The Citadele Index shows that business moods shifted throughout 2011 – in the third quarter, the level was higher than at any time since the beginning of 2008 (51.48 points), while in Q4 the figure dropped back below the level of 50 points (48.54). Manufacturing company representatives remain comparatively more optimistic – 50.40 points. The retailing, service and construction industries had 48.46, 47.99 and 45.76 points respectively. It must be noted that the index rose above 50 points among large and medium-sized companies (52.12 and 53.93 points), as well as among companies with a mixture of domestic and foreign capital (55.32 points) or exclusively foreign capital (51.84 points).

Arnis Kaktiņš, head of the SKDS public opinion research centre: “The Citadele Index is essentially a futures index in that it shows how other macroeconomic indicators might change in future. Since Q1 2010, future prognoses among businesspeople have almost always been more optimistic than their views about the present, while in December 2011 we found that future prognoses became more cautious and can almost be described as pessimistic.”

Economic indicators are higher than business moods in Latvia
Citadele Bank chief economist Zigurds Vaikulis: “Since 2007, businesspeople in Latvia have been more cautious than economic indicators should warrant. Economic growth in 2011 was more rapid than had been expected, and GDP rose by an unexpectedly high level of 5.3%. It is also true that we did very well during the fourth quarter of the year against the background of Estonia and Lithuania. Although the Citadele Index shows that businesspeople are becoming more cautious all in all, the fact is that there are no signs of a crisis in Latvia’s economy at this time. The caution of businesspeople in Latvia probably has more to do with the fact that they are monitoring the global economy, not least in terms of things that are happening in the euro zone.”

“Companies in the machinery and metals industries are more optimistic in general terms,” says Ivars Eniņš, deputy board chairman of the Association of Machinery and Metals Processing Industries. “Our association recently conducted its own survey to find that 56% of businesspeople in these sectors believe that revenues in 2012 will be as high as in 2011 or even higher. Businesspeople feel stable, because this industrial sector stands alongside wood processing as the leading export sector in Latvia. Manufacturing output rose by 34% in 2011. 81% of our products are exported, and that represents 30% of total Latvian exports. At this time we are exporting to 120 countries, and only 30% of our market is in the euro zone.”

Eniņš goes on to say that metal processing companies in Latvia substantially expanded the range of countries to which they export their goods last year, mostly focusing on Northern Europe and other countries which are outside of the euro zone. Eniņš also says that these companies have no lack of orders – only in 11% of cases is output capacity below 50%, employment numbers are increasing, and orders are becoming larger. Zigurds Vaikulis also says that although the euro zone can be expected to slide into a moderate recession, Latvia’s main export markets (Germany, Scandinavia, Russia, the United States) are in a comparatively more stable situation than are countries in Southern Europe.

Agnese Paegle, head of the Citadele Corporate Banking Sector: “Our businesspeople learned to be flexible during the previous crisis and to react quickly to market changes. They have also diversified export markets, and that helps them to be active under the uncertain situation, which currently exists in the European market. The main factors to which businesspeople should devote attention include as much capitalisation as possible, as well as the need to ensure stable and sufficient cash flows.”

About Citadele Index

Citadele Index research is conducted on a quarterly basis in order to find out entrepreneurs’ evaluation of the present situation and prognoses for the next 6 months in such fields as general economic activity in the State and corresponding business field. The previous research, which was carried out in last December polled 750 heads of companies of various sizes from all regions of Latvia representing various spheres of national economy. Citadele Index research is conducted by Citadele Bank in cooperation with market and public opinion research centre SKDS.

About Citadele Bank

Citadele is a full-service financial group for both private individuals and companies offering complete portfolio of banking, financial and private capital management services in its home market Latvia and through its international presence. Citadele is the only collaboration partner of American Express^® in Latvia and Lithuania who is entitled to issue American Express credit cards. Presently 75% of Citadele Bank is possessed by VAS “Privatizācijas aģentūra” (State JSC Privatization Agency) and 25% plus one share is possessed by the European Bank for Reconstruction and Development.

“I am glad that the audience of World Finance magazine has recognized Citadele Asset Management as one of the best asset management companies in the Baltic States for the second year in a row. Our strategy is developing a long-term relationship with clients, based on mutual trust, and offering clients innovative and competitive products, and simultaneously paying special attention to risk management. This strategy has proved its worth several times in the present changing economic situation, and it has resulted in top profitability indices on the market in both – management of pension funds and other investment instruments. Our strengths are the most diversified range of investment funds, specialization in East European markets and the professional team that has acquired experience also while working in the leading Baltic and foreign financial institutions,” explains Vladimirs Ivanovs, Chairman of Citadele Asset Management.

The audience of World Finance magazine determined the nominees for the annual prize in asset management. Voting took place from August 2011 until January 2012; all asset management companies which conduct business in the Baltic region were welcome to apply for the award.

The final decision on the award winner will be adopted by the jury of the contest and winners will be announced in July-August issue of World Finance magazine.

World Finance is the leading financial magazine in the world issued by World News Media from its Headquarters in London.

IPAS Citadele Asset Management is a subsidiary of Citadele Bank and one of the leading investment management companies in the Baltic States. Citadele Asset Management offers asset management services for local and foreign clients, in both – retail and corporate segment, investment funds, as well as 2nd and 3rd level pension plans of offered by the pension system and insurance companies. In Latvia Citadele Asset Management offers asset management as well as life insurance services; the latter are provided by Citadele Life, a subsidiary of Citadele Asset Management.

Subsidiaries of IPAS Citadele Asset Management offer asset management services also in Lithuania and Ukraine. The company also has a representative office in Kazakhstan. Citadele investment funds are registered for public offer also in Moscow, St. Petersburg, Kiev, Almaty and Minsk.

The last instalment, i.e. 46.94 million Euros, was transferred to State Treasury on 14 February. The breakdown of the last instalment was as follows: 46.6 million Euros was the principal sum, and the rest 340 thousand Euros was interest.

“The ability of Citadele Bank to repay State deposits ahead of the schedule is good news. Firstly, this means that the selected restructuring model for the bank is sustainable, and the bank is capable of meeting its obligations. Secondly, the bank has acquired certain trust in people’s eyes in order to attract the necessary funds for repaying State deposit and ensuring liquidity. Now Citadele will have to prove that it can increase its value regardless of the volatility that exists in European financial markets so that it can be handed over to private shareholders, recovering the funds invested in its share capital, within a reasonable period,” says Daniels Pavļuts, Minister of Economics.

“Repayment of State term deposits was one of our key tasks. I am thankful to all employees of Citadele. The bank was able to repay the whole sum of the term deposits that the State deposited in Citadele thanks to their professional and active work,” comments Juris Jākobsons, Chairman of the Board of directors of Citadele Bank.

“Having repaid the State term deposit, our team will now continue developing Citadele in a well-considered manner focused on long-term cooperation with our clients. We will continue increasing the bank’s liquidity and we will concentrate on a solid and profitable asset structure.

Citadele has especially promoted deposit products up to now, and we will continue to be an attractive bank for depositors in the future as well because deposits are the main source of funding for the bank. It is particularly the successful deposit policy that enabled us to issue new loans worth 151 million Lats in 2011 in Latvia. This is 10% of the total amount of newly issued loans in the local banking sector. In 2012 we will continue funding the Latvian economy paying special attention to small and medium enterprises, and facilitating utilization of resources available from the EU structural funds. We will also continue working on introducing new products and services tailored to the needs of clients. Every Lat deposited with Citadele is invested in the Latvian economy, and it continues working for the benefit of the national economy,” says J. Jākobsons.

“Successful performance of Citadele Bank has increased depositors’ trust, and the Latvian State can now significantly reduce its support. This is of great importance because the State has limited financial resources, and attracting depositors' funds will also be necessary for further development of the bank. Resources for development can also be ensured by means of attracting new shareholders. Thus selling the bank for a reasonable price remains a strategic goal,” says Iveta Zalpētere, Chairman of the Board of SJSC “Privatization Agency”.

Apart from the term deposit Citadele Bank also has a subordinated loan worth 64.3 million Euros granted by SJSC “Privatization Agency”. Citadele has paid 11.4 million Euros in interest for this loan from September 2010 until February 2012 to the Latvian State. Thus Citadele has paid a total of 26.1 million Euros in interest to the Latvian State for the term deposit and subordinated loan during the last year and a half. State share in Citadele Bank’s share capital is 77.2 million Lats or 109.8 million Euros. The State will recover both its investments when it sells its shares of Citadele.

As announced previously, bank Citadele started working with profit, i.e. 1st half of 2011, which is earlier than it was anticipated in the bank’s restructuring plan. Citadele’s profit had increased further from 182 thousand to 3.4 million Lats in the 3rd quarter of 2011. The bank’s deposit portfolio was 1.08 billion Lats, excluding State Treasury funds, as of end of December 2011.

Citadele Bank was founded on 30 July 2010 and launched its activity on 1 August 2010. 75% (minus one share) of Citadele Bank is possessed by SJSC “Privatization Agency” and 25% plus one share is possessed by the European Bank for Reconstruction and Development.

Citadele Life board chairman Uģis Vorons says that the increased market share can be attributed to the increased recognisability of the Citadele Bank: “Demand for Citadele Life insurance products has accompanied an increase in Citadele’s popularity in the market. Clients understand that the bank is stable and secure, so we can forecast increased client interest in future, as well. That will help us to achieve the goal of being among the leading players in the life insurance market.”

Citadele Life rapidly increased its total number of signed premiums in 2011 – by a full 367% in comparison to 2010, with total revenues of nearly LVL 4 million.

In terms of various segments in this process, the total number of signed premiums related to savings insurance policies that are linked to investment funds or the investment market increased by a factor of 4.5 over the course of the year with total revenues of LVL 3.5 million. The total number of signed premiums related to insurance with a guaranteed interest rate more than quintupled in comparison to 2010.

“As has always been the case, the greatest interest in savings life insurance in 2011 was seen at the end of the year, because just a few months later it is possible to receive the relevant tax relief that is provided for in Latvian law,” says Vorons. “That’s why we want to encourage our clients to avail of this main long-term savings advantage and to file their annual income declaration with the State Revenue Service.”

AAS Citadele Life is an AS Citadele Bank subsidiary which offers savings life insurance services, life insurance, accident insurance, and life insurance for borrowers.

Citadele Life was registered in the Latvian Company Register on December 2, 2005 and received its license to provide accident insurance on June 8, 2007. The registered and financed equity capital of Citadele Life is LVL 3 million.

About Citadele Bank

Citadele is a full-service financial group for both private individuals and companies offering complete portfolio of banking, financial and private capital management services in its home market Latvia and through its international presence. Citadele is the only collaboration partner of American Express^® in Latvia and Lithuania who is entitled to issue American Express credit cards. Presently 75% of Citadele Bank is possessed by VAS “Privatizācijas aģentūra” (State JSC Privatization Agency) and 25% plus one share is possessed by the European Bank for Reconstruction and Development.

“The Bank of Latvia has chosen the most active banks in Latvia to determine the inter-banking money market in lats, just as the European Banking Federation chooses Europe's leading banks to calculate the EURIBOR inter-banking network,” explains the member of Citadele's Management board, Philip Allard. “This decision by the Bank of Latvia shows that Citadele is taking an increasingly important place in Latvia's financial system and that the central bank considers Citadele to be an important participant therein.”

The Bank of Latvia has been calculating monetary market indices since 1998, doing so on the basis of the interest rates which are charged by the most active banks in the market. The RIGIBID and RIGIBOR indices currently are based on data from the Citadele Bank, the DNB Bank, the Latvian Mortgage and Land Bank, the Nordea Bank, the SEB Bank, Swedbank and the UniCredit Bank.

According to the exchange, Kurmiņš engaged in the largest number of securities transactions among all Latvian brokers in 2011 – more than 1,600 transactions in all.  The exchange adds that Kurmiņš also ensured the highest revenues in trading, which involves shares from Baltic companies – EUR 2.5 million.  Before being declared Broker of the Year, Kurmiņš posted one of the best results from a poll held among brokers, and he also received much praise from the exchange's Trading Department.

The Broker of the Year award has been presented each year for the past 15 years, and it allows the exchange to thank the best securities sales specialist of the past year, as well as to enhance the prestige of brokers in society.

The special prize from the exchange in 2011 was granted to Olainfarm board member Salvis Lapiņš, who responded to the exchange's invitation to take part in the first Web-based investor conference in the history of Latvia's securities market.  These conferences are common at the international level in terms of allowing exchanges to communicate with investors, promote high-quality dialogue, and enhance their recognisability.  The first seminar was an important step in improving the quality of investor relations among Latvian companies, and it also brought the exchange closer to Western standards in the area of investor relations.  After the Olainfarm Web seminar, the exchange received many positive responses from investors, particularly foreign ones.

The special exchange prize has been offered ever since 2000 to people who have made a particular investment in the Latvian securities market and its development.  In the past, the award has been received by people who work for banks or in the academic environment, as well as by media representatives and companies.

“During the last year agriculture businesses have become very active in implementing new viable and prosperous projects. We see that agriculture businesses in Latvia are becoming increasingly active in implementing projects and they find new, modern solutions for improving production efficiency and thus boosting their competitiveness also in the European market. Construction of biogas production plants has become especially popular. Activity in this field has become so popular also thanks to state aid which enables farmers to make efficient use of agricultural waste by producing heat and electricity and thus decreasing production costs and generating additional income,” says Agnese Paegle, Head of Corporate Banking Sector at Citadele Bank.

