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PRX: Parex banka's Losses in 2011 First Quarter - Five Million Lats, the Result is Better than Planned

Spekuliantai.lt | 2011-05-31 | NASDAQ OMX biržų naujienos | perskaitė: 809
PRX: Parex banka's Losses in 2011 First Quarter - Five Million Lats, the Result is Better than Planned

Parex banka Quarterly report 31.05.2011

Parex banka's Losses in 2011 First Quarter - Five Million Lats, the Result is
Better than Planned

In overall terms, the activities of the Parex Bank have been in line with the
bank's restructuring plan, and although the bank finished the reporting period
with a loss of LVL 5 million, the result is better than had been planned. This
can be attributed to several major Loan restructuring transactions that were
successfully entered into during the reporting period. This substantially
improved prospects for recovering certain loans, and it also allowed the bank
decrease previously recognised impairment losses. The possession for
unperforming loans were reduced, and that also reduced Q1 2011 losses for the
bank. Given that the Parex Bank is a specific resolution bank, these are
financial results which must be viewed positively. It must be noted here that
the final indicator of Parex Bank operations is the amount of money that is
recovered by the year 2017.


“I truly welcome any of our achievements, because the work that we are doing
together is not just complicated from the professional perspective, but also
difficult. It seems that there are people who still do not appreciate the
importance of the work that we have done or the fact that we are a completely
new team which has just one goal - recover the state's investment as much as
possible,” says Parex Bank board chairman Christopher Gwilliam.


The losses suffered during the reporting period in 2011 were caused by two
material - interest expenses exceed of interest income, and net loss on
available for sale financial assets and financial liabilities. Since the
restructuring of the bank, it has become a unique institution in the Baltic
States in that it has only problematic loans with respect to which there
already have been repayment problems in the past. Debt collection has been
begun in many cases - those in which neither interest nor the principal sum
have been repaid to the bank in a longer period of time. This is why interest
income from the Parex Bank's loan portfolio is much lower than is the case at
any other credit institution which has both good and problematic loans. Still,
the Parex Bank is doing everything that it can to increase interest income as
much as possible.


Because the Parex Bank continues to have obligations toward providers of
syndicated loan, the Finance Ministry, and the depositors of subordinated
capital, the volume of the bank's interest expenses is fixed, and it
respectively exceeds bank's interest income.


During the first quarter of 2011, the priority for the Parex Bank in the
context of this overall goal was to collect the money needed to repay its
syndicated loan of LVL 164 million. This was an enormous challenge for the
bank's management and employees, and all of our material and non-material
resources were devoted to the accumulation of the necessary sum of money.
Between August 1, 2010, and the end of the reporting period, the Parex Bank
engaged in relentless and serious work to recover LVL 125 million. The sum was
mostly based on a restructuring of unpaid loans and on the sale of the bank's
securities portfolio. It must be stressed that the Parex Bank's management
engaged in a very thoughtful strategy of operations which allowed the bank to
avoid any forced sale of its assets. The real estate market remains inadequate
in terms of fairly low prices, and so the Parex Bank is actively managing its
properties so that when the situation improves, the properties can be sold in
line with market prices and in line with the interests of all taxpayers and
shareholders.


About Parex banka:

Since 1 August 2010 Parex banka is operating as a resolution bank and it has
ceased rendering such classical banking services as account and deposit
services, issuing loans etc. The main objective of Parex banka is maximum
recovery of the state investments. In order to achieve its goals, the operation
of Parex banka is focused on efficient loan restructuring, debt recovery and
real estate management. Majority shareholders of Parex banka are the State of
Latvia which is represented by Privatization Agency and the European Bank for
Reconstruction and Development (EBRD).





Additional information:
Marita Ozoliņa-Tumanovska
Head of Communication and Marketing Department
Telephone: 67779142 or 29287169
E-mail: [email protected]


1. EN_EUR.pdf
(https://newsclient.omxgroup.com/cds/DisclosureAttachmentServlet?messageAttachmentId=351833)
2. EN_LVL.pdf
(https://newsclient.omxgroup.com/cds/DisclosureAttachmentServlet?messageAttachmentId=351834)

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