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EBRD invests in Latvia's largest commercial bank
In support of bank privatisation in Latvia, the European Bank for Reconstruction and Development (EBRD) has subscribed to 4.5 million newly issued ordinary shares in Latvijas Unibanka (LUB), Latvia's largest commercial bank. Under the terms of the Subscription Agreement signed on 11 May 1996, the EBRD will acquire approximately 23 per cent of the bank's share capital and reduce the holding of the state to around 25 per cent.
Commenting on the transaction, David Hexter, Deputy Vice-President at the EBRD, said: ²EBRD's subscription to shares in LUB is a logical step for both parties. EBRD has a mandate to promote the private sector. At the same time, reduced state participation and increased liquidity from the EBRD equity infusion will enable LUB to serve its clients more effectively as Latvia moves towards a market-oriented economy."
Following the collapse of Banka Baltija in May 1995, LUB is Latvia's largest bank in terms of both assets and equity. Consequently, it plays an important role in the Latvian economy. By strengthening LUB's capital base, and by providing medium-term funding through a loan agreement signed in December 1995, the EBRD's principal objectives are to make a contribution to LUB's further institutional development, and to facilitate an expansion of LUB's corporate lending activities.
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