Ms. Paegle emphasizes that programs implemented by Rural Support Service, EU funding and support from banks played a great role in Latvian farmers’ activity.

To improve business development, Citadele Bank will continue exercising active corporate lending in 2012. Citadele issues funding from the European Investment Bank and also offers Micro-loans for small and medium enterprises.

These instruments enable entrepreneurs to receive loan funds at a fixed long-term interest rate. Besides, Micro-loan is available without real estate collateral. Both types of funding can also be combined with support instruments offered by the EU or the State.

EIB funding is available at a fixed interest rate for a period of up to three years; the maximum lending period for these funds is 10 years. The amount of funding available for one company is from 4 thousand to 12.5 million Euros.

Micro-loan, on its part, is available at a fixed rate for a period of up to 5 years and without real estate collateral. The amount of funds available for one company is from 3 thousand to 30 thousand Lats or an equivalent in Euros or US Dollars.

Several hundreds of companies in Latvia have chosen Citadele Bank as their collaboration partner in corporate lending in 2011.

About Citadele Bank

Citadele is the largest local bank and it is also represented in Estonia, Lithuania, Germany, Sweden, Switzerland, Azerbaijan, Belarus, Kazakhstan, Moldova and Ukraine. Citadele is the only collaboration partner of American Express^® in Latvia and Lithuania who is entitled to issue American Express credit cards. Presently 75% of Citadele Bank is possessed by VAS “Privatizācijas aģentūra” (State JSC Privatization Agency) and 25% plus one share is possessed by the European Bank for Reconstruction and Development.

At this time SIA Sabiedrība Mārupe has completed the first stage of the project. Between May 2011 and mid-January 2012, the company using Citadele Bank’s co-financing built a 1 MW biogas cogeneration plant, a 6 MW heating boiler, a system to accumulate heat, and technologies which will allow the company to store up the heat that it produces so that it can be used for greenhouses. Preparations have been made for the construction of a 2 MW natural gas cogeneration plant.

“This project will help us to reduce the cost of producing heat, as well as the cost of growing tomatoes and cucumbers,” says SIA Sabiedrība Mārupe director Kaspars Brunovskis. “We will be able to maintain an even temperature in our greenhouses and thus increase output.”

Brunovskis adds that the biogas cogeneration plant makes it possible to make more efficient use of agricultural waste products, using them in an environmentally friendly way to produce electricity and heat. “That, in turn, will allow us to earn additional money by selling electricity,” he explains. “Because a number of private homes have been built around the territory of Sabiedrība Mārupe in recent years, a fundamental plus in relation to this project is that we are reducing the stench which used to be a problem when manure was spread on fields and plant waste was composted. That is important both for the environment and for the quality of life of local residents.”

The company director goes on to say that “with this project, we are drawing closer in terms of manufacturing effectiveness to vegetable growers in European countries such as the Netherlands. The heat that is needed for vegetable growing in Holland has long since been provided via the help of cogeneration plants.”

“Biogas production has become an increasingly popular solution for manufacturing and the use of resources so that Latvian companies in the agricultural sector can improve efficiency,” says Citadele Bank Corporate Banking Sector head Agnese Paegle. “This is a process which opens up new horizons for companies. Our experience tell us that it was agricultural companies in specific which were the most active in terms of seeking out the most sustainable projects in 2011. This project will open up new growth opportunities for as stable and well known company in Latvia as Sabiedrība Mārupe.”

Citadele is continuing to provide co-financing to Sabiedrība Mārupe so that it can pursue the second stage of the project. It involves the construction of a 2 MW natural gas cogeneration plant, as well as a CO2 production system.

The total cost of the biogas cogeneration plant and the natural gas cogeneration plant is LVL 5.2 million (including VAT), and Citadele has provided LVL 4.7 million in financing.

The client for the biogas cogeneration plant is SIA Zaļā Mārupe, and the construction work is being done by SIA Filter. The client for the natural gas cogeneration plant is SIA Mārupes Siltumnīcas.

About Citadele Bank

Citadele is the largest local bank in Latvia and it is also represented in Estonia, Lithuania, Germany, Sweden, Switzerland, Azerbaijan, Belarus, Kazakhstan, Moldova and Ukraine. Citadele is the only collaboration partner of American Express^® in Latvia and Lithuania who is entitled to issue American Express credit cards. Presently 75% of Citadele Bank is possessed by VAS “Privatizācijas aģentūra” (State JSC Privatization Agency) and 25% plus one share is possessed by the European Bank for Reconstruction and Development.

About SIA Sabiedrība Mārupe

SIA Sabiedrība Mārupe is a well known company in Latvia with much experience in agricultural production. The company manages 1,648 hectares of farmland in four parishes. It and its subsidiaries employ some 300 people. The subsidiary SIA Mārupes Siltumnīcas is the leading producer of vegetables in covered areas in Latvia. It has 9.6 hectares of greenhouses, with 6 ha used to grow cucumbers and 3.6 ha use to grow tomatoes. In 2008, the company Mārupes Siltumnīcas joined the Baltijas Dārzeņi co-operative, and is the largest supplier of vegetables at this time in terms of turnover.

75% of the compensation was paid out via a transfer to a client account at Citadele or any other bank.

As announced, the Lithuanian Deposits and Investments Insurance Fund decided to assign the task of paying out compensation to individual clients of Snoras in Latvia to the Citadele Bank. Legal entities, in turn, are able to receive compensation via AS UniCredit Bank.

Money for the compensation comes from the Lithuanian Deposits and Investments Insurance Fund “Indeliu ir Investiciju draudimas”, and it does not depend on Citadele Bank operations and vice versa. The bank is merely an instrument for the payment of the compensation.

Clients can receive their guaranteed compensation in lats and in a single payment.

Compensation is available both to residents and non-residents who are clients of the Snoras Bank’s branch in Latvia. According to Lithuanian law, Snoras clients are able to receive guaranteed compensation up to EUR 100,000 (about LVL 70,000).

People who receive compensation can choose to have it transferred to an account at Citadele Bank or any other bank, or to have it paid out in cash.

Those clients who use the Citadele online banking are able to file instructions on the payment of compensation via online banking. Such compensation can be transferred to an account at Citadele Bank or at any other bank.

Those people who do not use Citadele online banking services have to visit Citadele Bank headquarters at Republikas Square 2A, Riga, bringing along a passport for identification purposes. If a representative of a client comes to the bank, then he or she will have to bring also notarised authorisation. People can register for a visit at www.citadele.lv in order to avoid a queue in the process.

According to Lithuanian law, clients retain the right to compensation for a period of five years.

More information for individual clients: Citadele Bank’s Customer Support Centres 24/7 hotline + 371 67010000; www.citadele.lv.

More information for legal entities: UniCredit Bank’s hotline +371 67085569; www.unicreditbank.lv.

3D Secure system was introduced in order for making online payments by payment cards to be safer than ever before. The system carries out two important functions. Firstly, it prohibits making unsanctioned payments on the Internet by a payment card, which belongs to someone else. This is because shoppers are required to enter additional identification data. Secondly, it enables identifying traders who are registered in 3D Secure Internet purchases system. Thus traders have larger responsibilities toward the client.

Thousands of online stores across the world have joined 3D Secure system and their number continues to increase. “Verified by Visa” logotype, located on the website, indicates that an online store has joined 3D Secure system and that it supports secure payments by VISA and VISA Electron.

- How is 3D Secure system going to change online payment procedures?
“Holders of VISA and VISA Electron cards who use the Citadele online banking, when making payments at online stores registered with 3D Secure, will be asked to enter not just their name, card number, expiration date and security code (CVV2) , but also their Citadele online banking user name and authorisation code. Actually this is an additional password, which is provided especially for making online payments and it serves somewhat similarly to a PIN code. Such additional authorization prevents possibilities of fraud at online stores and significantly increases the level of security and protection of payment cards”, explains Citadele’s Board member Guntis Beļavskis.

“In comparison to other banks, we have provided our clients with an additional safety net – Citadele clients will not have to enter their online banking password when making a payment, thus protecting them even more against the ability of malicious people to gain unauthorised access to our clients’ online banking,” comments G. Beļavskis.

The bank would like to remind its clients that secure purchases require use of the Citadele online banking connection. Clients who do not use Citadele online banking are asked to visit any Citadele branch to arrange for one.

The bank offers the 3D Secure system at no cost to the client.

Once the 3D Secure system is in place, clients with VISA and VISA Electron cards will also be able to purchase goods and services from Internet vendors which have not registered with the 3D Secure system. In such cases, not additional ID data will be requested, but it will also show that the shopping is not as safe as it is in relation to shops, which use the security system.

Citadele linked its MasterCard and Maestro cards to the 3D Secure system on November 1 of this year. American Express cards are to be linked to the system soon, as well.

Nomura recommends restarting working at selling the bank when stability is recovered in the market and investors are ready to make long-term investments.

“Presently investors are not ready to make long-term investments into the banking sector due to the financial situation in Europe. Even though Citadele bank’s sales process was launched successfully, the negative backdrop proved to be too influential. Several investors stated that they would be ready to re-launch the bank’s sales transaction as the situation becomes more stable,” points out Nomura.

“The Latvian government resolution on postponing selling of Citadele bank’s shares owned by the Latvian State and returning back to this matter when more advantageous conditions appear in the market is a logical step and it is in line with the interests of the society and State. Until further decisions are adopted by shareholders, Citadele will remain to be in the hands of the existing ones, i.e. Latvian government and the EBRD. It will continue developing steadily just like previously,” says Juris Jākobsons, Chairman of Citadele bank’s Board.

“Selling Citadele’s shares at the highest price possible is in the interests of the society and State. Simultaneously, it is important for the bank, its clients and the society for Citadele to acquire a stable investor who is ready to make long-term investments in the bank’s development. Therefore the government's decision to return to the matter on attracting an investor, when market conditions in Europe are more advantageous for selling the bank’s shares, is reasonable," explains J. Jākobsons.

Mr. Jākobsons pointed out that suspending the process of selling Citadele’s shares will not influence the bank’s activity – Citadele will carry on working and developing, it will continue providing services to retail customers, enterprises and institutions, and it will also carry on working in asset management sector, focusing mainly on the Baltic market. Citadele will also carry one repaying the support deposited by the Latvian State.

75% (minus one share) of Citadele Bank shares are owned by Latvian State via the state owned Privatization Agency and the European Bank for Reconstruction and Development possesses 25% plus one of its shares.

As announced, Citadele Bank returned to profits faster than had been anticipated in the restructuring plan this year – already in the first half of 2011. Third-quarter results show that profits rose from LVL 182,000 to LVL 3.4 million. In comparison to 2010, Citadele has substantially increased net interest revenues. The bank’s liquidity ratio is a healthy 62.8%, which is twice more than requested 30% by the regulator.

Since August 2010 Citadele bank has succeeded four times at partially repaying to the State the aid received by the government of Latvia in the shape of a term deposit. The amount of the aid paid back is 157.1 million Euros or 110.4 Lats. During the period from August 2010 to the December 2011, Citadele has paid the State a total of EUR 23.9 million (LVL 16.8 million) in interest for the received aid, which includes State term deposits and the subordinated loan.

The outstanding amount of State deposits that Citadele has to repay (not counting interest) is EUR 46.6 million (LVL 32.8 million). Citadele Bank will repay that money next year.

The bank’s total assets as of September 30, 2011, amounted to LVL 1.2 billion (LVL 1.4 billion for the group). The amount of outstanding loans was LVL 621 million and LVL 713 million respectively for the bank and the group, while the indicators in terms of capital and reserves were LVL 85.3 million and LVL 83.0 million respectively. Total deposits at the bank at the end of Q3 amounted to LVL 980 million (LVL 1.2 billion for the group). Citadele’s capital adequacy ratio has increased in 2011. It is also higher than is predicted in the bank’s restructuring plan. Citadele bank’s vision is to become the most valuable local financial group in the Baltic States.

Citadele Bank is a universal bank in terms of the range of services offered. Main types of its services are the following: servicing of current accounts; payment cards; consumer loans and mortgage loans; term deposits for retail customers and enterprises; distribution of American Express credit cards in Latvia and Lithuania; development of 2nd and 3rd level pension savings; provision of loans and refinancing services to enterprises; guarantees and letters of credit; leasing and factoring; 3rd level closed pension funds for enterprises; life insurance; private banking services and Concierge service; investment of funds in more than 20’000 local and foreign investment funds.

Information on suspension of the sales process of Citadele bank from State Joint Stock Company “Privatization Agency”

Today, on 27 December, the government resolved to assess the opportunities of selling the bank in October 2012 when Privatization Agency and Nomura will have prepared an evaluation of the current situation in the market and re-launching of the sales process. Amendments to the bank’s sales strategy, which were previously approved by the government, will be introduced accordingly. If the government adopts a positive resolution on re-launching the sales process of the bank in October, both – the investors who have expressed their interest as well as other potential investors will be invited to submit their proposals. Resolution on suspending selling of Citadele bank will have no impact on the bank's activity; it will continue working on the implementation of the restructuring plan. The restructuring plan provides that the State must return the bank back to the private sector in the long run. However, the restructuring plan does not provide for compulsory selling of the bank since the State must recover the maximum amount possible of the invested funds.

Sales process of the bank was launched in July this year. Nomura International, sales consultant, reached out to more than 100 applicants, and their initial proposals were received in October.

