COMMISSION DECISION
of 15 September 2010
on the State aid C 26/09 (ex N 289/09) which Latvia is planning to implement for the restructuring of AS Parex banka
(notified under document C(2010) 6202)
(Only the English text is authentic)
(Text with EEA relevance)
(2011/364/EU)
1.
PROCEDURE
2.
DESCRIPTION
2.1.
THE BENEFICIARY AND ITS DIFFICULTIES
2.2.
THE RESCUE MEASURES ALREADY APPROVED
2.3.
THE RESTRUCTURING PLANS
2.3.1. THE INITIAL RESTRUCTURING PLAN
2.3.2. THE REVISED RESTRUCTURING PLAN
2.3.3. THE FINAL RESTRUCTURING PLAN
Table 1
Shareholders structure after the split
(in LVL thousand) |
|||||
|
Parex banka – 2008 |
Parex banka – 2009 |
Parex banka – 31.7.2010(15) |
Citadele banka |
Parex banka after the split(16) |
Assets |
|||||
Cash and deposits with central banks |
79 154 |
136 769 |
131 693 |
119 783 |
30 876 |
Balances due from credit Institutions |
228 752 |
189 321 |
227 741 |
245 069 |
5 583 |
Loans |
1 744 871 |
1 429 466 |
1 355 831 |
748 457 |
627 471 |
Securities |
941 293 |
405 800 |
356 439 |
224 735 |
130 936 |
Investment in subsidiaries |
51 442 |
72 725 |
81 691 |
5 530 |
51 962 |
Other assets |
323 797 |
220 097 |
75 584 |
45 604 |
52 747 |
Total Assets |
3 369 309 |
2 484 501 |
2 228 978 |
1 389 179 |
899 576 |
Liabilities and Equity |
|||||
Bank of Latvia |
587 183 |
140 449 |
— |
— |
— |
Credit Institutions |
129 584 |
50 865 |
27 295 |
41 571 |
51 703 |
Syndicate |
544 673 |
381 271 |
163 402 |
— |
163 402 |
State Treasury |
676 398 |
622 048 |
692 454 |
131 000 |
458 454 |
Customer Deposits |
1 225 488 |
911 318 |
1 006 202 |
928 686 |
75 314 |
Eurobond |
88 712 |
87 489 |
113 136 |
109 244 |
— |
Subordinated (Legacy) |
52 848 |
52 857 |
52 863 |
— |
52 878 |
Subordinated (State) |
— |
37 338 |
37 338 |
50 270 |
— |
Subordinated (EBRD) |
— |
12 932 |
12 932 |
||
Other Liabilities |
35 556 |
31 458 |
34 754 |
30 280 |
21 522 |
Total Liabilities |
3 340 442 |
2 328 025 |
2 140 376 |
1 291 051 |
823 274 |
Equity |
28 867 |
156 476 |
88 602 |
98 127 (17) |
76 302 |
Total |
3 369 309 |
2 484 501 |
2 228 978 |
1 389 179 |
899 576 |
Split Ratio, including the transfer of investments in Lithuanian subsidiary, in AP Anlage & Privatbank AG and deposits in German branch(18) |
|
|
|
64 % |
36 % |
In terms of Parex banka – 2008 |
|
|
|
44 % |
|
|
Aug-Dec 2010e |
2011e |
2012e |
2013e |
2014e |
Cost analysis |
|||||
Operating expenses/total income |
[…] % |
[…] % |
[…] % |
[…] % |
[35-55] % |
Impairments/net loans |
[…] % |
[…] % |
[…] % |
[…] % |
[1-3] % |
Profitability |
|||||
Net Income (Loss), in LVL million |
[loss] |
[profit] |
[profit] |
[profit] |
[profit] |
ROE |
[—] % |
[…] % |
[…] % |
[…] % |
[18-28] % |
Balance sheet |
|||||
Total assets (LVL million) |
[…] |
[…] |
[…] |
[…] |
[1,400-1,650] |
Deposits/total assets |
[…] % |
[…] % |
[…] % |
[…] % |
[…] % |
Loans/customer deposits |
[…] % |
[…] % |
[…] % |
[…] % |
[50-80] % |
Equity/total assets |
[…] % |
[…] % |
[…] % |
[…] % |
[9-13] % |
CAR |
[10-14] % |
[11-15] % |
[12-16] % |
[14-19] % |
[16-20] % |
|
Aug-Dec 2010e |
2011e |
2012e |
2013e |
2014e |
Cost analysis |
|||||
Operating expenses/total income |
[…] % |
[…] % |
[…] % |
[…] % |
[45-60] % |
Profitability |
|||||
Net Income (Loss), in LVL million |
[loss] |
[loss] |
[loss] |
[profit] |
[profit] |
ROE |
|
— |
|
[…] % |
[> 0] % |
Balance sheet |
|||||
Loans/customer deposits |
[…] % |
[…] % |
[…] % |
[…] % |
[40-60] % |
CAR |
[> 8] % |
[> 8] % |
[> 8] % |
[> 8] % |
[> 8] % |
New Bank |
Baseline scenario |
||
Additional provisions needed, million LVL |
Additional capital needed, million LVL |
CAR, % |
|
2010 |
[…] |
[…] |
[…] |
2011 |
[…] |
[…] |
[…] |
2012 |
[…] |
[…] |
[…] |
2013 |
[…] |
[…] |
[…] |
2014 |
[…] |
[…] |
[…] |
2.4.
