Contract Concluded with Transformation Consultant of Mortgage Bank


Riga, 2011-06-16 14:22 CEST (GLOBE NEWSWIRE) -- On Wednesday, June 15, 2011 the Ministry of Finance (MoF) and state-owned JSC „Mortgage and Land Bank of Latvia” (Mortgage Bank) have completed the contract conclusion procedure with SIA IBS „SEB Enskilda” on development and implementation of the strategy for detachment of commercial assets of the Mortgage Bank.

The consultant is attracted based on the Concept for Transformation of the state-owned JSC “Mortgage and Land Bank of Development” into Development Bank approved by the Cabinet of Ministers (the Cabinet) on 24 November 2009 and Transformation Plan of the Mortgage Bank reviewed by the Cabinet on 12 April, 2011 that stipulated detachment of the bank’s commercial assets not related to the functions of development bank.

To select the consultant various applicants were interviewed and ranked by their experience, insight into the assignment and economic conditions. Assessment of the criteria highlighted the offer of SIA IBS „SEB Enskilda” as the most suitable. In order to effect the assignment SIA IBS „SEB Enskilda” sub-contracted US investment company „The Blackstone Group International Partners LLP” having experience with similar transactions worldwide and law firm „Kronbergs&Čukste/Baltic Legal Solutions” thus forming an international partnership.

According to the fundamental conditions of the contract, as adopted by the Cabinet, the consultant is to support the Mortgage Bank and its shareholder in implementation of the bank’s transformation plan by organising and guaranteeing an open and transparent detachment of the commercial component of the Mortgage Bank and ensuring continuity of the bank’s transformation plan. Once the detachment strategy is approved by the Cabinet and submitted to the European Commission, the consultant will proceed with its implementation to finalise detachment of the Mortgage Bank’s commercial component.

The purpose of Mortgage Bank’s transformation is to establish a promotional institution for implementation of the state aid programmes by making maximum use of the infrastructure, intellectual and financial potential of the Mortgage Bank, effecting the transformation to the best for the state and maintaining implementation continuity of the state aid programmes. During the transformation process the activities of the Mortgage Bank are focused on the branches crucial for the national economy – financing of small and medium enterprises, promotion of business start-ups, development of infrastructure and other national development projects within the framework of programmes approved by the Cabinet.

At the end of 2009 the Cabinet issued a decree approving the transformation concept of the Mortgage Bank. The concept describes the optimum model for bank’s transformation into a development institution implying concentration of the activities in the sectors crucial for the national economy at the moment. The decree stipulates that Mortgage Bank has to cease commercial activities by end of 2013.

In order to bring about the transformation concept there is a transformation plan elaborated which was approved by the government and submitted to the European Commission. The transformation plan lists the actions to be taken to implement the government’s decision on transformation of the Mortgage Bank into a development bank in compliance with the EU competition requirements and placing of its commercial component in the private sector. The plan respects the European Commission’s decision passed in 2009 regarding approval of the capitalisation of the Mortgage Bank in the same year where it was also stated that the bank wasn’t allowed to continue with commercial activities.

In accordance with the latest letter of intent of Latvian government to the International Monetary Fund Latvia has undertaken to implement the transformation plan of the Mortgage Bank by end of 2011 and also establish the development financial institution on the basis of the development component of the Mortgage Bank and attract private investor to the commercial component.

  

         Sandra Eglīte
         PR Officer of Mortgage Bank
         sandra.eglite@hipo.lv
         telephone: +371 67774244, +371 26577810
         www.hipo.lv