Desmond's Latvian bank posts a 50pc fall in profits to just €13m
Rietumu Banka, the Latvian bank in which financier Dermot Desmond has a 33pc stake, posted a more than 50pc decline in profit to €13m last year as the Baltic state's economy teetered on the brink of collapse.
Figures from the bank show that Rietumu's total assets declined 12pc during 2009 to €1.4bn, while the bank also reined in its lending as the Baltic states were consumed by the economic crisis.
Loans made to clients in the Baltic states as well as Russia and Belarus account for more than one-third of Rietumu's total €690m credit portfolio. That portfolio has decreased by 14pc since the end of 2008.
The bank's capital adequacy ratio exceeds 16pc, with equity and reserves amounting to €190m.
An accompanying management statement to the unaudited accounts said that "despite the economic crisis, scarce financial resources and the tough situation in Latvia, Rietumu successfully ended the year having maintained its status of the most effective bank in the Baltics". It added that customer deposits with the bank rose 1pc in 2009.
Latvia's economy had to be bailed out by the International Monetary Fund (IMF) and the European Union last year as it spectacularly collapsed.
The World Bank also contributed to a €7.5bn rescue package for the country, with preconditions that included a severe austerity plan to be introduced by the Latvian government. Civil service wages have been cut by as much as 40pc, while the nation's unemployment rate has rocketed to 22pc.
The country's economy is thought to have contracted by about 18pc last year and will shrink a further 2pc to 4pc this year, while its sovereign credit rating remains at 'junk' status.
Mr Desmond acquired his stake in Rietumu in 2005 for an estimated €100m, as the Latvian economy boomed amid a property bubble and its accession to the EU in 2004. That growth boosted Rietumu's bottom line, with the bank recorded a profit of over €41m in 2006, a 15pc increase over 2005.