On 14 November an agreement was signed between MoF and Parex regarding the term deposits of State Treasury with Parex. Parex had to put financial pledge, mortgage or commercial pledge as collateral in favour to the State Treasury. The State Treasury placed several term deposits with Parex in accordance with the amounts and terms set by MoF. On 25 November, the consent of European Commission on Parex takeover was received.
However, it soon became clear that major shareholders failed to fulfill the requirements set forth in Investment Agreement, and in order to reach the agreement on the loan refinancing it was decided to increase state influence in Parex. On 3 December 2009, the Agreement on Amendments to the Investment Agreement was signed, and as a result all the Parex shares owned by V.Kargins and V.Krasovickis were taken over by the Mortgage Bank - totally making 84.83%. Former minority shareholders remained the owners of the rest 15.17%.
Before signing this agreement, the government and FCMC imposed restrictions on execution of Parex liabilities to prevent the outflow of assets from Parex, after the information on the Bank's problems and takeover became public.
In the mid of December 2008, the Cabinet decided to increase the holding of the Mortgage Bank in Parex by the acquisition of all Parex shares owned by one of the Parex minority shareholders, Svenska Handelsbanken AB. After conclusion of this transaction, the state holding in Parex increased up to 85.15%.
In February 2009 Parex shares owned by the state were transferred to the Latvian Privatization Agency, in order to avoid mutual risks that could arise of possible inclusion of Parex in Mortgage Bank consolidated group.
In the period from 10 November 2008 when the Investment Agreement was signed and to 17 March 2009, the State Treasury placed several deposits with Parex making a total amount of 837.3 mln lats, for the acquisition of the issued short-term treasury bills. The investments were made by the requirements of Monetary Fund and pursuant to the instructions of the Cabinet. The acquired securities were used by Parex to maintain liquidity.
Also, the government backed issue of guarantee extensions in respect of Parex syndicated loan (500 million euro with maturity 29.06.2009 and 275 million euro with maturity 18.02.2009), and supported the increase of Bank's equity capital.