Parex Bank was a

Latvia Latvia ( or ; lv, Latvija ; ltg, Latveja; liv, Leţmō), officially the Republic of Latvia ( lv, Latvijas Republika, links=no, ltg, Latvejas Republika, links=no, liv, Leţmō Vabāmō, links=no), is a country in the Baltic region of ...

n bank founded in 1992 by Valērijs Kargins and as a privately owned full-service banking company in

Riga, Latvia Riga (; lv, Rīga , liv, Rīgõ) is the capital and largest city of Latvia and is home to 605,802 inhabitants which is a third of Latvia's population. The city lies on the Gulf of Riga at the mouth of the Daugava (river), Daugava river where ...

that was very dominant in currency exchange in the 1990s. It had local and international clients in both the West and

Russia Russia (, , ), or the Russian Federation, is a transcontinental country spanning Eastern Europe and Northern Asia. It is the largest country in the world, with its internationally recognised territory covering , and encompassing one-ei ...

with close ties to the Tambovskaya

Russian mafia Russian organized crime or Russian mafia (, ), otherwise known as Bratva (), is a collective of various organized crime elements originating in the former Soviet Union. The initialism OPG is Organized Criminal (''prestupnaya'' in Russian) ...

St Petersburg Saint Petersburg ( rus, links=no, Санкт-Петербург, a=Ru-Sankt Peterburg Leningrad Petrograd Piter.ogg, r=Sankt-Peterburg, p=ˈsankt pʲɪtʲɪrˈburk), formerly known as Petrograd (1914–1924) and later Leningrad (1924–1991), i ...

and

Vladimir Putin Vladimir Vladimirovich Putin; (born 7 October 1952) is a Russian politician and former intelligence officer who holds the office of president of Russia. Putin has served continuously as president or prime minister since 1999: as prime min ...

. As the second largest bank in Latvia in 2008, its failure and state takeover was one of the major events of the 2008–2010 Latvian financial crisis. On 1 August 2010, Parex Banka was split into a new bank Citadele Banka and

Reverta Reverta is a professional-distressed asset management company headquartered in Latvia. With branches in Berlin, Stockholm, Tallinn and representative offices in Tokyo, Moscow, Kyiv, Baku and other cities, the company employs 2,600 staff in 14 co ...

, an asset recovery company. Citadele was then sold to a group of United States investors while Reverta sued the founders Kargins and Krasovickis for €88 million due to 14 highly irregular loans and deposits between 1995 and 2008.

History

On 5 August 1986, under the Riga's City Committee of the

Komsomol The All-Union Leninist Young Communist League (russian: link=no, Всесоюзный ленинский коммунистический союз молодёжи (ВЛКСМ), ), usually known as Komsomol (; russian: Комсомол, links=n ...

, Gints Marga created ''Parex'', which is a

portmanteau A portmanteau word, or portmanteau (, ) is a blend of words Valērijs Kargins had been working at VEF but could not live on its salary so, in 1987, he purchased for five thousand Soviet roubles the Parex shell which was later reorganized into a cooperative and then a limited liability company for tourism. After Kargins had travelled to

Yugoslavia Yugoslavia (; sh-Latn-Cyrl, separator=" / ", Jugoslavija, Југославија ; sl, Jugoslavija ; mk, Југославија ;; rup, Iugoslavia; hu, Jugoszlávia; rue, label= Pannonian Rusyn, Югославия, translit=Juhoslavij ...

in 1985, then

Vietnam Vietnam or Viet Nam ( vi, Việt Nam, ), officially the Socialist Republic of Vietnam,., group="n" is a country in Southeast Asia, at the eastern edge of mainland Southeast Asia, with an area of and population of 96 million, making ...