“Citadele Bank is continuing stable development. Our operating indicators are in line with the bank’s restructuring plan, and in several areas we are doing better than planned. The bank’s successful operation allow us to repay the state’s investment ahead of schedule,” says Citadele Board Chairman Juris Jākobsons.

With this payment, since August 2010 Citadele Bank has repaid to the State EUR 157.1 million (LVL 110.4 million) of the total term deposit invested by the government of Latvia.

During the period from August 2010 to the December 2011, Citadele has paid the State a total of EUR 23.9 million (LVL 16.8 million) in interest for the received aid, which includes State term deposits and the subordinated loan.

The outstanding amount of State deposits that Citadele has to repay after this instalment (not counting interest) is EUR 46.6 million (LVL 32.8 million). Citadele Bank will repay that money next year.

Information about Citadele’s operating results of the 3rd quarter of 2011
Citadele Bank returned to profits faster than had been anticipated in the restructuring plan this year – already in the first half of 2011. Third-quarter results show that profits rose from LVL 182,000 to LVL 3.4 million. In comparison to 2010, Citadele has substantially increased net interest revenues. The bank’s liquidity ratio is a healthy 62.8%, which is twice more than requested 30% by the regulator.

“We plan to complete 2011 at a profit, too,” says Jākobsons. “Citadele is finding new clients, our deposit volumes have increased, and we’re continuing to offer financial products which are unique at the Baltic level.”

Citadele’s capital adequacy ratio has increased in 2011. It is also higher than is predicted in the bank’s restructuring plan. At the end of December 2010, the bank’s level of first-level capital sufficiency was at 6.7%, and at the end of September 2011, it was at a level of 7.4%. The bank’s overall capital sufficiency indicator is at a level of 13.2% (11.0% for the group), exceeding 8% minimum level stipulated by the law.

The bank’s total assets as of September 30, 2011, amounted to LVL 1.2 billion (LVL 1.4 billion for the group). The amount of outstanding loans was LVL 621 million and LVL 713 million respectively for the bank and the group, while the indicators in terms of capital and reserves were LVL 85.3 million and LVL 83.0 million respectively. Total deposits at the bank at the end of Q3 amounted to LVL 980 million (LVL 1.2 billion for the group).

Citadele also continues to invest financing in Latvia’s economy by offering loans to companies. This has helped to absorb money from the European Union’s Structural Funds in Latvia, because many of the companies, which have received financing from Citadele have needed it to implement projects which are co-financed by the EU.

75% (minus one share) of Citadele Bank shares are owned by Latvian State via the state owned Privatization Agency and the European Bank for Reconstruction and Development possesses 25% plus one of its shares.

As announced previously, on 29 November the Citadele Bank started pay-out of the state-guaranteed reimbursement to the depositors of AS “Latvijas Krājbanka” in Latvia.

The state-guaranteed reimbursement concerns all types of funds – deposits, disbursement accounts, salary accounts, savings, including interest calculated by November 22. The compensation can be received via a transfer to an account at Citadele or any other bank, or it can be received in cash. Citadele clients who use online banking services can submit instructions via that system.

Clients who wish to withdraw more than LVL 500 in cash must contact the bank in advance, because for security reasons, the bank does not store excessive amounts of cash in its tills. People are also asked to register for a visit to the bank on www.citadele.lv or by ringing the Citadele Client Support Centre on the 24/7 number +371 6701 0000, as well as 1188. This will allow people to avoid the queue.

The funds to be disbursed to clients of Latvijas Krājbanka are guaranteed by the Latvian State.

In compliance with the Law on Deposit Guarantees, the state guarantees to reimburse the clients of Latvijas Krājbanka in the amount of 100 000 euro equivalent in lats or 70 280.40 lats. The clients are entitled to receive the guaranteed reimbursement over the course of upcoming 60 years or even up to the year 2071.

In compliance with the law, the state-guaranteed reimbursement can be received also by those clients of Latvijas Krājbanka, who are not residents of Latvia.

The clients, whose deposit amount in Latvijas Krājbanka exceed the established cap of 70 280.40, may file a creditor claim within the procedure of liquidation or insolvency procedure of Latvijas Krājbanka.

“Given the unstable economic situation in many European countries, where a series of nations and major companies are having their ratings lowered, it is only logical that ratings agencies are cautious about long term forecasts, and they are reacting to the things that are happening in European markets. Citadele’s long term rating changes are a response to the unstable situation in the European market, and long term forecasts cause everyone to be cautious. Though Citadele’s operating indicators are in line with the bank’s restructuring plan, and in several areas we are doing better than planned,” says Citadele board chairman Juris Jākobsons.

According to Moody’s Citadele’s capital adequacy ratio has increased in 2011 and is beyond minimal requirements. It is also higher than is predicted in the bank’s restructuring plan. At the end of December 2010, the bank’s level of first-level capital sufficiency was at 6.7%, and at the end of September 2011, it was at a level of 7.4%. The bank’s overall capital sufficiency indicator is at a level of 13.2% (11.0% for the group), exceeding 8% minimum level stipulated by the law. Nonetheless, the downgrade in rating reflects Moody’s opinion that the capital adequacy ratio of banks should be higher in given market situation.

During the course of 2011, Citadele engaged in targeted operations aimed at restructuring many loans issued to companies, as well as mortgage loans. This ensured higher revenues for the lending portfolio and allowed to reach sustainable balance between clients’ cash flows and loan repayments schedules. The proportion of loans in arrears for more than 90 days at Citadele is significantly lower than the average in the banking sector. Where the average in the sector is 18%, the average for Citadele is just 6% of the loan portfolio.

Citadele also returned to profits faster than had been anticipated in the restructuring plan this year – already in the first half of 2011. Third-quarter results show that profits rose from LVL 182,000 to LVL 3.4 million. In comparison to 2010, Citadele has substantially increased net interest revenues. The bank’s liquidity ratio is a healthy 62.8%, which is twice more than requested 30% by the regulator.

“We plan to complete 2011 at a profit, too,” says Jākobsons. “Citadele is finding new clients, our deposit volumes have increased, and we’re continuing to offer financial products which are unique at the Baltic level. We have successfully provided state-guaranteed compensation to Latvijas Krājbanka clients, and we have also begun to pay compensation guaranteed by the Lithuanian government to clients of the Latvian branch of the Snoras Bank.”

The bank’s total assets as of September 30, 2011, amounted to LVL 1.2 billion (LVL 1.4 billion for the group). The amount of outstanding loans was LVL 621 million and LVL 713 million respectively for the bank and the group, while the indicators in terms of capital and reserves were LVL 85.3 million and LVL 83.0 million respectively. Total deposits at the bank at the end of Q3 amounted to LVL 980 million (LVL 1.2 billion for the group).

During the third quarter of the year, Citadele repaid EUR 48.7 million (LVL 34.2 million) to the Latvian Finance Ministry. Of this money, EUR 46.6 million (LVL 32.8 million) represented financing which the state had invested in the bank as a term investment, while EUR 2.1 million (LVL 1.5 million) represented third-quarter interest payments to the state for its deposit. This was the third payment over the course of the past year which Citadele has made to the state.

Citadele also continues to invest financing in Latvia’s economy by offering loans to companies. This has helped to absorb money from the European Union’s Structural Funds in Latvia, because many of the companies, which have received financing from Citadele have needed it to implement projects which are co-financed by the EU.

Citadele Bank major shareholders are the Latvian State (75% via the state owned company Privatization agency) and EBRD (25% plus one share).

Compensation is available both to residents and non-residents who are clients of the Snoras Bank’s branch in Latvia. According to Lithuanian law, Snoras clients will be able to receive guaranteed compensation up to EUR 100,000 (about LVL 70,000).

People who receive compensation can choose to have it transferred to an account at Citadele Bank or any other bank, or to have it paid out in cash. Those clients who use the Citadele online banking will be able to file instructions on the payment of compensation via online banking. Such compensation can be transferred to an account at Citadele Bank or at any other bank.

Those people who do not use Citadele online banking services will have to visit Citadele Bank headquarters at Republikas Square 2A, Riga, bringing along a passport for identification purposes. If a representative of a client comes to the bank, then he or she will have to bring also notarised authorisation. People can register for a visit at www.citadele.lv in order to avoid a queue in the process.

As has been reported in the past, the Lithuanian Deposits and Investments Insurance Fund decided to assign the task of paying out compensation to individual clients of Snoras in Latvia to the Citadele Bank. Legal entities, in turn, will be able to receive compensation via AS UniCredit Bank.

Money for the compensation will come from the Lithuanian Deposits and Investments Insurance Fund “Indeliu ir Investiciju draudimas”, and it does not depend on Citadele Bank operations and vice versa. The bank is merely an instrument for the payment of the compensation.

According to Lithuanian law, clients retain the right to compensation for a period of five years.

More information for individual clients: Citadele Bank’s Customer Support Centres 24/7 hotline + 371 67010000; www.citadele.lv.

More information for legal entities: UniCredit Bank’s hotline +371 67085569; www.unicreditbank.lv.

“We very much welcome the fact that the Lithuanian Deposits and Investments Insurance Fund has entrusted the Citadele Bank with the payment of compensation to individual clients from the Latvian branch of the Snoras Bank. In technological terms, we are prepared to start paying that compensation to residents. We will announce the date upon which we will start this process once we receive a client register from the Lithuanian Deposits and Investments Insurance Fund which shows the amount of money that each client is to receive, and once we have access to financing from the fund. We would like to call on people to monitor information about this on the Citadele homepage,” said Citadele board chairman Juris Jākobsons.

The board chairman said that it is already clear that the clients of the Snoras Bank branch in Latvia, like clients of Latvijas Krājbanka, will be able to receive the compensation in cash or in the form of a transfer to an account at Citadele or any other bank. Those clients who use Citadele online banking services will be able to file instructions on payment via online banking. Those who do not use Citadele online banking will have to visit bank headquarters at Republikas Square 2A in Rīga, and they must bring along their passport for identification purposes.

Compensation to the clients of the Snoras Bank branch in Latvia will be paid from the Lithuanian Deposits and Investments Insurance Fund, or “Indeliu ir Investiciju draudimas.” The financing will be kept off the Citadele books, which means that the compensation will not depend on Citadele operations and vice versa. The bank is simply an instrument which will ensure the payment of compensation to depositors.

Snoras clients in Latvia will be able to receive guaranteed compensation up to EUR 100,000 (LVL 70,000). As is the case with Latvijas Krājbanka clients, Snoras clients will be able to receive their compensation only in lats and only through a single payment.

Lithuanian law states, that the right of clients to receive compensation remains in place for five years.

As announced previously, on 29 November the Citadele Bank started pay-out of the state-guaranteed reimbursement to the depositors of AS “Latvijas Krājbanka” in Latvia.

Money can be received in person in the branch offices of Citadele Bank in Latvia or via Citadele online banking. Clients can receive the money in the account of Citadele or another bank, or to receive it in cash.

If one wishes to receive sums that exceed 500 Lats in cash, he or she must apply for it at Citadele in advance because the Bank does not keep large amounts of cash stored at one location due to safety reasons.

In order to avoid standing in queues, Citadele Bank would like to encourage making an appointment for the visit beforehand on Citadele’s website at www.citadele.lv or by calling Citadele’s Customer Support Centre 24/7 hotline at + 371 67010000 or 1188.

In order to ensure safety for clients, State Police are on duty at all branch offices of Citadele. For the purpose of providing prompt and convenient attendance for existing clients of Citadele who do not have deposits with Latvijas Krājbanka as well as clients of Latvijas Krājbanka, Citadele Bank service people who have registered their appointment on the internet beforehand separately from the ones who arrive without prior registration; clients of Citadele Bank who have no deposits with Latvijas Krājbanka are attended separately as well.

The funds to be disbursed to clients of Latvijas Krājbanka are guaranteed by the State and these funds are supplied to Citadele from the State Deposit Guarantee Fund. This funding is held separately from Citadele’s balance. Therefore the compensation money does not depend on Citadele’s activity and vice versa – Citadele’s activity does not depend on these funds. The Bank serves as an instrument for ensuring disbursement of compensation to depositors.

In compliance with the Law on Deposit Guarantees, the state guarantees to reimburse the clients of “Latvijas Krājbanka” in the amount of 100 000 euro equivalent in lats or 70 280.40 lats. The state-guaranteed reimbursement concerns all types of funds – deposits, disbursement accounts, salary accounts, savings. The clients are entitled to receive the guaranteed reimbursement over the course of upcoming 60 years or even up to the year 2071.

Overall, money reimbursement is due to approximately 235 000 individuals and legal entities.

In compliance with the law, the state-guaranteed reimbursement can be received also by those clients of “Latvijas Krājbanka”, who are not residents of Latvia.

The clients, whose deposit amount in “Latvijas Krājbanka” exceed the established cap of 70 280.40, may file a creditor claim within the procedure of liquidation or insolvency procedure of “Latvijas Krājbanka”.

Currencies for payments: LVL, EUR, USD.

Information needed to make payments:
1) The recipient’s account number, LV38PARX0000035440005
2) The recipient: Latvijas Krājbanka, Reg. No. 40003098527
3) The goal of the transfer:

• The name, surname or corporate name of the recipient
• The personal code or registration number of the recipient
• The number of the loan account or credit card/overdraft limit agreement (or account number)

Latvijas Krājbanka has opened an account at Citadele, and ever since November 30, Latvijas Krājbanka clients have been able to transfer loan repayments via that account. Starting today, people can make loan repayments via a transfer to the Latvijas Krājbanka account or in cash at any Citadele branch in Latvia.

