department with the function of the development institution.