(includes the information taken from the sources of Association of Latvian Commercial banks and the Financial and Capital Market Commission and from the site of Parex Group)
The Cabinet of Ministers of Latvia decided on the takeover of JSC Parex banka in November 2008. Practical and urgent financial assistance was needed for improving the situation, which could be offered only by the government. This was an emergency measure as a result of which 51 per cent of Parex's shares were passed on to the government, through the state-owned Mortgage and Land Bank of Latvia (JSC Latvijas Hipoteku un zemes banka).
The decision did not affect the competition in the market as Mortgage and Land Bank is not the leader of banking sector in Latvia and, along with Parex, their joint market share could not exceed 20 per cent in any of segments. At that period (and now) Swedbank was the leading bank in Latvia in terms of assets, capital and reserves, and loans issued, — followed by other Scandinavian-owned banks SEB, DnB Nord and Nordea. Parex was on the top of the rating only by deposits.
In the process of takeover, part of documents related to it was classified as secret or restricted use information, for the purpose to protect legal rights and justified interests of the recipient of financial services including depositors, state and business participants. This unprecedented event and limited information about it raised numerous questions and opinions.
Parex bank's takeover was necessary to maintain the stability of the entire banking sector and to minimize negative consequences for the economy. The bank was of systemic importance for Latvia, and since the beginning of 2008, as the global banking system grew unstable, it was carefully monitored and supervised by FCMC along with other banks in Latvia.