As announced previously, on 29 November the Citadele Bank started pay-out of the state-guaranteed reimbursement to the depositors of AS “Latvijas Krājbanka” in Latvia.

Money can be received in person in the branch offices of Citadele Bank in Latvia or via Citadele online banking. Clients can receive the money in the account of Citadele or another bank, or to receive it in cash.

If one wishes to receive sums that exceed 500 Lats in cash, he or she must apply for it at Citadele in advance because the Bank does not keep large amounts of cash stored at one location due to safety reasons.

In order to avoid standing in queues, Citadele Bank would like to encourage making an appointment for the visit beforehand on Citadele’s website at www.citadele.lv or by calling Citadele’s Customer Support Centre 24/7 hotline at + 371 67010000 or 1188.

In order to ensure safety for clients, State Police are on duty at all branch offices of Citadele. For the purpose of providing prompt and convenient attendance for existing clients of Citadele who do not have deposits with Latvijas Krājbanka as well as clients of Latvijas Krājbanka, Citadele Bank service people who have registered their appointment on the internet beforehand separately from the ones who arrive without prior registration; clients of Citadele Bank who have no deposits with Latvijas Krājbanka are attended separately as well.

The funds to be disbursed to clients of Latvijas Krājbanka are guaranteed by the State and these funds are supplied to Citadele from the State Deposit Guarantee Fund. This funding is held separately from Citadele’s balance. Therefore the compensation money does not depend on Citadele’s activity and vice versa – Citadele’s activity does not depend on these funds. The Bank serves as an instrument for ensuring disbursement of compensation to depositors.

In compliance with the Law on Deposit Guarantees, the state guarantees to reimburse the clients of “Latvijas Krājbanka” in the amount of 100 000 euro equivalent in lats or 70 280.40 lats. The state-guaranteed reimbursement concerns all types of funds – deposits, disbursement accounts, salary accounts, savings. The clients are entitled to receive the guaranteed reimbursement over the course of upcoming 60 years or even up to the year 2071.

Overall, money reimbursement is due to approximately 235 000 individuals and legal entities.

In compliance with the law, the state-guaranteed reimbursement can be received also by those clients of “Latvijas Krājbanka”, who are not residents of Latvia.

The clients, whose deposit amount in “Latvijas Krājbanka” exceed the established cap of 70 280.40, may file a creditor claim within the procedure of liquidation or insolvency procedure of “Latvijas Krājbanka”.

As announced previously, on 29 November the Citadele Bank started pay-out of the state-guaranteed reimbursement to the depositors of AS “Latvijas Krājbanka” in Latvia.

Money can be received in person in the branch offices of Citadele Bank in Latvia or via Citadele online banking. Clients can receive the money in the account of Citadele or another bank, or to receive it in cash.

If one wishes to receive sums that exceed 500 Lats in cash, he or she must apply for it at Citadele in advance because the Bank does not keep large amounts of cash stored at one location due to safety reasons.

In order to avoid standing in queues, Citadele Bank would like to encourage making an appointment for the visit beforehand on Citadele’s website at www.citadele.lv or by calling Citadele’s Customer Support Centre 24/7 hotline at + 371 67010000 or 1188.

In order to ensure safety for clients, State Police are on duty at all branch offices of Citadele. For the purpose of providing prompt and convenient attendance for existing clients of Citadele who do not have deposits with Latvijas Krājbanka as well as clients of Latvijas Krājbanka, Citadele Bank service people who have registered their appointment on the internet beforehand separately from the ones who arrive without prior registration; clients of Citadele Bank who have no deposits with Latvijas Krājbanka are attended separately as well.

The funds to be disbursed to clients of Latvijas Krājbanka are guaranteed by the State and these funds are supplied to Citadele from the State Deposit Guarantee Fund. This funding is held separately from Citadele’s balance. Therefore the compensation money does not depend on Citadele’s activity and vice versa – Citadele’s activity does not depend on these funds. The Bank serves as an instrument for ensuring disbursement of compensation to depositors.

In compliance with the Law on Deposit Guarantees, the state guarantees to reimburse the clients of “Latvijas Krājbanka” in the amount of 100 000 euro equivalent in lats or 70 280.40 lats. The state-guaranteed reimbursement concerns all types of funds – deposits, disbursement accounts, salary accounts, savings. The clients are entitled to receive the guaranteed reimbursement over the course of upcoming 60 years or even up to the year 2071.

Overall, money reimbursement is due to approximately 235 000 individuals and legal entities.

In compliance with the law, the state-guaranteed reimbursement can be received also by those clients of “Latvijas Krājbanka”, who are not residents of Latvia.

The clients, whose deposit amount in “Latvijas Krājbanka” exceed the established cap of 70 280.40, may file a creditor claim within the procedure of liquidation or insolvency procedure of “Latvijas Krājbanka”.

During the visits, consultants from the bank will offer residents and companies a chance to prepare all necessary documents to open a bank account and to access online banking services. This will allow them to submit instructions related to the payment of state-guaranteed compensation without having to visit a bank branch, and they will be allowed to indicate any account from any bank for that purpose. Citadele consultants will also offer information about the payment of the compensation and help those residents who have never used the Internet to deal with the payments in the online banking system.

Local residents will also be able to open a Citadele account at no charge, ask for online banking services and submit an application for a payment card. After five business days, when the card is ready, a Citadele consultant will deliver it to the client.

Businesses will have free access to a set of services for small businesses, which includes one or more payment accounts, the Maestro debit card, an online banking connection, one Digipass access apparatus, SMS banking services, as well as the opportunity to make payments in lats during the first six months within the Citadele system and in Latvia with no commission fee and for a sum of up to LVL 50,000.

The travelling consultants will not have the security and technologies needed to make cash payments or to provide for transfers, so that will not be possible. The instructions related to the state compensation can be submitted once the Citadele online banking services are hooked up.

Today Citadele consultants are in Alūksne, and future destinations will include Cesvaine on December 6, Valka on December 7, and Jaunpiebalga on December 8. Other towns which consultants plan to visit in the near future include Kuldīga, Mazsalaca, Smiltene, Dobele, Ape, Krāslava, Dagda, Lielvārde, and Sigulda.

The trips are being organised in partnership with local governments, and Citadele asks other local governments to inform the bank if they, too, would like a visit from a Citadele consultant so that agreement can be reached on when that might happen.

As announced previously, on 29 November the Citadele Bank started pay-out of the state-guaranteed reimbursement to the depositors of AS “Latvijas Krājbanka” in Latvia.

Money can be received in person in the branch offices of Citadele Bank in Latvia or via Citadele online banking. Clients can receive the money in the account of Citadele or another bank, or to receive it in cash.

If one wishes to receive sums that exceed 500 Lats in cash, he or she must apply for it at Citadele in advance because the Bank does not keep large amounts of cash stored at one location due to safety reasons.

In order to avoid standing in queues, Citadele Bank would like to encourage making an appointment for the visit beforehand on Citadele’s website at www.citadele.lv or by calling Citadele’s Customer Support Centre 24/7 hotline at + 371 67010000 or 1188.

In order to ensure safety for clients, State Police are on duty at all branch offices of Citadele. For the purpose of providing prompt and convenient attendance for existing clients of Citadele who do not have deposits with Latvijas Krājbanka as well as clients of Latvijas Krājbanka, Citadele Bank service people who have registered their appointment on the internet beforehand separately from the ones who arrive without prior registration; clients of Citadele Bank who have no deposits with Latvijas Krājbanka are attended separately as well.

The funds to be disbursed to clients of Latvijas Krājbanka are guaranteed by the State and these funds are supplied to Citadele from the State Deposit Guarantee Fund. This funding is held separately from Citadele’s balance. Therefore the compensation money does not depend on Citadele’s activity and vice versa – Citadele’s activity does not depend on these funds. The Bank serves as an instrument for ensuring disbursement of compensation to depositors.

In compliance with the Law on Deposit Guarantees, the state guarantees to reimburse the clients of “Latvijas Krājbanka” in the amount of 100 000 euro equivalent in lats or 70 280.40 lats. The state-guaranteed reimbursement concerns all types of funds – deposits, disbursement accounts, salary accounts, savings. The clients are entitled to receive the guaranteed reimbursement over the course of upcoming 60 years or even up to the year 2071.

Overall, money reimbursement is due to approximately 235 000 individuals and legal entities.

In compliance with the law, the state-guaranteed reimbursement can be received also by those clients of “Latvijas Krājbanka”, who are not residents of Latvia.

The clients, whose deposit amount in “Latvijas Krājbanka” exceed the established cap of 70 280.40, may file a creditor claim within the procedure of liquidation or insolvency procedure of “Latvijas Krājbanka”.

As announced previously, on 29 November the Citadele Bank started pay-out of the state-guaranteed reimbursement to the depositors of AS “Latvijas Krājbanka” in Latvia.

Money can be received in person in the branch offices of Citadele Bank in Latvia or via Citadele online banking. Clients can receive the money in the account of Citadele or another bank, or to receive it in cash.

If one wishes to receive sums that exceed 500 Lats in cash, he or she must apply for it at Citadele in advance because the Bank does not keep large amounts of cash stored at one location due to safety reasons.

In order to avoid standing in queues, Citadele Bank would like to encourage making an appointment for the visit beforehand on Citadele’s website at www.citadele.lv or by calling Citadele’s Customer Support Centre 24/7 hotline at + 371 67010000 or 1188.

In order to ensure safety for clients, State Police are on duty at all branch offices of Citadele. For the purpose of providing prompt and convenient attendance for existing clients of Citadele who do not have deposits with Latvijas Krājbanka as well as clients of Latvijas Krājbanka, Citadele Bank service people who have registered their appointment on the internet beforehand separately from the ones who arrive without prior registration; clients of Citadele Bank who have no deposits with Latvijas Krājbanka are attended separately as well.

The funds to be disbursed to clients of Latvijas Krājbanka are guaranteed by the State and these funds are supplied to Citadele from the State Deposit Guarantee Fund. This funding is held separately from Citadele’s balance. Therefore the compensation money does not depend on Citadele’s activity and vice versa – Citadele’s activity does not depend on these funds. The Bank serves as an instrument for ensuring disbursement of compensation to depositors.

In compliance with the Law on Deposit Guarantees, the state guarantees to reimburse the clients of “Latvijas Krājbanka” in the amount of 100 000 euro equivalent in lats or 70 280.40 lats. The state-guaranteed reimbursement concerns all types of funds – deposits, disbursement accounts, salary accounts, savings. The clients are entitled to receive the guaranteed reimbursement over the course of upcoming 60 years or even up to the year 2071.

Overall, money reimbursement is due to approximately 235 000 individuals and legal entities.

In compliance with the law, the state-guaranteed reimbursement can be received also by those clients of “Latvijas Krājbanka”, who are not residents of Latvia.

The clients, whose deposit amount in “Latvijas Krājbanka” exceed the established cap of 70 280.40, may file a creditor claim within the procedure of liquidation or insolvency procedure of “Latvijas Krājbanka”.

“Even though the flow of people at the Bank’s branch offices was much bigger today than usually, we have generally been able to ensure attendance of all clients by working actively,” comments Guntis Beļavskis, Member of Citadele’s Board.

Regardless of encouragements to refrain from hurrying to the Bank during the first days of disbursement, people started gathering at some branch offices during the night and early in the morning before business hours. This resulted in queues in the morning. However queues had decreased significantly and even disappeared after lunch.

We would like to encourage all clients of Krājbanka who plan to visit the Bank within the nearest couple of days to register for an appointment on Citadele’s website at www.citadele.lv just like the 16’900 people who have already done this. You will be able to select the most convenient time for your appointment with the Bank upon registration.

We would like to encourage residents who are not in immediate need of money to refrain from hurrying to the Bank in order to enable people who are presently without means of subsistence and companies which are facing limited solvency due to their funds being frozen with Krājbanka receive compensation first.

We would also like to remind that Citadele’s clients who have access to the internet bank are welcome to place their orders for receiving money via their internet bank profiles.

In order to ensure safety for our clients, State Police are on duty at all branch offices of Citadele. For the purpose of providing prompt and convenient attendance for existing clients of Citadele who do not have deposits with Latvijas Krājbanka as well as clients of Latvijas Krājbanka, we service people who have registered their appointment on the internet beforehand separately from the ones who arrive without prior registration; clients of Citadele banka who have no deposits with Latvijas Krājbanka are attended separately as well.

As announced previously, the funds to be disbursed to clients of Latvijas Krājbanka are guaranteed by the State and these funds are supplied to Citadele from the State Deposit Guarantee Fund. This funding is held separately from Citadele’s balance. Therefore the compensation money does not depend on Citadele’s activity and vice versa – Citadele’s activity does not depend on these funds. The Bank serves as an instrument for ensuring disbursement of compensation to depositors.

The State of Latvia guarantees compensation to Krājbanka’s clients in the amount of maximum 100 thousand Euros (70’280.40 Lats). Legislation provides that clients will maintain their rights to receive this money for 60 years.

State guaranteed compensation applies to all assets – deposits, bank accounts, salary accounts, savings accounts (including interest) calculated before 22 November. In accordance with the Law on Deposit Guarantees, funds are disbursed in Latvian Lats.

You are welcome to receive money by means of a wire transfer to an existing bank account at Citadele or a bank account at any other bank; money can also be collected in cash. We would like to remind that the whole sum is granted in a single payment. Therefore money cannot be partly transferred to your bank account and partly received in cash. Reminder: if you wish to receive sums that exceed 500 Lats in cash, you must apply for it at Citadele or via our website beforehand because the Bank does not keep large amounts of cash stored at one location due to safety reasons.