THE RESTRUCTURING AID MEASURES
(LVL million) |
||||||
|
1.8.10 |
31.12.10 |
31.12.11 |
31.12.12 |
31.12.13 |
31.12.14 |
Base case |
131 |
143 |
36 |
0 |
— |
— |
Best case |
131 |
143 |
— |
— |
— |
— |
Worst case |
131 |
143 |
36 |
0 |
— |
— |
(LVL million) |
|||||||||
|
1.8.10 |
31.12.10 |
31.12.11 |
31.12.12 |
31.12.13 |
31.12.14 |
31.12.15 |
31.12.16 |
31.12.17 |
Base case |
[400-550] |
[400-550] |
[400-550] |
[250-400] |
[250-400] |
[150-400] |
[150-400] |
[100-250] |
[0-100] |
Best case |
[400-550] |
[400-550] |
[400-550] |
[250-400] |
[250-400] |
[150-400] |
[150-400] |
[100-250] |
0 |
Worst case |
[400-550] |
[400-550] |
[400-550] |
[250-400] |
[250-400] |
[150-400] |
[150-400] |
[100-250] |
[100-200] |
(%) |
||||
|
2010e |
2011e |
2012e |
2013e |
Cost of liquidity support |
9,6 |
5,4 |
6,5 |
7,9 |
Cost of customer deposits |
[…] |
[…] |
[…] |
[…] |
(LVL million) |
|||||||||
|
31.7.10 |
31.12.10 |
31.12.11 |
31.12.12 |
31.12.13 |
31.12.14 |
31.12.15 |
31.12.16 |
31.12.17 |
Base case |
— |
— |
[10-30] |
[30-60] |
[0-20] |
— |
— |
— |
— |
Best case |
— |
— |
[10-30] |
[30-60] |
[0-20] |
— |
— |
— |
— |
Worst case |
— |
— |
[10-30] |
[30-60] |
[0-20] |
— |
— |
— |
— |
(LVL million) |
|||||||||
|
31.7.10 |
31.12.10 |
31.12.11 |
31.12.12 |
31.12.13 |
31.12.14 |
31.12.15 |
31.12.16 |
31.12.17 |
Base case |
— |
[0-10] |
[20-40] |
[20-40] |
[20-40] |
— |
— |
— |
— |
Best case |
— |
[0-10] |
[20-40] |
[20-40] |
[20-40] |
— |
— |
— |
— |
Worst case |
— |
[0-10] |
[20-40] |
[20-40] |
[20-40] |
— |
— |
— |
— |
(in LVL million) |
||
|
Base case |
Worst case |
Principal repayment of the State deposit |
[…] |
[…] |
Interest repayment on the State deposit |
[…] |
[…] |
Total |
[…] |
[…] |
(LVL million) |
|
Base case |
|
Outstanding State deposit |
[0-100] |
Recapitalisation by the State |
[…] |
Total |
[50-300] |
Worst case |
|
Outstanding State deposit |
[100-200] |
Recapitalisation by the State |
[…] |
Total |
[200-400] |
2.5.
