Navigation path

Left navigation

Additional tools

Other available languages: FR DE LV


Brussels, 29 th July 2009

State aid: Commission opens in-depth investigation into aid package for Latvian JSC Parex Banka

The European Commission has opened under EC Treaty State aid rules an in-depth investigation into state support measures for the Latvian JSC Parex Banka. This is a first step towards finding a viable long-term solution for the bank, in close contact with the Latvian authorities. A rescue package for Parex in the form of state guarantees, liquidity support and a recapitalisation measure was approved by Commission decisions of 24 November 2008, 11 February 2009 and 11 May 2009 (see IP/08/1766 and IP/09/732 ) . A restructuring plan for Parex was submitted on 11 May 2009. The Commission now will examine whether the restructuring plan will enable Parex to return to long-term viability while avoiding undue distortions of competition. The opening of an investigation is common for state interventions in the banking sector, ensures legal certainty for the concerned market players and gives interested parties the possibility to submit comments on the proposed measures. It does not prejudge the outcome of the procedure.

Competition Commissioner Neelie Kroes said: “The Commission has to carry out an in-depth investigation into the aid package for Parex Banka to determine whether it is accompanied by a realistic project to address the problems that led to the current situation. This way we ensure legal certainty for all actors concerned and allow interested third parties to give their views."

Parex Banka is the second largest bank in Latvia in terms of assets. It is a universal bank offering the full range of banking products directly and through specialised subsidiaries. The bank was founded in 1992 and was majority owned by two individuals before the Latvian State took over their shares at the end of 2008. It has branches in Stockholm, Tallinn, Hamburg and Berlin and 11 representative offices in 9 other countries.

On 24 November 2008, the Commission approved rescue aid in the form of liquidity support, state guarantees and a recapitalisation measure in favour of Parex (see IP/08/1766 ) in line with the EU rules on emergency aid for banks (see MEMO/04/172 ). On 11 May 2009, the Commission approved amendments to the recapitalisation measure enabling Latvia to acquire newly issued ordinary shares and subordinated debt with the aim to strengthen the bank's capital basis (see IP/09/732 ).

In line with the Commission's decision on the rescue aid, Latvia notified on 11 May 2009 a restructuring plan for Parex. The plan includes the implementation of a new business strategy as well as a number of restructuring aid measures consisting of a liquidity support, a prolongation of state guarantees, potential new state guarantees to ensure further funding of the bank and capital injections.

The Commission's detailed investigation, covering all abovementioned measures, will evaluate whether the planned measures are capable of restoring the long-term viability of Parex, whether state support is limited to the minimum necessary, and whether the proposed measures to limit potential distortions of competition are in proportion to the distortive effects of the aid.

The opening of a formal investigation procedure does not prejudge whether the measures concerned are in line with the EU State aid rules. It is a necessary step to ensure legal certainty for the aid beneficiaries and their business partners and provides an opportunity to take account of comments from interested parties.

The non-confidential version of the decision will be made available under the case number N289/2009 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News .

Side Bar