Banks, EU – Baltic States, Financial Services, Latvia, Mergers and take-overs

“We can inform now that the shareholder that has acquired the controlling 60% stake is a company owned by a group of US and European investors,” Vilistere-Lace said.

She also indicated that the regulator, the Register of Enterprises and other parties concerned have been provided information about the latest changes in the bank’s ownership structure. “As soon as this is legally approved, we will reveal the shareholders,” the bank’s spokeswoman said.

Vilistere-Lace informed that the bank’s previous key owner and chairman Grigory Guselnikov has resigned as chairman of the bank’s supervisory board.

Dace Jansone, a spokeswoman for the Financial and Capital Market Commission (FCMC), told LETA that the FCMC is informed about the deal and that the regulator is taking all the necessary supervisory measures and sharing the information with the European Central Bank.

Jansone underlined that the change of the bank’s ownership means no changes for its clients as all the services are being provided and all obligations remain in force.

Since March 2018, PNB Banka operates under the European Central Bank’s director supervision, therefore it is the European Central Bank’s competence to approve or ban the acquisition deal.

“According to the information provided by the bank… the change of shareholders has been registered,” the FCMC representative said.

As reported, the UK-based Russian banker Grigory Guselnikov has announced he has sold his stake in Latvia’s PNB Banka. Guselnikov said on Twitter that he and his family members have sold their shares in PNB Banka “to EU & U.S investors” without naming the buyers.

“Everything has its own limit-nothing is endless) Hereby I announce that my family members & myself have sold PNB_Banka Intl shares to EU & U.S investors I am sure new shareholders will find & implement a successful strategy in Latvian banking environment. Good luck to the Team!” Guselnikov tweeted.

The bank has issued a statement saying that “a group of US and European investors have decided to take over the majority shareholding in AS PNB Banka. Such a decision has been taken following the assessment of the economic potential of Latvia and Latvian banking sector. The agreement provides for the acquisition of the controlling stake of the Bank’s majority shareholder Grigory Guselnikov and additional capital support in the future for the Bank”.

The bank’s representatives also indicated that in coming weeks PNB Banka’s new shareholders and the management board “will develop and present to the Financial and Capital Market Commission (FCMC) an updated business development strategy, which will encompass expanding products and services for international and Latvian clients, modern banking technology and a long-term investment strategy”.

According to representatives of the bank’s new shareholders, they are not interested in continuing the bank’s legal dispute with the Latvian state, the FCMC and the European Central Bank.

According to preliminary data, PNB Banka closed 2018 with a loss of EUR 5.099 mln, while the banking group incurred a loss of EUR 18.403 mln.

The International Centre for Settlement of Investment Disputes (ICSID) has been hearing a claim filed by PNB Banka, Guselnikov and his family members against Latvia over allegedly “unfair, arbitrary, improperly motivated and unreasonable regulatory treatment accorded to the Bank by the Latvian authorities, contrary to Latvia's obligations under international law."

Allegedly, PNB Banka (then Norvik Banka) also complained that "a high-ranking official in the Latvian financial sector" had extorted bribes from the bank, promising to use his influence to prevent the Latvian financial regulator, the Financial and Capital Market Commission, from pressuring the bank.

According to Grigory Guselnikov, the high-ranking Latvian official mentioned in the claim is Bank of Latvia Governor Ilmars Rimsevics, who had been extorting bribes from Norvik Banka for years. In late December 2017, Guselnikov complained about extortion also to the Latvian State Police which have launched a criminal investigation.

In late 2018, PNB Banka ranked seventh largest bank in Latvia by assets, Guselnikov, who has the dual citizenship of Russia and the UK, acquired a controlling stake in the Latvian bank in 2013.