EU Starts Investigation On Latvia Bank Rescue Measures

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The European Commission on Wednesday said it opened an in-depth investigation into state support measures for a Latvian bank JSC Parex Banka.

The Commission will now examine whether the restructuring plan, submitted on 11 May 2009, will enable Parex to return to long-term viability while avoiding undue distortions of competition.

"The opening of an investigation is common for state interventions in the banking sector, ensures legal certainty for the concerned market players and gives interested parties the possibility to submit comments on the proposed measures. It does not prejudge the outcome of the procedure," the Commission said.

On 24 November 2008, the Commission approved rescue aid for Parex, the second largest bank in Latvia, in the form of liquidity support, state guarantees and a recapitalization measure in line with the EU rules on emergency aid for banks.

On 11 May 2009, the Commission approved amendments to the recapitalization measure enabling Latvia to acquire newly issued ordinary shares and subordinated debt with the aim to strengthen the bank's capital basis.

The European Commission on Wednesday said it opened an in-depth investigation into state support measures for a Latvian bank JSC Parex Banka. (Market News Provided by RTTNews)