"ACCUMULATE IN THE WEST - INVEST IN THE EAST" - THE FIRST SUBJECT OF PAREX BANK

"Parex" brend

The history of Parex brend began in 1988 when Parex began in Riga to provide with services on tourism. After a year bank by turnover could excel the most famous competitors of that time which were the State "Sputnik" and "Turist". In 1991 Parex became the first company in USSR received the license for exchange of currencies during the half year. During its monopolist time in the market 1/6 part of the world Parex services are used the civil and enterprises of all former USSR.

In 1993 Parex bank began its operation. It established in result of Parex joining with the branches of "Zhilsocbank" and "Promstroybank" which has a history from Russian - Asian and Lifland banks operated in Latvia before World War I.

At present Parex Group is one of the largest finance group in the Baltic countries. The flagman of Group is Latvian Parex Bank. It is a leader in the Latvian market by all major figures of banking activity, for instance - assets, invests, capital and reserves. During 2004 the bank's assets increased for 33.2% and reached 1,058 bn lats and the volume of given credits - for 43.7% - up to 640 mln. lats. The greatest results showed the portfolio of Parex Bank's mortgage credits which increased for a year to 104.6% and made 168 mln. lats.

For the beginning of current year bank occupied 17.8% of Latvian assets market (totally in the country more than 20 banks), 20.4% on capital and 15.2% of drawn credits. Comparing the figures of Parex bank activity with the Russian commercial banks, we can see that on assets bank would be take the 10th line in the market, on the other figures would be join into 20 of the largest Russian banks.

Except of Latvian Parex bank and its branches in Estonia to the structure of Parex Group listed tha banks and the insurances and leasing companies in Latvia, Luthuania and Estonia. Group is represented in 11 countries of the world, including Russia, Ukraine, Azerbaijan, Sweden, Germany, Great Britain and Japan. There is operated in Switzerland the associated Anlage un Privatbank. At the end of April Parex agency opened in Bulgaria, and the nearest plans are the opening of Parex's competent barnches in Germany and Sweden. In April of current year Parex bank signed important contract with the famous international company American Express due to which received exclusive rights for launching of credit cards American Express in Latvia.

Expansion in the East

At the beginning of current year the management of Parex bank declared about activization of work in the fianance market of CIS countries. As a chief means of expansion bank chose untraditional bank services and leasing. The companies' operation was paid into financing of bargains with transport that included itself the leasing of automobile transport, big cargo and construction technique and also cars for enterprises and private persons.

The main competitors in the Russian market of leasing Parex bank thinks the western financial companies and does not afraid of the serious competitive on behalf of banks-residents and leasing companies. The reason is assurance of European bank in competitive due to less interest rates and significant experience received for years of customers serving in Latvia and other countries.

On March 25, 2005 there was registered in Azerbaijan new leasing company Parex Leasing & Factoring. Director of Parex Leasing & Factoring Tatjana Baltgaile informed us about providing with leasing services in Azerbaijan:

We are absolutely new company and the first foreign company which join into the Azerbaijan market for rendering of leasing services. We are 100 percent associated Parex Banka in Latvia that fulfills its expansion in the East. Parex Bank has enough working experience in the field of leasing services. At present time Parex Bank has also got some leasing companies in CIS (two in Moscow and by one in Saint-Petersburg, Kiev and Minsk). We are the sixth leasing company that established in CIS countries.

We will operate on international canons. We see ourself as competetive at a segment of Azerbaijan market due to attract of Europen resources to which we have access. There we plan to begin in Azerbaijan from leasing of auto transport, special transport and approximately after a half year of activity to enlarge our services spectrum to leasing of equipment and other main means.

In result of marketing research of existing market we decided that the stated field of activity in Azerbaijan just arising. There are operated 7 leasing companies in Azerbaijan which associated of local banks and their leasing portfolio on April of 2005 made by around $11,5 mln. These companies have just developed. Leasing operations in Azerbaijan were delaying in view of imperfection of leasing legislation. There is no of separate law which would be regulate the leasing services in Azerbaijan. At that moment they are regulated by some articles of Civil codex.

According to IFC leasing services market of Azerbaijan can make $400 mln.

At present, our company has not begun to provide with leasing services. We are under the formation, gathering of qualified staff but taking into consideration the experience of Parex Bank and opportunities of European funds attract on low interest rates we plan to assimilate the leasing portfolio totally $2 mln. this year.

Presently, company's attention paid in the work with dealers that received our proposal and expressed their wishes in cooperation. All of this assistances in developmet of economy and business in the country.

We have enough smooth credit policy because the price of leasing services is quite low. Leasing percentage will be competitive in the domestic market of Azerbaijan and will depend on terms of provided leasing, leasing receiver prosperity, liquidity of transport means. We will fulfill the correct and thought policy, i.e. there will be planned individual approch to customers.

There came into Latvia the largest leasing companies of the world after its accession into EU. We meet competition and use the European experience in Azerbaijan. Firstly, we are attracted by the policy and economy stability in the country and also the rhythm of economy development growth in Azerbaijan.

Moreover, we are going to open our branches in some regions and making the service closer to customer. At the same time, there will be expanded the spectrum of provided leasing services. Now we will cover with services only juridical persons though Azerbaijan legislation allows us to provide with services natural persons too.

At that moment company began to consider of three leasing projects and they partly regard the infrastructure development. We are receiving the requests from construction companies on leasing of special technology equipment. Taking into account the construction boom in Azerbaijan the construction organizations are necessary the technology equipment for providing of increasing needs in dwelling and infrastructure, industrial processing. Leasing on technology equipment is also interested to our company.

We suspect that the maximal term of leasing will make 4 years. I guess it is enough. The big terms, the big percentage on leasing that make resources expensive for leasing receiver. An acceptable average term for leasing is 36 months.

As Parex Bank Office leader in Azerbaijan Jurijs Baltgailis mentioned, on May of the current year the international journal Global Finance recognized Parex Bank as the best bank in Latvia.

The title was awarded within the frame of investigation "Development markets of banks services in the Central and East Europe" held by Global Finance. Bank analitics, managements and bank consultants selected the owner of title of the best bank of development market taking into attention such factors as assets growth, yield, strategy relations, spectrum of provided services, competitive price policy and introducing of new productions.

Bank's credit activities including in Azerbaijan too directed into financing of more develop field of economy, inlcuding the transport corridors and energy sector. Mortgage credit is growth. Due to its geographical location the main demand Parex Bank feels on credit projects implemented by inhabitants of CIS countries in Latvia. The realty, dewelling houses, land on the coastal in Yurmala, exclusive houses and flats in Riga are actively bought and the prices for stated above are lower than the same units in Moscow.

The Russian companies' demand in big credits establishing associated companies or representative in Latvia. Business feels positive side of operation in EU. From geographical point of view Riga for Russia and CIS countries are historically profitable area of trade with Europe, the place of currencies' exchange and funds storing.

Azerbaijan is one of States which economy on the base of our calculations has significant potential growth. Investors not only in Latvia positively state the reforms have already done under the new President of the Republic of Azerbaijan. The changes testify about interesting of State in attract to country of the largest foreign investors.