Bank that almost brought Latvian state to bankruptcy pays off loan

May 3, 2011, 16:45 GMT

Riga - Latvian bank Parex, whose near-collapse brought the Latvian state to the edge of bankruptcy in 2008, announced Tuesday it had repaid the last part of a 500-million-euro (354-million-dollar) loan, a major step in its attempt to wind up its operations successfully.

The 230 million-euro-payment was made 'without attracting state budgetary funds' a statement from the bank said, adding that its most vital obligations have now been 'settled in full.'

Parex chairman Chrisopher Gwilliam, who was appointed last year when Parex was split into a resolution bank and a going concern rebranded 'Citadele,' said the repayment sent a 'remarkably positive signal to foreign investors and rating agencies.'

'It gives evidence about gradual recovery of the economy and confirms that the government has made the right decisions and implemented the right strategy as to solving problems of the banking sector,' Gwilliam said.

The Latvian government's decision to save Parex from collapse in December 2008 led directly to the Baltic state asking for a 7.5- billion-euro loan from international lenders and the introduction of harsh austerity measures.

British banker Gwilliam is leading Parex's efforts to turn its remaining efforts into cash to repay the money the state paid to prop up the bank. Meanwhile, Citadele bank is hoping to attract an international buyer.

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