, and then the

United Kingdom The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain, is a country in Europe, off the north-western coast of the continental mainland. It comprises England, Scotland, Wales and ...

in 1988 where he facilitated an exchange between Riga and

Durham Durham most commonly refers to: *Durham, England, a cathedral city and the county town of County Durham *County Durham, an English county * Durham County, North Carolina, a county in North Carolina, United States *Durham, North Carolina, a city in N ...

for youth tourist groups, he realized that he needed to establish a currency exchange among groups from

France France (), officially the French Republic ( ), is a country primarily located in Western Europe. It also comprises of Overseas France, overseas regions and territories in the Americas and the Atlantic Ocean, Atlantic, Pacific Ocean, Pac ...

and the United Kingdom in Latvia. The first youth group to exchange currency at Parex was from

Czechoslovakia , rue, Чеськословеньско, , yi, טשעכאסלאוואקיי, , common_name = Czechoslovakia , life_span = 1918–19391945–1992 , p1 = Austria-Hungary , image_p1 ...

. In 1988, he and Viktors Krasovickis, who had a tourism agency, became partners in Parex. On 3 April 1991, Parex Bank received the first licence issued to a private company for currency exchange operations in the territory of the

Soviet Union The Soviet Union,. officially the Union of Soviet Socialist Republics. (USSR),. was a transcontinental country that spanned much of Eurasia from 1922 to 1991. A flagship communist state, it was nominally a federal union of fifteen nationa ...

– issued by the second President of the Bank of Latvia, Paul Sakss. In May, Parex opened the first exchange office which was used by many clients from all over

USSR The Soviet Union,. officially the Union of Soviet Socialist Republics. (USSR),. was a transcontinental country that spanned much of Eurasia from 1922 to 1991. A flagship communist state, it was nominally a federal union of fifteen nati ...

. On 13 August 1991, Kargins, along with and his wife Nina Kondratyev reorganized Parex and became the new bank AS PAREX's sole owners. Kargins owned half of the shares (valued at 1,086,200 Soviet roubles), while the remaining 50% were distributed in similar amounts between Viktors Krosovickis and his wife. b. 1954) graduated from the Riga Polytechnic Institute as a specialist in automation and telemechanics. He worked at Komutator in Riga and later in a travel and excursion agency. Later, he created his own travel agency. His wife Nina Kondratyev was a software engineer. In January 1992, Parex Bank was founded, with the owners Valērijs Kargins and Viktors Krasovickis having equal shares in the bank. Krasovickis' wife, Ņina Kondratjeva, did not participate in the bank`s future activities as they divorced that year. However, she continued to hold significant deposit in it. Persons from all over the

and later the former Soviet Union exchanged through Parex and, when the

Russian rouble ''hum''; cv, тенкĕ ''tenke''; kv, шайт ''shayt''; Lak: къуруш ''k'urush''; Mari: теҥге ''tenge''; os, сом ''som''; tt-Cyrl, сум ''sum''; udm, манет ''manet''; sah, солкуобай ''solkuobay'' , name_ab ...

fell into the abyss of inflation, the Latvian rouble and later the

Latvian lats The lats (plural: ''lati'' or ''latu'' (if the number can be divided by 10), ISO 4217 currency code: LVL or 428) was the currency of Latvia from 1922 until 1940 and from 1993 until it was replaced by the euro on 1 January 2014. A two-week tran ...

were much more stable in which to exchange currency. Riga was intended to become the global financial center in the former Soviet Union and Parex Bank advertised that "''We are closer than Switzerland!''" (russian: "Мы ближе, чем Швейцария!") According to Kargins, Kargins and Krasovits were on friendly terms with Anatoly Sobchak and Vladimir Putin personally authorized Parex's Saint Petersburg office. In May 2015, Spanish prosecutors alleged that Parex Bank, which held mostly offshore deposits for persons from Russia, was the preferred Latvian bank for the money laundering of Vladimir Putin, Yuri Chaika, and Russian Mafia especially the Tambovskaya Mafia from Saint Petersburg and that very large sums were laundered for them through Latvian and German firms associated with Parex Bank and Overseas Services, which is a sister firm of Parex Bank, by Mikhail Rebo, also spelled Rabo, and his wife Tatiana Rebo who was the manager of the Parex Bank Berlin. Also, the Spanish prosecutors alleged that Grigory Rabinovich benefited from the looting of Parex Bank by receiving a fake unrecoverable loan which he received as a refund for his purchase of shares in Parex while United States and Swedish shareholders of Parex Bank received no money. Ilmars Poikans alleged that both

