In line with the decision of the Cabinet of Ministers made in 2009 on transforming the state JSC “Mortgage and Land Bank of Latvia” into a development bank, on Tuesday, November 1, the Government assigned the Ministry of Finance by November 15 to establish an advisory council to coordinate state aid mechanisms. The Government also supported the Mortgage Bank’s commercial part sales strategy. These are the next successive steps in transforming the Mortgage Bank into a development institution.
The goals of transforming the Mortgage Bank is to establish a development institution for the implementation of state aid programmes using efficiently infrastructure, intellectual and financial potential of the Mortgage Bank, transforming the Bank in a way beneficial to the state and at the same time ensuring continuity of the implementation of state aid programmes. During the transforming process the operations of the Mortgage Bank are focused on key economic fields, such as financing of small and medium-sized enterprises, promotion of business launching, development of infrastructure and other national development projects within the framework of CoM approved programmes.
Since the development bank/institution plays mainly a complementary role and it does not have to compete with other players in the market, the part of the Mortgage Bank, which is not directly linked with the performance of development functions, namely commercial part, will be provided a possibility to develop in the private sector.
The transformation of the Mortgage Bank is done according to the conception approved by the CoM on November 24, 2009 on transforming the state JSC “Mortgage and Land Bank of Latvia” into a development bank and the Mortgage bank transition plan considered by the CoM on April 12, 2011 envisaging separation of the commercial part of the Bank, which is not related to the functions of the development bank. In order to develop the Mortgage Bank commercial part sales strategy, a commission was established, which evaluated potential candidates. As a result of the selection procedure SEB Enskilda was appointed as a consultant.
Developing the commercial part sales strategy the involved consultant SEB Enskilda analysed several possible solutions and recommended sales of the commercial part, including the subsidiary, as the most optimal option. Previous market research showed that this solution provided for a possibility to sell the commercial part in an optimal time period, thus receiving the highest possible price. The solution for the strategy offered by the financial consultant SEB Enskilda meets priorities of the Mortgage Bank commercial part sales process and will ensure continuity of the implementation of state aid programmes and services provided by the commercial part to clients, as well as it is in line with the EU regulations on competition and state aid. After selling the commercial part the Mortgage Bank will focus only on the performance of the development institution’s functions.
Following the approval of the strategy negotiations will be launched with potential buyers in order to start evaluation of their offers by end-2011. The transformation process should be finalized by end-2013.
The implementation of the strategy will not affect contractual liabilities of clients and the bank. During the whole transformation process continuity and succession of services will be ensured. Clients will be informed in person and in a timely manner on any changes in services.
Information prepared by:
Head of Communication Division
Phone 67083850, Aleksis.Jarockis@fm.gov.lv