Slump of 32pc in Latvian bank’s profits deals blow to Desmond
Tuesday August 19 2008
RIETUMU Banka, the Latvian financial institution in which Dermot Desmond owns a 33pc stake, has reported a net profit slump of over 32pc to €17.4m in the first six months of this year compared to the same period in 2007.
The bank’s assets grew to €1.6bn, up from €1.4bn a year ago, it confirmed yesterday. At its shareholder meeting Mr Desmond was re-elected to the bank's council, while Brendan Murphy, of the financier's Dublin-based International Investment & Underwriting, was also re-elected. Mr Murphy was at one time finance director with electrical appliance maker Glen Dimplex.
Earlier this month Rietumu Banka secured a €75m syndicated loan financed by several institutions, including JP Morgan, Commerzbank and West- LB.
Rietumu said the loan will be used to finance expansion of its loan book within Russia and eastern European countries. The bank recently acquired a 67pc stake in a Ukraine-based brokerage, beefing up its presence in the country's market. The remainder is owned by a local Ukrainian partner.
Leasing
Earlier this year Rietumu Banka also acquired Russian and Belarusian leasing companies belonging to WestLeasing. The Latvian institution said it plans to extend its footprint to global markets and is planning to open an office in western Europe. In 2006, Rietumu obtained a €60m syndicated loan from the European Bank of Reconstruction and Development and a €110m syndicated loan to enable it to expand its lending activities.
Rietumu Bank was founded in 1992 by the then vice-president of Diners Club, Tony Levin. It is understood Mr Desmond acquired part of his stake in the bank from Mr Levin. Latvia has had to cope with spiralling inflation during the past number of months, with the rate now standing at 16.7pc.
Recent figures show that the country's economy slowed considerably in the first six months of this year, with growth slumping to 0.2pc compared to 10.2pc in the same period last year.
The government has also seen receipts from taxes and customs duties fall sharply. House prices had been rising significantly until late last year, but a recent global property survey says house values in the capital, Riga, fell over 38pc in the first quarter of 2008.
- John Mulligan