Valdis Dombrovskis Valdis Dombrovskis (born 5 August 1971) is a Latvian politician serving as Executive Vice President of the European Commission for An Economy that Works for People since 2019 and European Commissioner for Trade since 2020. He previously served ...

, who is a

European Commission The European Commission (EC) is the executive of the European Union (EU). It operates as a cabinet government, with 27 members of the Commission (informally known as "Commissioners") headed by a President. It includes an administrative body ...

Vice President responsible for the integrity of the euro, and the Bank of Latvia Governor Ilmars Rimsevics, who is a member of the council of

European Central Bank The European Central Bank (ECB) is the prime component of the monetary Eurosystem and the European System of Central Banks (ESCB) as well as one of seven institutions of the European Union. It is one of the world's most important centra ...

, supported the fraud at Parex Bank and that Rimsevics received a very large sum for his efforts. In 1993, about 30% of Parex Bank`s shares were bought by offshore company Europe Holdings Ltd and by the year 2001 its share (without voting rights) reached 51%. The company remained in the list of owners until 2002, when Kargins and Krasovickis formally repurchased parts of Europe Holdings Ltd, again becoming the sole owners of the bank. However, by the end of 2007, around 14% of the Bank`s total paid-in share capital was in the hands of 59 small shareholders. Parex was closely involved with

Enron Enron Corporation was an American energy, commodities, and services company based in Houston, Texas. It was founded by Kenneth Lay in 1985 as a merger between Lay's Houston Natural Gas and InterNorth, both relatively small regional compani ...

Arthur Andersen Arthur Andersen was an American accounting firm based in Chicago that provided auditing, tax advising, consulting and other professional services to large corporations. By 2001, it had become one of the world's largest multinational corporat ...

and later

Ernst & Young Ernst & Young Global Limited, trade name EY, is a multinational professional services partnership headquartered in London, England. EY is one of the largest professional services networks in the world. Along with Deloitte, KPMG and Pricewat ...

prior to the collapse of Enron in 2002. In the early 2000s, John Christmas, a United States banker who joined Parex in 2002 and was the head of the Parex's International Relations, informed the

Financial Services Authority The Financial Services Authority (FSA) was a quasi-judicial body accountable for the regulation of the financial services industry in the United Kingdom between 2001 and 2013. It was founded as the Securities and Investments Board (SIB) in 19 ...

London London is the capital and List of urban areas in the United Kingdom, largest city of England and the United Kingdom, with a population of just under 9 million. It stands on the River Thames in south-east England at the head of a estuary dow ...

about a massive

money laundering Money laundering is the process of concealing the origin of money, obtained from illicit activities such as drug trafficking, corruption, embezzlement or gambling, by converting it into a legitimate source. It is a crime in many jurisdicti ...

network involving shell companies with accounts at Parex but the Financial Services Authority took no action to stop the illicit affairs. In 2005, Christmas informed the Chairman of the Bank of Latvia, Ilmārs Rimšēvičs, that Parex was involved in money laundering schemes but Rimšēvičs took no action. In 2001, (30 October 1949, Liepa, Liepa Parish - 10 July 2021), who was the first Prosecutor General of Latvia serving from September 1990 to August 1998 and drafted Latvia's ''Law on the Prevention of Money Laundering'' in 1997 following the April to June 1995 Banka Baltija financial crisis and collapse, was elected to the supervisory board of ''Parekss Banka'' and became its legal advisor and headed the anti money laundering division of the bank until 2009. From 2004 to 5 August 2008, Skrastiņš was a member of the management board of Parex Bank. In 2001, the ruling coalition of left wing groups at Riga, which were very close to the Kremlin, shifted all financial dealings with the mayor's office to Parex Bank.Alt archive
at compromat.ru on 5 May 2005 as PAREXу снесло все крыши (All rooftops of PAREX have been torn off). On 7 May 2004, ''Parekss Banka'' changed its name to ''Parex Banka''. In May 2005, President George W. Bush travelled to Latvia to discuss Latvian banking irregularities. The Lithuanian branches of Parex were associated with pro-Russia, pro-Kremlin, and pro-Putin