COMMITMENTS OF LATVIA
2.5.1. COMMITMENTS REGARDING CITADELE BANKA
|
2010 |
2011 |
2012 |
2013 |
2014 |
2015 |
Gross new core lending (LVL million) |
[28-40] |
[115-165] |
[120-175] |
[130-190] |
[145-210] |
[160-230] |
Market share for core loans (without CIS loans) in terms of share of loan portfolio to total loans in Latvia (%) |
[< 5] % |
[< 6] % |
[< 6] % |
[< 6] % |
[< 7] % |
[< 7] % |
Gross new private capital management sector (PCM)(26) lending (LVL million) |
[0-4] |
[9-13] |
[9,5-14] |
[10-15] |
[11-17] |
[12,5-18] |
|
2010 |
2011 |
2012 |
2013 |
2014 |
2015 |
Core deposit balance (without PCM deposits) (LVL million) |
[550-790] |
[600-860] |
[660-950] |
[720-1045] |
[795-1150] |
[875-1260] |
Market share for core deposits (%) |
[< 7] % |
[< 8] % |
[< 8] % |
[< 8] % |
[< 8] % |
[< 8] % |
PCM deposit balance (LVL million) |
[340-490] |
[405-585] |
[375-540] |
[410-590] |
[440-630] |
[475-685] |
Market shares for PCM deposits (%) |
[< 5] % |
[< 5] % |
[< 5] % |
[< 5] % |
[< 5] % |
[< 5] % |
|
2010 |
2011 |
2012 |
2013 |
2014 |
2015 |
Gross new lending (LVL million) |
[19-27] |
[36,5-53] |
[40-58] |
[44-63] |
[48-70] |
[53-76] |
Market share in terms of share of loan portfolio to total loans in Lithuania (%) |
[< 2,5] % |
[< 2,5] % |
[< 2,5] % |
[< 3] % |
[< 3] % |
[< 3] % |
|
2010 |
2011 |
2012 |
2013 |
2014 |
2015 |
Total deposit balance (LVL million) |
[115-170] |
[130-185] |
[140-205] |
[155-225] |
[170-245] |
[190-270] |
Market share (%) |
[< 3] % |
[< 3] % |
[< 3] % |
[< 4] % |
[< 4] % |
[< 4] % |
|
2010 |
2011 |
2012 |
2013 |
2014 |
2015 |
Gross new lending (LVL million) |
[3,2-4,6] |
[7-10] |
[7,6-11] |
[8-12] |
[9-13] |
[10-14] |
Market share in terms of share of loan portfolio to total loans in Estonia (%) |
[< 1,5] % |
[< 1,5] % |
[< 1,5] % |
[< 1,5] % |
[< 1,5] % |
[< 1,5] % |
|
2010 |
2011 |
2012 |
2013 |
2014 |
2015 |
Total deposit balance (LVL million) |
[85-125] |
[95-135] |
[105-150] |
[115-165] |
[125-180] |
[135-195] |
Market share (%) |
[< 1] % |
[< 1,5] % |
[< 2,5] % |
[< 2,5] % |
[< 2,5] % |
[< 2,5] % |
|
2010 |
2011 |
2012 |
2013 |
2014 |
2015 |
Total deposit balance (LVL million) |
[47-69] |
[50-75] |
[60-85] |
[65-90] |
[70-100] |
[80-110] |
Market share (%) |
[< 0,5] % |
[< 0,5] % |
[< 0,5] % |
[< 0,5] % |
[< 0,5] % |
[< 0,5] % |
|
2010 |
2011 |
2012 |
2013 |
2014 |
2015 |
Total deposit balance (LVL million) |
[35-50] |
[40-55] |
[40-60] |
[45-70] |
[50-75] |
[55-80] |
Market share (%) |
[< 0,5] % |
[< 0,5] % |
[< 0,5] % |
[< 0,5] % |
[< 0,5] % |
[< 0,5] % |
2.5.2. COMMITMENTS REGARDING PAREX BANKA
2.5.3. OTHER COMMITMENTS
3.
GROUNDS FOR INITIATING THE FORMAL INVESTIGATION PROCEDURE
4.
COMMENTS FROM INTERESTED PARTIES
5.
COMMENTS FROM LATVIA
6.
OTHER COMMENTS
7.
ASSESSMENT
7.1.
EXISTENCE OF AID
7.2.
COMPATIBILITY OF THE AID
7.2.1. LEGAL BASIS FOR THE COMPATIBILITY ASSESSMENT
7.2.2. COMPLIANCE OF THE MEASURES WITH THE IMPAIRED ASSETS COMMUNICATION
7.2.3. COMPATIBILITY UNDER THE RESTRUCTURING COMMUNICATION
Assets of Citadele banka as compared to pre-crisis Parex banka |
Citadele banka at the end of restructuring period, YE 2014 (including incremental growth) |
Market share reduction in the core lending markets at the end of restructuring (including incremental growth) |
Market share reduction in the deposits (core and wealth management business) markets at the end of restructuring (including incremental growth) |
After the split: 44 % (total assets reduced by EUR 1,9 billion); If the divestment of CIS loans is taken into account (YE […]): [35-50] % (total assets reduced by EUR [1,6-2,3] billion) |
[40-55] % (reduced by EUR [1,9-2,3] billion) |
Pre-crisis market share of 11,7 % vs. [< 7] % in 2014 (capped): market presence reduced by [50-60] % |
Pre-crisis market share of 20 %(33) vs. [< 13] % (decreasing to [< 10] % by 2015): market presence reduced by [55-65] % |