Funds to be disbursed to Latvijas Krājbanka depositors are provided to Citadele Bank by the State from Deposit Guarantee Fund. This funding is held separately from Citadele’s balance. Therefore the compensation money does not depend on Citadele’s activity and vice versa – Citadele’s activity does not depend on these funds. The Bank serves as an instrument for ensuring disbursement of compensation to depositors.

“To ensure a convenient service for clients, we have established a system for arranging a visit on the website of Citadele bank. By arranging a visit in advance, people can save time and avoid standing in line. As not all residents have an internet connection at their disposal, the visit can be arranged also by calling the Citadele Client Support Centre or 1188,” tells the Member of the Board of Citadele bank Kaspars Cikmačs.

Please, take into account that upon making the arrangements over 1188, you will have to give your personal information.
We are inviting the residents to enjoy the opportunity of accessing internet in local libraries to arrange a visit.

By filling in the contact information in the online system, you can choose the most convenient branch office in Latvia, the time of visit, and the preferable method of receiving the money. It can be arranged also via telephone by calling 1188 or the Citadele Client Support Centre employees, who will fill in the online form according to the client’s needs.

The system will show only the dates and times, which are available at the time of arranging the visit.

As it has already been reported, the bank Citadele has a total of 42 branch offices and client service centres across Latvia. The network of the bank is among the broadest in Latvia. Branch offices of the bank Citadele are located in Riga, Jūrmala, Jelgava, Ogre, Bauska, Aizkraukle, Talsi, Tukums, Saldus, Ventspils, Liepāja, Salacgrīva, Limbaži, Valmiera, Cēsis, Gulbene, Balvi, Madona, Jēkabpils, Rēzekne, Ludza, Līvāni, and Daugavpils.

More information is available at www.citadele.lv, as well as by calling the information hotline at 1188 or the Citadele Client Support Centre at 67010000.

When is the final day for receiving the money?
The depositors will be entitled to receive the guaranteed reimbursement for 60 years following the date of when the deposits have become unavailable, i.e. the depositors can address the bank up until 2071.

Where the state-guaranteed reimbursement can be received?
Money can be received either via Citadele online banking by applying for reimbursement electronically, or in person in the 42 branches of Citadele in Riga and across Latvia.

How will the money pay-out proceed?
When the bank initiates business relations with the client for the first time, it has to identify the client. It means that those clients, who at the time of receiving the reimbursement have an account in Citadele, can receive the money from Citadele in their Citadele account, by filing a request through the Citadele online banking, and they will not have to arrive at the bank in person.

Persons, who do not have an account in Citadele, may electronically or in person file an application containing information regarding whether they wish to receive the money to an account in Citadele or to an account of another bank, or in cash. However, in this case, the residents will have to arrive at the bank in person, in order to verify identity and make sure that the money is paid out to the right person.

How much money can you get back?
Citadele will pay out the amount of money, which will be indicated for each person in the Krājbanka client register to be submitted by Financial and Capital Market Commission of Latvia. In compliance with the Law on Deposit Guarantees, the State guarantees reimbursement of an amount that does not exceed the equivalent amount of 100 000 euros or 70 280.40 lats.

Will non-residents of Latvia receive the state-guaranteed reimbursement? How much?
Residents and non-residents alike are entitled to receive the guaranteed reimbursement, insofar as it does not exceed an amount in lats equivalent to 100 000 euros.

Does the reimbursement include all deposit types?
Yes, the law provides that the reimbursement is ensured for all types of deposits in all currencies to an amount that does not exceed 100 000 euros (70 280.40 lats) in all accounts combined. The state-guaranteed amount refers to deposits, disbursement account balances, salary accounts, savings accounts, etc. Reimbursement will be paid out to the full amount for deposits, which do not exceed 100 000 euros or 70 280.40 lats.

Will there be a commission fee for receiving money?
Commission fees will not be applicable for the initial transfer/ cash pay-out. It means that regardless of the bank registered in Latvia, to the account of which you want to receive the money, its transfer from the Deposit Guarantee Fund to your account will not be subject to a commission fee.

Can I receive a part of the money in cash and a part with a transfer to my bank account?
In compliance with the agreement with FKTK, money has to be paid out in one transaction, therefore both types of pay-out cannot be used and person has to choose – to receive the money to an account or in cash.

What is the reimbursement currency?
In compliance with the law, reimbursements will be paid out in lats. If the deposits were made in other currencies, money will be converted into lats. Deposits in other currencies will be calculated into lats in compliance with the currency exchange rate established by the Bank of Latvia on 22 November. Citadele will receive information about the amount of money in lats, and will accordingly pay out that money.

Does the paid-out reimbursement include also the deposit interest?
Yes, the interest profit calculated by 22 November is included in the disbursement amount to be paid out. The state-guaranteed reimbursement concerns all types of funds – deposits, disbursement accounts, salary accounts, savings.

- How is the reimbursement amount determined?
The accounting registers of Latvijas Krājbanka include specific information about the respective deposit attractor, because the deposit attractor (Latvijas Krājbanka) in its accounting registers continuously ensures information about all depositors, who are entitled to the guaranteed reimbursement in compliance with the provisions of the relevant law, and regarding the guaranteed reimbursement amount.

Will there be compensation for losses arising due to currency exchange?
The national statutory acts do not provide for this type of compensation.

Can the resources in the Deposit Guarantee Fund increase or decrease depending on the financial results of Citadele operations?
The funds intended for paying out the guaranteed reimbursements are kept separately from the Citadele balance. Therefore the reimbursement funds do not depend on the operations of Citadele and the operations of Citadele do not depend on these funds. The State has guaranteed the rights to receive guaranteed reimbursement. The Bank serves as an instrument to ensure pay-out of reimbursements to the depositors.

How many clients will receive the state-guaranteed reimbursement?
The current data shows that 235 000 persons (individuals and legal entities alike), clients of “Latvijas Krājbanka”, will receive the guaranteed reimbursement.

What will happen with those, whose deposits in Krājbanka exceed 100 000 euros (about 70 000 lats)?
What concerns the part of deposits, which exceeds 70 280.40 lats, persons will be able to file claims in capacity of a creditor within the procedure of liquidation or insolvency of a credit institution.

Where to call, if you have any questions?
Information for International customers during working hours of the bank: +371 6 701 0010.
24/7 Client Contact Centre of Citadele Bank – tel. +371 6 701 0000.
Information hotline 1188

In case of any questions or complaints regarding the pay-out or amount of reimbursement or regarding recognising a person as a depositor, please, address FKTK. Telephone: +371 67774800 and +371 67774801. In writing to: fktk@fktk.lv, Address: Kungu iela 1, Riga, LV-1050, Fax: +371 67225755.

Pursuant to the decision taken by the Council of the Financial and Capital Market Commission of Latvia (hereinafter FKTK), AS “Citadele banka” will provide pay-out of the state-guaranteed reimbursement to the depositors of AS “Latvijas Krājbanka”.

“We are interested in making sure that the residents and entrepreneurs receive the money back as soon as possible. The offer by Citadele was the best among those who applied for providing money pay-out. The main benefits in comparison with other candidates were readiness to promptly introduce the technological solution, which is necessary for pay-out of the state-guaranteed reimbursement, and the earliest ability to begin pay-out of money,” says the FKTK Office Manager Anna Dravniece.

“Just recently, the State of Latvia and its residents have demonstrated trust to Citadele, in order for us to continue working, therefore we are now particularly honoured to help out the State and the residents, who find themselves in a difficult situation,” admits the Chairman of the Board of Citadele Bank Juris Jākobsons.

“The main task of Citadele is to ensure that reimbursement of money could be started as soon as possible and that this process would be as convenient as possible for the clients of “Latvijas Krājbanka”. Meanwhile, we will make sure that service to the existing client of Citadele would not be encumbered and that during the money repayment period, convenient service is ensured to all clients,” says the Member of the Board of Citadele Bank Guntis Beļavskis.

Money can be received in person in the branch offices or via Citadele online banking
“Money can be received either in person in the branches of Citadele in Riga or across Latvia, or via Citadele online banking by applying for reimbursement electronically. To decrease the lines and to ensure utmost expedience in the process of repayment, we are inviting everybody, who has the possibility, to take advantage of the services offered by online banking and open an account in Citadele, in order to avoid crowds during the first days of money reimbursement,” stresses G. Beļavskis.

Clients, who will not have opened an account in Citadele, can electronically or in presence file an application to receive the money in the account of Citadele or another bank, or to receive it in cash. However, people will still need to come to the bank in person so that the bank employee can verify identity and make sure that the money is repaid to the right person.

“In compliance with the FKTK agreement, money to the clients is to be repaid in one transaction, therefore we are inviting the residents to choose on how they wish to receive the money: with a transfer to Citadele or another bank account or in cash,” explains G. Beļavskis.

Clients are entitled to receive guaranteed deposit amount up until 2071
In compliance with the Law on Deposit Guarantees, the state guarantees to reimburse the clients of “Latvijas Krājbanka” in the amount of 100 000 euro equivalent in lats or 70 280.40 lats. The state-guaranteed reimbursement concerns all types of funds – deposits, disbursement accounts, salary accounts, savings. The clients are entitled to receive the guaranteed reimbursement over the course of upcoming 60 years or even up to the year 2071.

In compliance with the Law on Deposit Guarantees, money will be paid out in lats. Deposits in other currencies will be calculated into lats in compliance with the currency exchange rates established by the Bank of Latvia on the day when deposits had become unavailable. Citadele will receive the “Latvijas Krājbanka” client register from FKTK containing information about the client data, as well as the amount of money to be paid out to each client, and Citadele will not have to perform any calculations or currency exchanges.

As the resources of the Deposit Guarantee Fund will not be included on the balance-sheet of Citadele, these funds are not linked and will in no way affect the operations of Citadele. “Citadele in essence is a tool for ensuring that the residents and businesses receive money from the Deposit Guarantee Fund,” explains the FKTK Office Manager Anna Dravniece.

Overall, money reimbursement is due to approximately 235 000 individuals and legal entities.

In compliance with the law, the state-guaranteed reimbursement can be received also by those clients of “Latvijas Krājbanka”, who are not residents of Latvia.

The clients, whose deposit amount in “Latvijas Krājbanka” exceed the established cap of 70 280.40, may file a creditor claim within the procedure of liquidation or insolvency procedure of “Latvijas Krājbanka”.

Where to call, if you have any questions?
Information for International customers during working hours of the bank: +371 6 701 0010.
24/7 Client Contact Centre of Citadele Bank – tel. +371 6 701 0000.
Information hotline 1188 (Banka Citadele expresses its gratitude to the information hotline 1188 for the willingness to co-operate in providing information to the residents!)

In case of any questions or complaints regarding the pay-out or amount of reimbursement or regarding recognising a person as a depositor, please, address FKTK. Telephone: +371 67774800 and +371 67774801. In writing to: fktk@fktk.lv, Address: Kungu iela 1, Riga, LV-1050, Fax: +371 67225755.

Immediately after restructuring the Parex bank in 2010 and upon establishing Citadele Bank, to which the good assets of the former Parex bank were brought over, Citadele took over also the client servicing function. Meanwhile, since the restructuring, Parex has not been dealing with client servicing.

Parex bank already since last August has not been implementing the classical banking functions, namely, it does not deal with crediting and does not accept client deposits. Since August of last year, the operations of Parex bank are mainly related to asset management and therefore in accordance with the tasks of the restructuring plan, the status of a bank does not need to be maintained in order to achieve objectives of the restructuring plan.

Citadele Bank continues its growth and is operating with profits. Citadele continues developing client servicing and offering new services and products. AS “Citadele banka” is a full service financial institution, which offers banking, financial and capital management services in the domestic market and in 10 other countries. It is the only collaboration partner of American Express® in Latvia and Lithuania having the rights to issue American Express credit cards. The objective of the bank is to become the most valuable financial group in the Baltic States.

AS “Citadele banka” has branch offices in Latvia, Estonia, Germany, and Sweden, as well as banks in Lithuania and Switzerland. Altogether it owns 19 subsidiaries operating in various financial market sectors. The bank is represented also in Azerbaijan, Kazakhstan, Ukraine, Russia, and Belarus.

Bank Citadele was established on 30 June 2010. It commenced independent operations on 1 August 2010 after successfully completing the EC-approved restructuring of AS “Parex banka”, during which the good assets of the then “Parex banka” were carried over to the newly established bank Citadele.

75 % less one share of the bank Citadele is owned by the State of Latvia in the person of “Privatizācijas aģentūra”, whereas the owner of 25 % plus one share is the European Bank for Reconstruction and Development (EBRD). In May 2011, the state adopted a decision on selling the shares it owns, and a process has been initiated to attract a stable long-term investor to the bank.

According to the financial data for the first half of 2011, Citadele is the third largest bank in Latvia in terms of attracted deposits (9.7% market share), the fifth largest by the total amount of loans issued (5.2% market share) and the sixth largest bank according to the amount of assets (6.5% market share).

According to the data of 30 June 2011, Citadele’s total assets amount is 1.25 billion Lats (Group –1.42 billion Lats). The Bank’s loan portfolio is 641 million Lats (Group – 736 million Lats) and the amount of capital and reserves is 84 million Lats (Group - 83 million Lats). The total amount of deposits with Citadele Bank at the end of the first half a year of 2011 reached 1.01 billion Lats (Group – 1.18 billion Lats).