Viktor Yanukovych Viktor Fedorovych Yanukovych ( uk, Віктор Федорович Янукович, ; ; born 9 July 1950) is a former politician who served as the fourth president of Ukraine from 2010 until he was removed from office in the Revolution of D ...

scandals with large support from the "

Donetsk Donetsk ( , ; uk, Донецьк, translit=Donets'k ; russian: Донецк ), formerly known as Aleksandrovka, Yuzivka (or Hughesovka), Stalin and Stalino (see also: cities' alternative names), is an industrial city in eastern Ukraine loc ...

" clan, which was formed by

Akhat Bragin Akhat (Alexander) Khafizovich (Sergeevich) Bragin ( uk, Ахать (Олександр) Хафізович (Сергійович) Брагін, russian: Ахать (Александр) Хафизович (Сергеевич) Брагин, tt-Cyrl, ...

and headed by Rinat Akhmetov after Bragin's death on 15 October 1995, in the 2004 Ukrainian elections according to the

Lithuania Lithuania (; lt, Lietuva ), officially the Republic of Lithuania ( lt, Lietuvos Respublika, links=no ), is a country in the Baltic region of Europe. It is one of three Baltic states and lies on the eastern shore of the Baltic Sea. Lithuania ...

n newspaper '' Respublika''. The United States branch of

Deutsche Bank Deutsche Bank AG (), sometimes referred to simply as Deutsche, is a German multinational investment bank and financial services company headquartered in Frankfurt, Germany, and dual-listed on the Frankfurt Stock Exchange and the New York St ...

, Deutsche Bank Americas (DBA), had Parex's correspondent account, but shut it down after pressure from the

United States Treasury Department The Department of the Treasury (USDT) is the national treasury and finance department of the federal government of the United States, where it serves as an executive department. The department oversees the Bureau of Engraving and Printing and ...

. A company called ''International Overseas Services'' (russian: Международные зарубежные услуги) also known as ''International Offshore Services'' has had close ties to Parex. Established in 1996 in

Dublin Dublin (; , or ) is the capital and largest city of Ireland. On a bay at the mouth of the River Liffey, it is in the province of Leinster, bordered on the south by the Dublin Mountains, a part of the Wicklow Mountains range. At the 2016 ...

Ireland Ireland ( ; ga, Éire ; Ulster-Scots: ) is an island in the North Atlantic Ocean, in north-western Europe. It is separated from Great Britain to its east by the North Channel, the Irish Sea, and St George's Channel. Ireland is the s ...

but moved to

Virginia Virginia, officially the Commonwealth of Virginia, is a state in the Mid-Atlantic and Southeastern regions of the United States, between the Atlantic Coast and the Appalachian Mountains. The geography and climate of the Commonwealth are ...

in the

United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...

in 2007, International Overseas Services had subsidiaries in Riga, Kyiv and Moscow, had Philip Burwell ( ir, Pilip Boireil) listed as its representative in Latvia, and had dummy directors. IOSG Secretaries was the firm's branch in Panama with Ricardo Cambra La Duke as its agent. Both Milltown Corporate Services and Ireland and Overseas Acquisitions, which had Erik Vanagels () and Stan Gorin () as directors (both in reality were pensioners from Latvia) and Burwell as administrator, were shell companies of International Overseas Services. Milltown Corporate Services had been registered in Ireland until 2005, then briefly in British Virgin Islands, then in Belize, then

Russian mafia connections

Parex and its successor ABLV Bank were connected to the

based Tambovskaya

which is close to

during his political rise.

