Pompey owner snaps up 5pc foothold in Desmond bank
Hong Kong businessman Balram Chainrai, who controls Portsmouth football club, has snapped up a 5pc stake in Rietumu Banka, the Latvian financial institution in which billionaire financier Dermot Desmond (right) has a 33pc stake.
Rietumu Banka confirmed the transaction yesterday without giving any financial details of the deal.
However, the institution said that Mr Desmond retains his one-third stake in the bank via his Boswell International Consulting entity.
Mr Chainrai secured his stake at the end of February from an existing shareholder, according to a statement from Rietumu.
The decision to acquire the holding in the bank comes as Latvia struggles to regain its financial footing after a calamitous period where it has relied on a bailout from both the European Union and the IMF to shore up its public finances.
Rietumu posted a more than 50pc decline in profit to 9.2m Latvian lats (€13m) last year.
Its total assets declined 12pc during 2009 to 1bn lats, while the bank also curtailed lending as the Baltic states attempted to cope with the global economic fallout.
Baltic countries, as well as Russia and Belarus, account for more than a third of Rietumu's total 489m lats credit portfolio.
That portfolio decreased by 14pc between the end of 2008 and December 2009.
The bank's capital-adequacy ratio exceeded 16pc at the end of last year, with equity and reserves amounting to 134m lats.
Rietumu's latest figures show that retained earnings plummeted to just 5,429 lats at the end of 2009 from 82.8m lats at the end of 2008.
Mr Desmond acquired his stake in Rietumu in 2005 for an estimated €100m. He bought shares in the institution from its co-founder, US banker Tom Levins, and others.
At the time of the purchase the Latvian economy was racking up significant growth, much of it on the back of a housing bubble.
Rietumu Banka chief executive Alexander Kalinovski said yesterday that the bank was "definitely positive and highly optimistic" about Mr Chainrai's investment in the institution.
"This opens up fresh opportunities for further dynamic development and gives access to new resources," he added.
Mr Kalinovski also said Mr Chainrai would be in a position to provide support for Rietumu's banking operations across Southeast Asia.
Mr Chainrai has built his fortune through consumer electronics and property deals.
He currently owns struggling premier league Portsmouth Football Club, nicknamed Pompey.
Mr Chainrai took control after he advanced a £17m (e19m) mortgage to the previous owner last October.