According to the data of 30 June 2011, the bank’s capital asset ratio is reported to be 13.0% (Group – 10.7%) and its liquidity ratio is a healthy 62%.

On 7 September 2010, the international rating agency Moody's Investors Service awarded the bank with a long-term rating of Ba3 (stable).

The bank’s group provides a broad range of financial services. The main types of services include dealing with disbursement accounts, payment cards, deposit products for individuals and undertakings, consumer loans and mortgages, corporate financing, guarantees and letters of credit, leasing, factoring, distribution of American Express credit cards in Latvia and Lithuania, services of private banking and Concierge service, life insurance, asset management, incl. management of the 2nd and 3rd level retirement savings and 3rd level locked-in retirement funds for undertakings.

As from 22 November, all outgoing domestic and international payments from the Bank Citadele to “Latvijas Krājbanka” have been suspended until further notice from financial services authorities.

Please find all of the information about these opening hours here.

Happy Independence Day!

Your Citadele Bank

Irrespective of the country in which they work, sailors must, after completing their higher education, undergo regularly scheduled training to improve their professional skills – usually once every five years. The Novikontas Maritime College offers a full range of courses for maritime professionals. All of the courses are in line with the requirements of international conventions, and the certificates which are issued by the Latvian Maritime Register are recognised all around the world.

The modernisation of the Maritime College involved the procurement of new navigation and machine room simulators – a navigation simulator with a dynamic positioning model, a navigation simulator with simulation of radar operations and maps, and a machine room simulator which makes it possible to work synchronously with the navigation simulator so that helmsmen and machinists can be trained together.

“We have trained sailors from Latvia, Sweden, England, Norway and the Netherlands in the past, but this project will allow us to provide the quality of training and the technologies that are needed to encourage an increasing number of maritime professionals to study at our school,” says the director of the Novikontas Maritime College, Aleksandrs Hropenko. “We also want to increase the number of sailors who come to us from Ukraine and Russia. We will be the only educational institution of this kind with such a high quality of equipment in the Baltic States and CIS, and in terms of quality, we will be a serious competitor for similar training centres elsewhere in Europe.”

“The quality of education is one of those areas about which there have been and continue to be very serious discussions in Latvia,” says Agnese Paegle, head of the Citadele Bank’s Corporate Services Directorate. “I am sure that education is an area in which there is great potential for growth here in Latvia, and the development of education is important both in terms of training high-level specialists, as well as in providing for a very promising export niche which could help a great deal with economic recovery. I am delighted, therefore, that Citadele has also made its investment in the field of improving education. The Novikontas Maritime College is a successful example of this. Our sailors have always been in much demand all around the world, and it is critically important not just to maintain the bar at its current level, but to raise it even further.”

Financing for the project included EUR 420,000 from the European Regional Development Fund and EUR 600,000 from the Citadele Bank. The Novikontas Maritime College began the project in December 2010 and completed it in September of this year.

The Novikontas Maritime College offers 59 different courses in the maritime sector. “We start with elementary survival techniques in the sea if a ship needs to be abandoned, and we end with key nuances in running a ship and transporting people,” says the deputy director of the college, Dmitrijs Semjonovs. “We train sailors at all levels, from captains to stewards. A sailor is more than a mechanic, helmsman, seaman or cook, because when the ship is under an autonomous regime and is far from land, each sailor must also be a fire-fighter, rescue specialist, nurse and, to put it simply, a strong person. Our educational institution ensures that all of these skills are developed.”

The Win-win cards offer consumers control and management of their spending together with a wide range of benefits and privileges from both the American Express and MasterCard payment networks.

The Win-win cards consist of a set of two cards, the Citadele Win-win American Express^® Card and the Citadele MasterCard. Both cards are linked to a single account with a single PIN code and allow cardholders to earn rewards points, which they can exchange for gift certificates from various retailers in Latvia. In addition, cardholders will receive exclusive offers through the American Express Selects programme.

“The introduction of unique and innovative products in Latvia is a key area of activity for Citadele Bank,” says Citadele Bank board member Guntis Beļavskis. “We are pleased to offer consumers these new rewards cards, which bring together all of the best things which customers can enjoy in terms of payment cards, such as secure everyday payments, as well as the opportunity to receive points with every purchase and access to exclusive advantages and offers from various shops, restaurants and hotels in Latvia and millions of locations worldwide.”

“We understand that consumers today are particularly keen to make careful spending decisions.” Beļavskis continues. “The Win-win cards are ideally suited for customers who are seeking control and management of their spending, as well as the opportunity to receive points on every purchase they make with these cards. These cards answer the specific needs of the marketplace, and we are delighted to be increasing the product choice in Latvia.”

The Win-win cards reward everyday spending, turning each lat that is spent into rewards points. The American Express-branded card offers customers 2 points per 1 LVL spent and 200 introductory points, and the MasterCard offers 0.5 points per 1 LVL spent. Those who earn 1,000 points can exchange them for a gift certificate worth LVL 10 from any of the retailers in Latvia who are partners in the programme, including Maxima and Rimi stores, as well as Drogas, the Jānis Roze bookshops.

In addition, with the Win-win American Express Card, cardholders will receive:

• Benefits of the American Express SELECTS programme, which include offers at a multitude of shops, restaurants, hotels, entertainment facilities and sports clubs in Latvia and worldwide;
• Access to Globalshop services, which make it possible to purchase products from U.S.-based online sites and receive them in Latvia, even if the merchant does not usually ship to Latvia; and
• Access to 24/7 customer service, internet banking and SMS banking.

The Win-win cards can also be used to make cash withdrawals from ATMs or to withdraw cash at shops which offer cash payment services. The new cards can also be used to pay for car leasing or hotel reservations.

Find more information about Win-win on Citadele Bank’s website www.citadele.lv as well as branch offices and Customer Service Centres of Citadele Bank in Latvia.

Citadele Bank has the exclusive right to issue American Express® Cards and acquire merchants on to the American Express network in Latvia and Lithuania.

About Citadele Bank

Citadele is the largest local bank in Latvia and it is also represented in Estonia, Lithuania, Germany, Sweden, Switzerland, Azerbaijan, Belarus, Kazakhstan, Moldova and Ukraine. 75% of Citadele Bank is possessed by VAS “Privatizācijas aģentūra” (State JSC Privatization Agency) and 25% plus one share is possessed by the European Bank for Reconstruction and Development.

3D Secure system was introduced in order for making online payments by payment cards to be safer than ever before. The system carries out two important functions. Firstly, it prohibits making unsanctioned payments on the Internet by a payment card which belongs to someone else. This is because shoppers are required to enter additional identification data. Secondly, it enables identifying traders who are registered in 3D Secure internet purchases system. Thus traders have larger responsibilities toward the client.

“Security of our clients’ finances is our priority and we have worked purposefully during the first year of Citadele’s activity to introduce 3D Secure system at the earliest convenience. Initially the system will serve MasterCard and Maestro payment cards and soon we plan to attach Visa and American Express^® Cards issued by Citadele Bank to 3D Secure system as well,” says Guntis Beļavskis, Member of Citadele’s Board.

Thousands of online stores across the world have joined 3D Secure system and their number continues to increase. MasterCard SecureCode logotype, located on the website, indicates that an online store has joined 3D Secure system and that it supports secure payments by MasterCard and Maestro.

- How is 3D Secure system going to change online payment procedures?
“Users of MasterCard and Maestro, who have subscribed to the Online Banking, from November on, when making payments at online stores registered with 3D Secure, will receive a notification next to their name, last name, card number, expiry date and security code (CVC2) fields requesting to enter their username and password used for Citadele’s Online Banking. Actually this is an additional password which is provided especially for making online payments and it serves somewhat similarly to a PIN code. Such additional authorization prevents possibilities of fraud at online stores and significantly increases the level of security and protection of payment cards”,explains G. Beļavskis.

“In comparison to other banks, we have ensured our clients with an additional safety cushion – Citadele’s clients will not need to enter their internet bank passwords at the moment of payment. Thus we will provide additional defence from unsanctioned fraudulent attempts to access our clients’ Online Banking,” comments G. Beļavskis.

We would like to remind that in order for online purchases to be safe, clients need be subscribers to the Online Banking. Clients who have not subscribed to the Online Banking are welcome to appear at any branch office of Citadele to carry out subscription.

3D Secure system is provided by the Bank free of charge.

After introducing 3D Secure system Citadele's clients who use MasterCard or Maestro payment cards will be able to make online purchases at stores which are not registered with 3D Secure system as well. In such cases clients will be required no additional identification data. However, this will simultaneously indicate that shopping with a particular trader is not as safe as with the websites that are registered with the security system.

About Citadele Bank

Citadele is the largest local bank in Latvia and it is also represented in Estonia, Lithuania, Germany, Sweden, Switzerland, Azerbaijan, Belarus, Kazakhstan, Moldova and Ukraine. Citadele is the only collaboration partner of American Express^® in Latvia and Lithuania who is entitled to issue American Express credit cards. Presently 75% of Citadele Bank is possessed by VAS “Privatizācijas aģentūra” (State JSC Privatization Agency) and 25% plus one share is possessed by the European Bank for Reconstruction and Development.

The amendments were made in the prospectuses of following investment funds: OIF „Citadele Eastern Europe Fixed Income Fund”, OIF „Citadele Ukrainian Equity Fund”, OIF „Citadele Russian Equity Fund”, OIF „Citadele Caspian Sea Equity Fund”, OIF “Citadele Strategic Allocation Funds” and CIF „Citadele Baltic Real Estate Fund – II”.

The amendments to the prospectuses of these investment funds became effective on October 17, 2011.

Financing from the EU and the Citadele Bank allowed Ditton Chain to reconstruct its manufacturing facilities, install new manufacturing equipment, and begin to manufacture high-quality driving chains for export. This work began in April 2010.

“Our aim in this project is to manufacture competitive driving chains with a high level of added value, particularly automobile chains and special chains for export to the EU and the United States, as well as, potentially, to the promising market of Russia and the CIS,” says Ditton Chain board member Raimonds Bruževičs.

The reconstruction of the manufacturing facilities included the installation of British-made turning and processing centres, Belarusian-made metal processing equipment, Japanese-made high-precision presses, and other equipment, most of which is very specific and was produced specifically for Ditton Chain.

“We are particularly pleased about our new kilns or thermal processing equipment for forging and nitro-cementing. These are German-manufactured kilns which reach a temperature of nearly 1,000 degrees Celsius, and that means that the parts, which are manufactured are particularly durable. There are the only kilns of their type in the Baltic States,” adds Bruževičs.

“Economic growth or decline cannot be expressed only in statistical numbers, and the opening of a new factory, similarly, does not just mean one more company or a greater amount of processed metal. The main focus of achievements and development is on people and their quality of life. That’s why I believe that the new factory relates to new jobs, a higher quality of life for families, as well as growth for people in the city and the surrounding region. That offers new hope for those who say that they are disappointed, those who have emigrated, and those who are still thinking about whether to stay here and have children and grandchildren here,” says Saeima Speaker Solvita Āboltiņa, adding that she is particularly pleased that the new factory was established specifically in Latgale.

“We are pleased about any project which helps companies to develop along with the Latvian economy, and we are honoured to have been able to help in implementing this project with Citadele financing. I hope that this example will encourage many other businesses in Latgale and elsewhere in Latvia to get busy in organising products aimed at the manufacturing of new and exportable products. This is an example which shows that positive changes are possible,” says Juris Jākobsons, Chairman of Citadele Bank’s Board of Directors.

“The latest Citadele Index study shows that it is particularly in the manufacturing sector that companies currently have the greatest need for loans from banks,” Jākobsons goes on. “This shows that there is much potential for the further development of manufacturing in Latvia, and it is very important for banks to be ready to work together with businesspeople. The presence of such export-capable companies is particularly important in Latgale so that economic development can be promoted here.”

Ditton Chain invested more than LVL 7.2 million in the reconstruction of its manufacturing facilities. LVL 3 million of that came from the EU’s European Regional Development Fund, while more than LVL 3 million were provided by Citadele. The company itself provided the additional funds for the project.

Ditton Chain hopes to create as many as 120 new jobs over the course of time so that it can gradually increase manufacturing output.

About Citadele Bank

Citadele is the largest local bank and it is also represented in Estonia, Lithuania, Germany, Sweden, Switzerland, Azerbaijan, Belarus, Kazakhstan, Moldova and Ukraine. Citadele is the only collaboration partner of American Express^® in Latvia and Lithuania who is entitled to issue American Express credit cards. Presently 75% of Citadele Bank is possessed by VAS “Privatizācijas aģentūra” (State JSC Privatization Agency) and 25% plus one share is possessed by the European Bank for Reconstruction and Development.

“We are grateful to our clients who work with Citadele, entrust their funds with the Bank and implement their short-term and long-term plans, with the Bank's support. We are also thankful to the Bank's personnel which works professionally and selflessly in order to ensure client’s in an ever increasing quality and the opportunity to use innovative products and services adapted to the present needs of the market. Citadele has become an example of a successful bank restructuring process as a result of our joint work, and it continues developing in a stable manner in line with its restructuring plan. Repaying the State its invested funds was one of our main tasks, and it continues to be our top priority. I am sure that the State will completely recover the tax payer’s money it invested in Citadele,” says Juris Jākobsons, Chairman of Citadele’s Board of Directors.

Since August 2010 Citadele Bank has repaid to the State 110.5 million Euros, that is 77.6 million Lats, of the total term deposit invested by the government of Latvia.