$100 million loan

In 2005, Severneft CEO Zhan Khudainatov received a $100 million loan from Parex which led to the collapse of the Parex Bank and, later, was revealed in the

Panama Papers The Panama Papers ( es, Papeles de Panamá) are 11.5 million leaked documents (or 2.6 terabytes of data) that were published beginning on April 3, 2016. The papers detail financial and attorney–client information for more than 214,488 ...

.) (Independent Oil Company) which is headed by Eduard Khudainatov (born 11 September 1960), a brother of Zhan Khudainatov, is under United States financial sanctions because of its closeness to the

North Korea North Korea, officially the Democratic People's Republic of Korea (DPRK), is a country in East Asia. It constitutes the northern half of the Korean Peninsula and shares borders with China and Russia to the north, at the Yalu (Amnok) and T ...

n regime. As a former vice president of

Rosneft PJSC Rosneft Oil Company ( stylized as ROSNEFT) is a Russian integrated energy company headquartered in Moscow. Rosneft specializes in the exploration, extraction, production, refining, transport, and sale of petroleum, natural gas, and petro ...

, Eduard Khudainatov is close to Igor Sechin. At the time of the loan, Denis Sherstyukov, a close business associate of both Kargin's son and Georgy Krasovitsky, a son of Viktor Krasovitsky, was on the council of Parex and has close ties to

through

Nils Ušakovs Nils Ušakovs (russian: Нил Валерьевич Ушаков, ''Nil Valeryevich Ushakov'') (born 8 June 1976) is a Latvian Russian politician, former mayor of Riga and former journalist. He has been the board chairman of the left-wing part ...

and his

Harmony Centre ;russian: Достойная жизнь для каждого) , website saskanascentrs.lv Harmony Centre ( lv, Saskaņas Centrs, SC; russian: Центр Cогласия, ЦC) was a social-democratic political alliance in Latvia. It origin ...

which is close to Putin's

United Russia United Russia ( rus, Единая Россия, Yedinaya Rossiya, (j)ɪˈdʲinəjə rɐˈsʲijə) is a Conservatism in Russia, Russian conservative List of political parties in Russia, political party. As the largest party in Russia, it hold ...

. From 2004 to 2008, Denis Sherstyukov expanded Parex into countries of the

former Soviet Union The post-Soviet states, also known as the former Soviet Union (FSU), the former Soviet Republics and in Russia as the near abroad (russian: links=no, ближнее зарубежье, blizhneye zarubezhye), are the 15 sovereign states that wer ...

Alfa Bank offer

In 2007, the Latvian- Russian

Petr Aven Petr Olegovich Aven (also transliterated Pyotr Aven; russian: Пëтр Олегович Авен; Latvian: Pjotrs Avens; born 16 March 1955) is a Russian oligarch, businessman, economist and politician who also holds Latvian citizenship. Until ...

of Alfa Bank offered to buy Parex Banka from Kargins and Krasovitsky. However, Kargins and Krasovitsky wanted €1 billion which was not acceptable to Aven. In October 2008, Baltic Screen estimated that Krasovitsky's wealth was 207 million

lats Lats or LATS may refer to: * Latissimus dorsi muscle * Latvian lats, former currency of Latvia * Latin American Test Symposium of test and fault tolerance technologists * Landfill Allowance Trading Scheme, a UK scheme to reduce biodegradable wast ...

(€291 million) and Kargin's wealth was 220 million lats (€309 million).

