Sunday 19 November 2017

Desmond Latvian bank eyes Irish move

Rietuma Banka to focus on lending here and the UK after scaling back its operations in the Russian bloc

Rietumu Banka headquarters in Latvia
Rietumu Banka headquarters in Latvia
Billionaire financier Dermot Desmond has owned a stake in Rietumu Banka since 2005
John Mulligan

John Mulligan

Latvia’s Rietumu Banka, in which billionaire financier Dermot Desmond owns a one-third stake, has confirmed plans to expand its lending activity to Ireland and the UK after it scaled down its business in the Commonwealth of Independent States, which includes Russia.

Rietumu said in its annual report that its profit after tax jumped 17.5pc last year to €82.3m.

Earlier this year, it emerged that Rietumu had backed a venture called Profunder, which provides loans to Irish commercial property owners and helps them buy out their loans from vulture funds.

Mr Desmond, who is also a shareholder in INM, the publisher of this newspaper, has owned a stake in Rietumu since 2005. He paid an estimated €100m for the holding.

Rietumu’s annual report shows that its operating income rose 14pc last year to €181m.

“In 2016 Latvian anti money-laundering legislation has been significantly expanded and the complexity of vetting new and existing customers’ profiles and transactions has dramatically increased,” it noted. “Given the time and effort involved with new compliance reality the bank has decided to refocus our customer policy.

“Under the new policy the group has been focusing on larger privately owned businesses to which we can offer a broader range of products.”

It also noted that because of the “uncertain environment” in the region, the bank has scaled down its commercial lending in the CIS. It added that it has focused on industries that have not been significantly affected by economic or other crises, and made “significant efforts” to grow its trade finance, leasing and consumer finance businesses.

“By focusing on these industries the bank also offered its customers new opportunities to develop their international expansion,” its annual report notes. “The group will focus on lending development in trade finance as well as developing new lending markets such as Ireland and the United Kingdom.”

The Profunder vehicle that Rietumu has backed in Ireland was founded as a subsidiary of Dublin-based corporate finance firm LeBruin.

LeBruin was established and is headed by former Anglo Irish Bank executives Tom Browne and Cathal Fitzgerald. Its chairman is James Osborne.

Profunder was launched earlier this year and has a €100m loan fund. It provides loans of between €1m and €3m to commercial property owners.

LeBruin also owns a subsidiary called Origin Capital. A €500m lending platform, it was launched in 2015 and provides senior debt funding in excess of €3m for commercial property transactions. It is backed by Morgan Stanley.

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