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UPDATE 1-Latvia to probe bank rescue, eyes more IMF talks
Fri, 17th Jul 2009 17:48
RIGA, July 17 (Reuters) - Latvia's Finance Ministry said on Friday it had asked the state prosecutor's office to probe the state takeover last year of a major bank that helped trigger the need for the country's IMF-led bailout.
The IMF has delayed its latest share of lending in the bailout, though the EU has decided to give a further 1.2 billion euros. The prime minister said he would hold more talks next week with the International Monetary Fund (IMF).
Some local media reports and politicians have criticised the wisdom of taking over the country's second largest bank, Parex, and the way it was done. Most recently the media has reported that some former employees left with big handouts.
Finance Minister Einars Repse said he had asked the prosecutor's office to investigate the takeover to clear up such controversies.
'Given that Parex Bank is now state property it is necessary to get clarity ... so that society can be sure that the takeover of the bank took place honestly and that no conscious wrongdoing or neglect took place,' Repse said in a statement.
He said he wanted the prosecutor's office to look at instances of former bank employees getting unduly large salaries and lay off compensations.
He also wanted the probe to look at why the former owners of the bank got large amounts of interest income each month.
Parex costs and the economy's steep slide into recession were the main reasons Latvia had to appeal for international aid last year, getting a 7.5 billion euro rescue led by the IMF and European Union.
Prime Minister Valdis Dombrovskis said talks with the IMF on a 200 million euro loan tranche would continue next week.
'It is very likely that we will be able come to some conclusions,' Dombrovskis told reporters.
He repeated Latvia did not really need the IMF money in a financial
sense, but that the IMF's role was important.
'It is more like a signal whether the IMF is on board with the European Commission or not,' he said. A spokeswoman for the IMF said on Thursday the Fund wanted to make sure the social costs of Latvia's budget reductions were not too high.
The economy has fallen rapidly in 2009 and gross domestic product is expected to contract by 18 percent this year.
(Reporting by Jorgen Johansson and Patrick Lannin; Editing by Ruth Pitchford) Keywords: LATVIA ECONOMY/
(Riga newsroom, patrick.lannin@reuters.com, patrick.lannin.reuters.com@reuters.net, +371 29 269 191)
COPYRIGHT
Copyright Thomson Reuters 2009. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
The IMF has delayed its latest share of lending in the bailout, though the EU has decided to give a further 1.2 billion euros. The prime minister said he would hold more talks next week with the International Monetary Fund (IMF).
Some local media reports and politicians have criticised the wisdom of taking over the country's second largest bank, Parex, and the way it was done. Most recently the media has reported that some former employees left with big handouts.
Finance Minister Einars Repse said he had asked the prosecutor's office to investigate the takeover to clear up such controversies.
'Given that Parex Bank is now state property it is necessary to get clarity ... so that society can be sure that the takeover of the bank took place honestly and that no conscious wrongdoing or neglect took place,' Repse said in a statement.
He said he wanted the prosecutor's office to look at instances of former bank employees getting unduly large salaries and lay off compensations.
He also wanted the probe to look at why the former owners of the bank got large amounts of interest income each month.
Parex costs and the economy's steep slide into recession were the main reasons Latvia had to appeal for international aid last year, getting a 7.5 billion euro rescue led by the IMF and European Union.
Prime Minister Valdis Dombrovskis said talks with the IMF on a 200 million euro loan tranche would continue next week.
'It is very likely that we will be able come to some conclusions,' Dombrovskis told reporters.
He repeated Latvia did not really need the IMF money in a financial
'It is more like a signal whether the IMF is on board with the European Commission or not,' he said. A spokeswoman for the IMF said on Thursday the Fund wanted to make sure the social costs of Latvia's budget reductions were not too high.
The economy has fallen rapidly in 2009 and gross domestic product is expected to contract by 18 percent this year.
(Reporting by Jorgen Johansson and Patrick Lannin; Editing by Ruth Pitchford) Keywords: LATVIA ECONOMY/
(Riga newsroom, patrick.lannin@reuters.com, patrick.lannin.reuters.com@reuters.net, +371 29 269 191)
COPYRIGHT
Copyright Thomson Reuters 2009. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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