2008–2010 Financial Crisis and PAREX takeover

Background

Prior to the financial crisis, JSC Parex Banka was the second largest bank in Latvia in 2008. By the beginning of 2008, Britain had fully nationalized Northern Rock to save it from bankruptcy. In the second half of 2008, a number of large and pre-eminent banks and financial institutions went bankrupt, such as

Lehman Brothers Lehman Brothers Holdings Inc. ( ) was an American global financial services firm founded in 1847. Before filing for bankruptcy in 2008, Lehman was the fourth-largest investment bank in the United States (behind Goldman Sachs, Morgan Stanley, ...

in the United States and Carnegie in Sweden. In autumn of 2008, after the bankruptcy of several major banks and financial institutions, the

global financial crisis Global means of or referring to a globe and may also refer to: Entertainment * ''Global'' (Paul van Dyk album), 2003 * ''Global'' (Bunji Garlin album), 2007 * ''Global'' (Humanoid album), 1989 * ''Global'' (Todd Rundgren album), 2015 * Bruno ...

began in earnest. Several countries in the world had to seek international financial assistance, many countries provided support or even took over state-controlled banks and other credit institutions. In October 2008, the

agreed on a plan to allow governments to engage in bank rescues with the rescue of JSC Parex Banka outlined on 25 November 2008. Arnis Lagzdins was the compliance official at Parex Bank during the crisis at Parex and its sister firm Overseas Services and later held the same position at Ūkio bankas in Lithuania when very large sums were money laundered allegedly by Vladimir Putin, Yuri Chaika, and the Russian Mafia including the Tambovskaya Organized Crime Group.

Following events

On 30 July 2008, in a letter from Financial and Capital Market Commission of Latvia (FCMC) to the Chairman of the Board of Parex Bank titled, "On the results of the risk assessment of the bank," it was stated that an inspection had been carried out for the period from 12 November 2007 to 18 January 2008 and that the test results indicated that "the bank's performance ascharacterized by a moderate level of risk, and the methods used by the institution to manage risk eresatisfactory, although improvements ereneeded in some areas." From 18 August until 3 October 2008, the FCMC conducted an inspection with the aim of reviewing and evaluating Parex's lending process. The inspection revealed significant shortcomings in the lending process; as the economic situation in Latvia and the world changed and the solvency of borrowers worsened, Parex had not set up the amount of provisions corresponding to the quality of the loan portfolio (40 million lats shortfall), as well as weaknesses in credit risk management. On 14 October 2008, the FCMC authorized Parex to include audited profit for the first half of 2008 in Tier 1 capital and to include Parex Group's audited profit for the first half of 2008 in Tier 1 capital of Parex Consolidation Group. This decision showed that Parex's capital adequacy position was relatively stable in mid-October 2008. On 20 October 2008, as a result of the inspection, more accurate information was obtained about the current or current financial situation of Parex. The FCMC informed Parex of the deficiencies found during the inspection and invited Parex representatives to negotiate the improvements of deficiencies. After the initial refusal, a meeting between FCMC and Parex representatives took place only a week later.

Request for state support

On 22 October 2008, Parex owners privately requested state support to maintain the bank's solvency by proposing a state treasury deposit to Parex Bank. The Ministry of Finance rejected this suggestion. The outflow of money from Parex continued. Finance Minister Atis Slakteris discussed the situation with the FCMC and the Bank of Latvia, and on 28 October the Minister of Finance informed Prime Minister Ivars Godmanis. The authorities involved at the beginning of November concluded that Parex needs to be taken over by the state. Several options were considered – the full takeover of Parex banka into state ownership, the transfer of 51% of Parex banka's shares to the Mortgage and Land Bank, as well as the refusal of assistance. In the latter case, the state would have to pay the bank's customers at least LVL 660 million as a state guarantee for deposits. The Cabinet of Ministers supported the takeover of the bank into state ownership. It was considered that there would be no security for the use of public funds if the bank remained in the hands of its shareholders. On 27 October 2008, withdrawals from Parex began to accelerate rapidly. Due to the risk of default of capital adequacy ratios and taking into account the promise of Parex's major shareholders to increase the capital base in case of necessity, FCMC requested Parex to submit by 29 October 2008 the ''Parex Capital Adequacy Recovery Plan''. On this day along, around 29 million lats of capital left Parex.