During the period from August 2010 to the end of September 2011, Citadele has paid the State 23.3 million Euros, or 16.3 million Lats, in interest for the received aid, which includes State term deposits and the subordinated loan.

The outstanding amount of State deposits that Citadele has to repay after this instalment is 93.2 million Euros or 65.5 million Lats. In quarterly instalments Citadele will repay this sum by the end of March next year.

Information about Citadele’s operating results during the first half of 2011.
Citadele Bank has finished the first half of 2011 with profit before impairment charges and tax of 5.4 million Lats (Group 4.6 million Lats). This resulted in net profit of 0.2 million Lats (Group 0.3 million Lats) after taxes.

According to the financial data for the first half of 2011, Citadele’s total assets amount to 1.25 billion Lats (Group – 1.42 billion Lats). The Bank’s loan portfolio is 641 million Lats (Group – 736 million Lats) and the amount of capital and reserves is 84 million Lats (Group - 83 million Lats). The total amount of deposits with Citadele Bank at the end of the first half year of 2011 reached 1.01 billion Lats (Group – 1.18 billion Lats). The bank’s capital asset ratio is reported to be 13.0% (Group – 10.7%) and its liquidity ratio is a healthy 62%.

According to data as of 30 June 2011, Citadele is the third largest bank in Latvia in terms of attracted deposits (9.7% market share), the sixth largest bank according to the amount of assets (6.5% market share) and the fifth largest by the total amount of loans issued (5.2% market share).

As announced previously, during its first year of activity, Citadele Bank reimbursed a total of 44.9 million Lats or 63.9 million Euros invested by the State already twice ahead of schedule. During its first year, the bank has paid to the State a total of 12.8 million Lats in interest for the received support.

During its first year of activity, commencing on August 2010, Citadele has started offering such new and unique products for the Baltics as the New Mortgage Loan and Citadele Payment Card. Citadele is the only collaboration partner of American Express^® in Latvia and Lithuania who is entitled to issue American Express credit cards. In order to facilitate business development, during 2011 Citadele Bank has started issuing funding of European Investment Bank to small and medium enterprises the total amount of which is 100 million Euros.

13’963 new clients have chosen Citadele Bank since August 2010.

According to data of market and public opinion research centre SKDS, during its first year Citadele succeeded at increasing the share of Latvia’s residents who see the Bank as a stable, safe, convenient and advantageous institution.

A study conducted by Data Serviss Finance Track research agency also serves as proof of this tendency – Citadele’s results are the 4th best on the market in all awareness indices.

About Citadele Bank

Citadele is the largest locally owned bank in Latvia and it is also represented in Estonia, Lithuania, Germany, Sweden, Switzerland, Azerbaijan, Belarus, Kazakhstan, Moldova and Ukraine. Citadele is the only collaboration partner of American Express^® in Latvia and Lithuania who is entitled to issue American Express credit cards. Presently 75% minus one Citadele Bank’s shares are possessed by the Privatization agency on behalf of the Latvian State and the owner of 25% plus one share is the European Bank for Reconstruction and Development (EBRD). Citadele Bank was founded on 30 June 2010. The new Bank launched its independent activities on 1 August 2010.

“Presently, a large part of small and medium enterprises in Latvia, especially the ones on the countryside, have become active thanks to the availability of EU and State support funds. It is of great importance for the recovery process of Latvia’s economy to make maximum use of the allocated EU funds since this is a significant support for the economy’s development in the nearest couple of years. Citadele also offers various funding opportunities for small and medium enterprises, such as funding from the European Investment Bank and micro-loan,” says Agnese Paegle, Head of Corporate Banking Sector of Citadele Bank.

Approximately 32% of enterprise managers working in production, 26% in trade, 16% in construction and 15% of their counterparts in services stated that their enterprise would need a loan or credit line now.

In terms of regions, enterprises that represent Vidzeme region (28%) are in greatest need followed by Zemgale (26%), outskirts of Riga (25%) and Kurzeme (24%). Companies located in Latgale (18%) and Riga (16%) is the ones who need less loan funds.

Considering from the point of view of populated areas, enterprises which operate on the countryside (33%) are in greatest need of loans followed by companies in other cities (22%); Entities in Riga need loans less (16%).

As announced previously, Citadele Bank started issuing European Investment Bank’s funding for development of small and medium enterprises in July. Citadele is ready to invest over 100 million Euros or 70.3 million Lats in Latvia’s entrepreneurship during a year.

EIB funding is available for the support of companies that operate in production, agriculture and services industries. This enables entrepreneurs to receive loan funds at a fixed long-term interest rate. This type of funding can also be combined with support instruments offered by the EU or the State.

“EIB funding can assist small and medium companies in their current needs – increasing current assets, purchasing raw materials, goods, equipment and instruments, modernizing production units and increasing efficiency as well as developing new areas of business and launching new products and services," says A. Paegle.

EIB funding is available at a fixed interest rate for a period of up to three years; the maximum lending period for these funds is 10 years. The amount of funding available for one company is from 4’000 to 12.5 million Euros.

Citadele Index research is conducted on a quarterly basis in order to find out entrepreneurs’ evaluation of the present situation and prognoses for the next 6 months in such fields as general economic activity in the State and corresponding business field. The previous research which was carried out in June 2011 polled 750 heads of companies of various sizes from all regions of Latvia represent various spheres of national economy.

About Citadele Index

The key task of Citadele Index is to obtain a unified index that characterizes entrepreneurs’ subjective assessment of economic conditions in the state. Citadele Index is calculated by summing up and assessing poll results obtained from managers of 750 enterprises of various volumes and representing various industries. The index also reflects entrepreneurs’ opinion and situation prognoses for economic activity in the State, economic activity in different industries and various business activity indices: profitability, turnover, financial condition, number of employees, amount of investments. If the index exceeds the value of 50 points, it speaks of optimism among entrepreneurs. Pessimism can be observed when it drops below the value of 50. Citadele Index study is performed on a quarterly basis.

About Citadele Bank

Citadele is the largest local bank and it is also represented in Estonia, Lithuania, Germany, Sweden, Switzerland, Azerbaijan, Belarus, Kazakhstan, Moldova and Ukraine. Citadele is the only collaboration partner of American Express® in Latvia and Lithuania who is entitled to issue American Express credit cards. Presently 75% of Citadele Bank is possessed by VAS “Privatizācijas aģentūra” (State JSC Privatization Agency) and 25% plus one share is possessed by the European Bank for Reconstruction and Development.

“Entrepreneurs are the first ones to feel the breezes of the State’s economic recovery and stabilization. However this entrepreneurs’ optimism regarding the country’s general economic situation is indeed very cautious and it is lower than in the 3rd quarter last year before tax reforms took place; it then peaked at 54.16 points,” says Agnese Paegle, Head of Corporate Services Directorate of Citadele Bank.

She emphasizes that “it is very important for the State economy today for the entrepreneur’s feeling of stability and optimism to stray the same and increase furthermore. The new government and all parties elected in Saeima (the Parliament) will soon have to start working on accepting the budget for 2012. The new government will have to form the next year’s budget and tax policy very carefully and do a good job on explaining entrepreneurs and the whole society all the decisions which will be taken for the sake of consolidation. It would be important for the development of entrepreneurship and the State to plan a sustainable budget instead of focusing on short-term consolidation activities. This is crucial for entrepreneurs to be able to plan their business and to know what to expect.”

Citadele Index research shows that entrepreneurs have re-acquired cautious optimism regarding economic activity in their business sector (51.13 index points compared to 47.61 points in the 1st quarter of this year), assessment of the enterprise’s turnover (50.38 points, previously – 47.97) as well as evaluation of the number of employees (50.19 points compared to previous 48.38).

Like previously, entrepreneurs evaluate competition in their business sector positively (56.09 points compared to previous 56.02) and the amount of company’s investments (52.56 points, previously 50.16).

However profitability (48.27 points, previously – 46.28) and the company’s financial condition (48.89 points, previously – 46.87) is evaluated as somewhat pessimistic.

Citadele Index research is conducted on a quarterly basis in order to find out entrepreneurs’ evaluation of the present situation and prognoses for the next 6 months in such fields as general economic activity in the State and corresponding business field. The previous research which was carried out in June 2011 polled 750 heads of companies of various sizes from all regions of Latvia represent various spheres of national economy.

About Citadele Index

The key task of Citadele Index is to obtain a unified index that characterizes entrepreneurs’ subjective assessment of economic conditions in the state. Citadele Index is calculated by summing up and assessing poll results obtained from managers of 750 enterprises of various volumes and representing various industries. The index also reflects entrepreneurs’ opinion and situation prognoses for economic activity in the State, economic activity in different industries and various business activity indices: profitability, turnover, financial condition, number of employees, amount of investments. If the index exceeds the value of 50 points, it speaks of optimism among entrepreneurs. Pessimism can be observed when it drops below the value of 50. Citadele Index study is performed on a quarterly basis.

About Citadele Bank

Citadele is the largest local bank and it is also represented in Estonia, Lithuania, Germany, Sweden, Switzerland, Azerbaijan, Belarus, Kazakhstan, Moldova and Ukraine. Citadele is the only collaboration partner of American Express^® in Latvia and Lithuania who is entitled to issue American Express credit cards. Presently 75% of Citadele Bank is possessed by VAS “Privatizācijas aģentūra” (State JSC Privatization Agency) and 25% plus one share is possessed by the European Bank for Reconstruction and Development.

In open-end investment fund’s “Citadele Ukrainian Equity Fund”, open-end investment fund’s “Citadele Russian Equity Fund”, open-end investment fund’s “Citadele Caspian Sea Equity Fund”, open-end investment fund’s “Citadele Strategic Allocation Funds” prospectus, simplified prospectus and management regulations was actualized the information about provisions for tax payments, specifying the holding company and the custodian of calculating the amount of compensation arrangements, and made other editorial clarifications.

In the open-end investment fund “Citadele Ukrainian Equity Fund”, open-end investment fund “Citadele Russian Equity Fund” and open-end investment fund “Citadele Caspian Sea Equity Fund” which are under the Company’s management were made amendments to the investment committees - fund prospectuses present new investment committee.

The amendments to the basic documents of open-end investment funds under the management of “Citadele Asset Management” IPAS become effective on September 25, 2011.

Sub-funds names of open-end investment fund “Citadele Eastern European Fixed Income Funds” were changed from “Citadele Eastern European Balanced Fund” to “Citadele Eastern European Bond Fund - EUR” and from “Citadele Eastern European Bond Fund” to “Citadele Eastern European Bond Fund – USD”.

Sub-fund “Citadele Eastern European Balanced Fund” of open-end investment fund “Citadele Eastern European Fixed Income Funds” name changes associated with changes in the fund's Investment Policy, which does not continue to invest in equity securities.

Changes to the basic documents of open-end investment fund under the management of “Citadele Asset Management” IPAS became effective on September 16, 2011.

“In September and in line with the schedule, the bank will repay nearly 50 million Euros to the state. This will be the third payment made by Citadele to the state over the course of the past year,” says J. Jākobsons.

The board chairman underlines that the restructuring plan approved by the European Commission speaks not just to financial indicators, but also to capital forecasts, which are in line with the Citadele group’s development plans. The group’s audited financial report for the 6 month period ended 30 June 2011 shows that the quality of assets has improved since 2010, and that has meant a substantial reduction in the amount of money set aside for loans.

“Moody’s is not changing its long-term and short-term ratings for Citadele at this time,” says Jākobsons. “What Moody’s has done is that it has begun a review of the long-term rating, and it will take a decision only when it learns the latest information about Citadele’s indicators, as well as more detailed information about the quality of assets, stabilisation of capital levels, and, particularly, the sustainability of these achievements.”

Information about Citadele’s operating results during the first half of 2011

Citadele Bank has finished the first half of 2011 with profit before impairment charges and tax of 5.4 million Lats (Group 4.6 million Lats). This resulted in net profit of 0.2 million Lats (Group 0.3 million Lats) after taxes.

According to the financial data for the first half of 2011, Citadele’s total assets amount to 1.25 billion Lats (Group – 1.42 billion Lats). The Bank’s loan portfolio is 641 million Lats (Group – 736 million Lats) and the amount of capital and reserves is 84 million Lats (Group - 83 million Lats). The total amount of deposits with Citadele Bank at the end of the first half year of 2011 reached 1.01 billion Lats (Group – 1.18 billion Lats). The bank’s capital asset ratio is reported to be 13.0% (Group – 10.7%) and its liquidity ratio is a healthy 62%.

According to data as of 30 June 2011, Citadele is the third largest bank in Latvia in terms of attracted deposits (9.7% market share), the sixth largest bank according to the amount of assets (6.5% market share) and the fifth largest by the total amount of loans issued (5.2% market share).

As announced previously, during its first year of activity, Citadele Bank reimbursed a total of 44.9 million Lats or 63.9 million Euros invested by the State already twice ahead of schedule. During its first year, the bank has paid the State a total of 12.8 million Lats in interest payments for the received support.

During its first year of activity since August 2010, Citadele has started offering such new and unique products for the Baltics as New Mortgage Loan and Citadele Payment Card. Citadele is the only collaboration partner of American Express^® in Latvia and Lithuania who is entitled to issue American Express credit cards. In order to facilitate business development, during 2011 Citadele Bank has started issuing funding of European Investment Bank to small and medium enterprises the total amount of which is 100 million Euros.

13’963 new clients chose Citadele Bank since August 2010.

