History

The Government of the Republic of Latvia founded the state-owned JSC ‘Mortgage and Land Bank of Latvia’ (Mortgage Bank) on 19 March 1993 by order No 140 of the Cabinet of Ministers. At the moment the Mortgage Bank is the only 100% state-owned commercial bank.

The aims of the state-owned JSC ‘Mortgage and Land Bank of Latvia’ and its legal status feature a certain similarity with the two state-owned banks functioning in the Republic of Latvia before the World War II: “Valsts Zemes banka” (State Land Bank) and “Latvijas Hipotēku banka” (Mortgage Bank of Latvia). The major tasks of these two banks were to finance the agrarian reform and grant long-term mortgage loans, mainly for financing of construction works. Due to its business niche and contribution to Latvia’s national economy the Mortgage Bank is to be considered the heir and successor of those two Latvian state-owned banks operating before the World War II. The name that was chosen for the Bank - “Latvijas Hipotēku un zemes banka” (Mortgage and Land Bank of Latvia), contains the names of both aforementioned banks, thus manifesting the founders’ intentions to continue their traditions.

Since its foundation, the Mortgage Bank has undergone considerable structural changes. In 1996, the Bank purchased the service network of “Sakaru Banka” with 26 branches in all district centres of Latvia whereby it became widely accessible to the customers.

At the beginning of the year 1997 the Bank acquired the state-owned JSC “Latvijas lauksaimniecības finansu sabiedrība” (Agriculture Finance Company of Latvia) that triggered a rapid growth of lending volumes using the World Bank’s resources and attracting highly professional staff to the Bank’s lending operations.

In 1999, the branches of the Bank were joined in a united accounting system EQUATION. The system provides for on-line settlements in-between the branches of the Bank that increases quality of customer service considerably and opens new options for future customer service.

Also in 1999, the Cabinet of Ministers approved the development concept of the Mortgage Bank for the next six years. The concept established the main operational directions for the bank: lending to the small and medium-sized enterprises, mortgage lending and issue of mortgage bonds.

At the moment, in line with the approved development concept, the Mortgage Bank adapts its activities to the functions of development bank.

On 15 May 2001, the 6th International Meeting of Promotional Banks organised by Mortgage Bank took place in Riga. The goals of such meetings are to foster the information exchange on the course of economic reforms in other countries, expand co-operation among the promotional banks and improve their functions. The meetings of the promotional banks have taken place in various countries since 1996. During these annual meetings the leading officials of the promotional banks share their experience on the issues important to the promotional institutions. The Mortgage Bank has participated in the meetings of promotional banks since 1998 and hosted the meeting of the year 2001.

The Bank engages in the development of the mortgage lending system of Latvia, establishment and development of the market in mortgage-backed securities as well as promotion of mortgage-backed securities actively. On 8-9 November 2001, the 5th Central European Mortgage Bonds Conference took place in Riga. The conference was attended by more than 100 participants from various countries of Europe (Germany, Denmark, Austria, Sweden, the Czech Republic, Slovakia, Hungary, Poland, a.o.) and USA representing banks, insurance companies, pension and investment funds, state institutions as well as professional associations and international bodies.

The mortgage bonds’ conferences aim to discuss the issues related to the legal regulation of the mortgage bonds, establishment and development of mortgage bonds’ market and investment options in the mortgage bonds, etc. These conferences have taken place in various countries since already 1996. The Mortgage Bank has participated in these conferences as the sole representative of Latvia since 1999. In 2001, the Mortgage Bank organized the mortgage bonds’ conference in co-operation with the Association of German Mortgage Banks.

The Mortgage Bank continues to implement the following development programmes commissioned by the government that provide support to specific groups of entrepreneurs and population: Small and Medium-sized Enterprises Lending Programme, Housing Development Lending Programme and various rural development programmes. The Lending Programme for Long-term Investments in Agriculture was started in spring 2002, the Non-agricultural Entrepreneurship Development Lending Programme - in January 2003. In February 2004, the Mortgage Bank and JSC „Hansabanka” signed a loan agreement with the Nordic Investment Bank and Council of Europe Development Bank about a credit line in the amount of 2 mln euros. The Mortgage Bank uses the resources of the credit line to implement support programmes for women entrepreneurs. In June 2005, for the first time in its history, the Mortgage Bank signed a syndicated loan agreement with fifteen European banks without a guarantee from the government.

The Bank pays particular attention to micro-lending (loans up to EUR 25 000) and development of co-operation with the credit unions.

In April 2004, the Mortgage Bank and Norway - Latvia Business Development Fund established jointly a new venture capital fund - the Small and Medium-sized Enterprises Support Fund to provide venture capital financing to the SMEs registered in Latvia. The Fund is a pilot-project that tests feasibility of the ideas, principles and structures of the venture capital programme yet to be introduced.

In October 2004, the Mortgage Bank organised an international conference for the members of the co-operatives ‘Co-operatives - Challenges and Perspectives’. The aim of the conference was to promote co-operation in Latvia and enhance participation of population in the economic processes.

To keep in pace with the development of the financial world the Mortgage Bank takes part in the life of the financial community actively. The Mortgage Bank is represented in the following local and international non-governmental institutions: the Association of Latvian Commercial Banks, Chamber of Commerce and Industry of Latvia, Farmers’ Federation of Latvia, Association of Organisations of Organic Farming of Latvia, Institute of Internal Auditors of Latvia, Association of Real Estate Valuators of Latvia, European Association of Public Banks, European Mortgage Federation (associate member), Network of European Institutions for SMEs, Club of Institutions of the EU Specialising in Long-term Credit.

The Mortgage Bank also has active co-operation with the German Association of Mortgage Banks (Verband Deutscher Hypothekenbanken).

Now the Bank has 27 branches, one in each district centre and 7 sub-branches situated in various regions of Latvia that provide for the servicing of the customers in the whole country. The Bank improves and modernizes its branches continuously.

For more detailed information about the Mortgage Bank see the annual reports posted on the home page.