ECB okays Latvia's Citadele Bank sell-off

The governing council of the European Central Bank (ECB) has approved a deal in which a group of multinational investors are buying state-owned shares in Latvia's Citadele Bank, the Latvian banking regulator said Wednesday.

The Latvian Financial and Capital Market Commission informed that the state-owned 75-percent stake in Citadele Bank would be sold to RA Citadele Holding - a subsidiary of U.S. equity firm Ripplewood Advisors LLC - and a group of 12 multinational investors.

During a detailed assessment process, the supervisory authorities examined the sell-off deal based on five main criteria: capital adequacy, financial stability, legality of the money to be invested in the bank, the investors' reputation, and their business plan for the bank's future strategy and operations.

The new investors have yet to complete the acquisition of Citadele Bank shares in cooperation with the Privatization Agency so that they can get fully involved in the bank's operations.

Since Citadele Bank has subsidiaries in Lithuania and Switzerland, the deal also has to be authorized by the Lithuanian and Swiss banking regulators.

Andris Grafs, a representative of the Latvian Privatization Agency which arranged Citadele Bank's sell-off on behalf of the Latvian government, said the price of the deal would be disclosed after the transaction was completed, which is expected to happen in a week's time.

Latvia expects to receive about 74 million euro (about 79 million U.S. dollars) for its stake in the bank.

Citadele Bank, established as a result of restructuring Latvia's Parex Bank, became operational in August 2010. In late 2008, the Latvian government took over the privately-owned Parex Bank, which was the second largest bank in Latvia at the time, in order to save it from looming bankruptcy amid the global financial crisis. Endit