Government takeover

In early November 2008, it was already clear that Parex's problems were so serious that it would involve the Cabinet of Ministers, and that Parex's takeover could be one of the most effective options for stabilizing the Latvian financial system by providing support to Parex. On 8 November 2008, the Cabinet of Ministers decided to acquire a controlling interest in Parex Bank. The country, represented by the Privatization Agency of Latvia, became the largest shareholder of Parex Bank. The

European Bank for Reconstruction and Development The European Bank for Reconstruction and Development (EBRD) is an international financial institution founded in 1991. As a multilateral developmental investment bank, the EBRD uses investment as a tool to build market economies. Initially fo ...

(EBRD) also acquired a share in Parex Bank over time.

Split into Reverta and Citadele

As a result of the restructuring carried out on 1 August 2010, Parex was split into two separate institutions; ''

'' was founded as a "solution bank" with the aim of recovering the public funds invested in its rescue. At the same time, Parex's "good" assets along with its credit institution services such as account and deposit servicing, credit lending were taken on by ''Citadele''. In December 2010, Reverta paid LVL 9.7 million in interest payments on the use of the state deposit. Reverta had recovered 58 million lats by the end of the reporting period within five months of 1 August 2010. On 28 December 2011, a Reverta shareholders' meeting made a decision on voluntary withdrawal from the credit institution's license. On 15 March 2012, the Financial and Capital Market Commission (FCMC) supports the request of Parex banka and revokes the license of the bank's credit institution. The change of the company's operating model was a natural and carefully considered step, considering that the services characteristic of credit institutions are not provided by Parex since 1 August 2010. 8 May 2012 marked a major milestone in Parex banka's operations: the bank is starting to work as a professional asset management company – Reverta Joint Stock Company. With an active portfolio of nearly one billion euros, Reverta is the largest asset manager in the Baltic region and ranked among the leading analogue companies in Eastern and Central Europe.

Causes of Parex's demise

According to investigations carried out in the wake of the crisis, it has been suggested that causes included * Global financial turmoil; * Increased withdrawal of deposits from Parex rig and Parex customer due to lack of financial resources, especially for residents of neighboring countries of Latvia; * Two contracts with syndicated lenders on 29 June 2007 for a EUR 500 million loan and on 21 February 2008 for a loan of EUR 275 million. Loans had to be repaid early in 2009, but Parex would not be able to do so due to the fall in the value of the securities portfolio; * As a result of the global financial crisis, the quality of Parex's foreign securities portfolio had deteriorated; Parex did not have a parent bank that would give Parex creditors additional guarantees or other collateral.

Economic effects

The state takeover of Parex has been seen as one of the major causes of the 2008–2010 financial crisis in Latvia, causing a chain reaction in the Latvian economy and requiring the government to take a €4.5 billion in bailout loans from the

International Monetary Fund The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster glo ...

, the

European Union The European Union (EU) is a supranational union, supranational political union, political and economic union of Member state of the European Union, member states that are located primarily in Europe, Europe. The union has a total area of ...

and the

World Bank The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Inte ...

Legal suit

Reverta sued the founders, Kargins and Krasovickis, for nearly €88 million from 14 highly irregular loans and deposits at Parex Banka which occurred between 1995 and 2008. In October 2016, Kargins and Krasovickis were ordered to pay €4,284,792 to Reverta.

Notes

References

"Parex" bank collapse
Baiba Rulle, IR magazine, 2012/2/23
Parex bank's correspondence reveals a hidden message volume
L. Fox, 19 January 2011.
What's going on under the guise of official secrets
Edgar Paul, 29 June 2014.
Latvian Bank > Press > Commentary and articles > Parex takeover

External links

Citadele Banka
{{Authority control 2010 disestablishments in Latvia Banks disestablished in 2010 Banks established in 1992 Banks of Latvia Latvian companies established in 1992 Defunct banks of Latvia