Mortgage Bank - On transformation of the Mortgage Bank into a development bank

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On transformation of the Mortgage Bank into a development bank

24.05.2010

The Ministry of Finance has drafted a report for the Cabinet of Ministers on the implementation progress of the concept on "Transformation of the state-owned JSC "Mortgage and Land Bank of Latvia" into a development bank". The report outlines the measures to be accomplished in order to transform the Mortgage Bank into a development bank. The government meeting scheduled for the 25^th of May will examine the report. The concept approved by the government stipulates establishment of the development bank on the basis of the Mortgage Bank by end of 2013.

The transformation framework of the Mortgage Bank encompasses the following measures:

to draft a law on development bank and make amendments to the existing regulatory acts;
to phase out the commercial segment of the Mortgage Bank by 31 December 2013;
to detach the impaired assets of the bank in the bank's daughter company in order to optimize work with the impaired assets;
to examine the possible alienation of the impaired assets management company in favour of the state or private investor if specific financial indicators are present;
to proceed with examination of the options for accelerated alienation of the commercial segment of the Mortgage Bank;
to pass a decision at the end of the transformation process about the status of the development bank (credit institution or financial institution).

During the transformation process the Mortgage Bank will continue servicing its customers and guarantee meeting of its obligations. At the same time the sum total of the deposits will be gradually reduced by 2013 in proportion to liquidity adequacy requirements of the Financial and Capital Market Commission.