According to data of market and public opinion research centre SKDS, during its first year Citadele succeeded at increasing the share of Latvia’s residents who see the Bank as a stable, safe, convenient and advantageous institution.

A study conducted by Data Serviss Finance Track research agency also serves as proof of this tendency – Citadele’s results are the 4th best on the market in all awareness indices.

About Citadele Bank

Citadele is the largest local bank in Latvia and it is also represented in Estonia, Lithuania, Germany, Sweden, Switzerland, Azerbaijan, Belarus, Kazakhstan, Moldova and Ukraine. Citadele is the only collaboration partner of American Express^® in Latvia and Lithuania who is entitled to issue American Express credit cards. Presently 75% minus one Citadele Bank’s shares are possessed by the Privatization agency on behalf of the Latvian State and the owner of 25% plus one share is the European Bank for Reconstruction and Development (EBRD). Citadele Bank was founded on 30 June 2010. The new Bank launched its independent activities on 1 August 2010.

“Activity of farmers in Latvia can be explained by both – improvement of the economic situation in the State and by implementation of several rural development programs, such as “Modernization of Agricultural Holdings”, says Agnese Paegle, Head of Corporate Banking Sector of Citadele Bank.

To improve business development, Citadele Bank continues exercising active corporate lending this year. In the first half of 2011 Citadele launched new financial instruments – Micro Loan and Funding from the European Investment Bank – for supporting small and medium enterprises.

The new financial instruments enable entrepreneurs to receive loan funds at a fixed long-term interest rate. Besides, Micro Loan is available without real estate collateral. Both types of funding can also be combined with support instruments offered by the EU or the State.

EIB funding is available at a fixed interest rate for a period of up to three years; the maximum lending period for these funds is 10 years. The amount of funding available for one company is from 4 thousand to 12.5 million Euros.

Micro Loan, on its part, is available at a fixed rate for a period of up to 5 years and without real estate collateral. The amount of funds available for one company is from 3 thousand to 30 thousand Lats or an equivalent in Euros or US Dollars.

Citadele’s aim is to invest over 100 million Euros or 70.3 million Lats in Latvia’s entrepreneurship during a year.

In the first half of 2011 more than 100 companies have chosen Citadele as their partner in corporate lending in Latvia. In Estonia Citadele was the choice of more than 300 companies.

According to the data of the Association of Commercial Banks of Latvia for the first half of 2011, Citadele ranks third among the most active lenders in Latvia in terms of new lending in corporate sector; it holds 9.1% of the market.

About Citadele Bank

Citadele is the largest local bank and it is also represented in Estonia, Lithuania, Germany, Sweden, Switzerland, Azerbaijan, Belarus, Kazakhstan, Moldova and Ukraine. Citadele is the only collaboration partner of American Express^® in Latvia and Lithuania who is entitled to issue American Express credit cards. Presently 75% of Citadele Bank is possessed by VAS “Privatizācijas aģentūra” (State JSC Privatization Agency) and 25% plus one share is possessed by the European Bank for Reconstruction and Development.

3D Secure system was introduced in order for making online payments by payment cards to be safer than ever before. The system carries out two important functions. Firstly, it prohibits making unsanctioned payments on the Internet by a payment card which belongs to someone else. This is because shoppers are required to enter additional identification data. Secondly, it enables identifying traders who are registered in 3D Secure internet purchases system. Thus traders have larger responsibilities toward the client.

“Security of our clients’ finances is our priority and we have worked purposefully during the first year of Citadele’s activity to introduce 3D Secure system at the earliest convenience. Initially the system will serve MasterCard and Maestro payment cards and soon we plan to attach Visa and American Express^® Cards issued by Citadele Bank to 3D Secure system as well,” says Guntis Beļavskis, Member of Citadele’s Board.

Thousands of online stores across the world have joined 3D Secure system and their number continues to increase. MasterCard SecureCode logotype, located on the website, indicates that an online store has joined 3D Secure system and that it supports secure payments by MasterCard and Maestro.

- How is 3D Secure system going to change online payment procedures?
“Users of MasterCard and Maestro, who have subscribed to the Online Banking, from November on, when making payments at online stores registered with 3D Secure, will receive a notification next to their name, last name, card number, expiry date and security code (CVC2) fields requesting to enter their username and password used for Citadele’s Online Banking. Actually this is an additional password which is provided especially for making online payments and it serves somewhat similarly to a PIN code. Such additional authorization prevents possibilities of fraud at online stores and significantly increases the level of security and protection of payment cards”,explains G. Beļavskis.

“In comparison to other banks, we have ensured our clients with an additional safety cushion – Citadele’s clients will not need to enter their internet bank passwords at the moment of payment. Thus we will provide additional defence from unsanctioned fraudulent attempts to access our clients’ Online Banking,” comments G. Beļavskis.

We would like to remind that in order for online purchases to be safe, clients need be subscribers to the Online Banking. Clients who have not subscribed to the Online Banking are welcome to appear at any branch office of Citadele to carry out subscription.

3D Secure system is provided by the Bank free of charge.

After introducing 3D Secure system Citadele's clients who use MasterCard or Maestro payment cards will be able to make online purchases at stores which are not registered with 3D Secure system as well. In such cases clients will be required no additional identification data. However, this will simultaneously indicate that shopping with a particular trader is not as safe as with the websites that are registered with the security system.

About Citadele Bank

Citadele is the largest local bank in Latvia and it is also represented in Estonia, Lithuania, Germany, Sweden, Switzerland, Azerbaijan, Belarus, Kazakhstan, Moldova and Ukraine. Citadele is the only collaboration partner of American Express^® in Latvia and Lithuania who is entitled to issue American Express credit cards. Presently 75% of Citadele Bank is possessed by VAS “Privatizācijas aģentūra” (State JSC Privatization Agency) and 25% plus one share is possessed by the European Bank for Reconstruction and Development.

Agriculture, aquaculture and manufacturing enterprises are the first ones to receive loans from the EIB funding in accordance with the concluded agreements. Loan funds will be invested in projects that are aimed at expanding manufacturing units and developing new products.

“The fact that we have concluded agreements for 3.2 million Euros already during the low season – summertime – is a good indicator. These loan funds from the EIB will be granted for implementation of investment projects and expansion of manufacturing. At the beginning of this year the most demanded type of funding in Latvia was the one anticipated for increasing current assets and maintaining manufacturing whereas now we see that companies gradually recover and they are not as cautious in implementing their investment plans. They start implementing the projects that were developed and elaborated before the crisis,” says Agnese Paegle, Head of Corporate Banking Sector of Citadele Bank.

She points out that the activity of companies in Latvia increases mainly due to the availability of funding from the EU and State support programs.

As announced previously, in July Citadele Bank started issuing EIB funding for development of small, medium and micro enterprises. Citadele is ready to invest over 100 million Euros or 70.3 million Lats in Latvia’s entrepreneurship during a year.

EIB funding is available for the support of companies that operate in manufacturing, agriculture and services industries. This enables entrepreneurs to receive loan funds at a fixed long-term interest rate. This type of funding can also be combined with support instruments offered by the EU or the State.

“Citadele’s aim is to facilitate activation of the local market in Latvia’s business sector, paying special attention to small, medium and micro enterprises which presently are in greatest need of support. Small and medium enterprises make up over 99% of all of the economically active companies in Latvia. Growth of small, medium and micro enterprises is an important precondition for shaping a stable middle class and decreasing unemployment in Latvia”, comments Juris Jākobsons, Chairman of Citadele Bank.

“EIB funding with the anticipated flat rate enables companies to plan and fix their monthly expenses because these loan funds do not depend on changes of LIBOR. Besides, economists anticipate a gradual increase in LIBOR during the next couple of years”, explains Agnese Paegle.

“EIB funding can assist small and medium companies in their current needs – increasing current assets, purchasing raw materials, goods, equipment and instruments, modernizing manufacturing units and increasing efficiency as well as developing new areas of business and launching new products and services," says A. Paegle.

EIB funding is available at a fixed interest rate for a period of up to three years; the maximum lending period for these funds is 10 years. The amount of funding available for one company is from 4’000 to 12.5 million Euros.

Good things happen!

About Citadele Bank

Citadele is the largest local Bank in Latvia with branch offices in other countries. AS “Citadele Banka” was established to inspire people and enterprises to growth and enhance regional development. It is the only collaboration partner of American Express^® in Latvia and Lithuania who is entitled to issue American Express credit cards. Presently, 75% of its shares are owned by Privatization Agency and the European Bank for Reconstruction and Development possesses 25% plus one of its shares.

After a pause that lasted two quarters the general mood index of entrepreneurs exceeds 50 points reaching 50.77 and catching up with the indices of the 3rd quarter of 2010 when the index peaked at 51.21 points.

“Entrepreneurs’ mood recovered last September before the previous Saeima elections, becoming optimistic after a two year long period of express pessimism. After the elections and changes introduced in taxation, the entrepreneurs’ mood again became much more cautious as was rather pessimistic for two quarters. Citadele Index surveys reveal that regardless of these changes in taxation, entrepreneurs have been able to cope and their mood has improved in some indicator groups slowly and steadily since the end of last year. Presently, it is back in the optimistic zone,” says Agnese Paegle, Head of Corporate Banking Sector of Citadele Bank.

“The entrepreneurs’ optimistic mood depends on the State’s economic situation, tax policy and availability of funding. We see in our practice that the companies which have or plan to receive support from the EU funds or State programs are the most active ones in investing. Similarly, a positive fact for entrepreneurs is that banks have re-launched more active lending and it is anticipated that the activity of banks will have a tendency to increase. This, on its part, will facilitate good changes also in the development of entrepreneurship,” says Agnese Paegle.

The results of the survey show that future prognoses of entrepreneurs still tend to be cautiously optimistic. The index that characterises the present has increased significantly, indicating that entrepreneurs are less critical toward the present situation than three months before even though generally the evaluation is still prone to be rather negative.

Similarly to the 1st quarter, the study of the 2nd quarter of this year indicates that cautious optimism is still observed among heads of large, medium and small companies while the mood in the micro enterprise group is still rather pessimistic. However the mood index has increased in this group as well in comparison to the 1st quarter.

As for industries, cautious optimism can be observed in production, trade and services group whereas pessimism still prevails in the construction enterprise group.

Large corporations by turnover (more than 150’000 Lats per year) were rather optimistic in the 1st quarter of this year and now companies with medium turnover (50’000 – 150’000 Lats per year) have joined them. Companies with small turnover (up to 50’000 Lats per year), on their part, are rather pessimistic. Yet a comparison with the previous quarter reveals that the mood index has increased in all turnover groups.

Observing enterprises by the origin of capital, it can be inferred that companies with foreign capital were more optimistic in the 2nd quarter of this year similarly to the end of 2010 and in the 1st quarter of this year. Companies with local capital still are rather pessimistic. However the index value has also increased in this company group.

In terms of regional division, managers of enterprises located in Riga, Vidzeme, Zemgale and Kurzeme were quite optimistic while the mood in Riga's surroundings and Latgale group is rather pessimistic.

Observing index values by the location, companies located in Riga and rural territories were cautiously optimistic in the 2nd quarter whereas enterprises that conduct their activity in other towns are still prone to be pessimistic.

Citadele Index research is conducted on a quarterly basis in order to find out entrepreneurs’ evaluation of the present situation and prognoses for the next 6 months in such fields as general economic activity in the State and corresponding business field. The previous research which was carried out in June 2011 polled 750 heads of companies of various sizes from all regions of Latvia represent various spheres of national economy.

About Citadele Index

The key task of Citadele Index is to obtain a unified index that characterizes entrepreneurs’ subjective assessment of economic conditions in the state. Citadele Index is calculated by summing up and assessing poll results obtained from managers of 750 enterprises of various volumes and representing various industries. The index also reflects entrepreneurs’ opinion and situation prognoses for economic activity in the State, economic activity in different industries and various business activity indices: profitability, turnover, financial condition, number of employees, amount of investments. If the index exceeds the value of 50 points, it speaks of optimism among entrepreneurs. Pessimism can be observed when it drops below the value of 50. Citadele Index study is performed on a quarterly basis.

About Citadele Bank

Citadele is the largest local Bank in Latvia with branch offices in other countries. AS “Citadele Banka” was established to inspire people and enterprises to growth and enhance regional development. It is the only collaboration partner of American Express^® in Latvia and Lithuania who is entitled to issue American Express credit cards. Presently, 75% of its shares are owned by Privatization Agency and the European Bank for Reconstruction and Development possesses 25% plus one of its shares.

“The Citadele payment card is the first for which we are offering this ‘cash payout’ service at stores, but gradually we’re going to implement it for other Citadele cards, as well. The payment card is a handy aide for everyday payments. Users have a range of advantages which similar payment cards in Latvia do not offer. Examples include discounts on food, petrol and medications, as well as cash-back services for purchase that are made. The ability to receive cash not just from AMTs, but also from shop tills will be another fundamental advantage for our clients, because it opens up new opportunities when you need less than LVL 5 and there is no ATM nearby. These are good changes for our clients.

The cash payout service is a new one, and it will take time for clients and retailers to learn how to provide and utilize this service just as freely and simply as it is to use a payment card to make a purchase. Here at Citadele we will always be prepared to help out when information is needed or when problems occur. We will work together with our clients and with the First Data company in Latvia to develop the service further,” says Citadele Bank board member Guntis Beļavskis.

Five Latvian commercial banks are offering cash payout services to card users from August, this year, – more than one million people in all. The banks are Citadele, DnB NORD, Latvijas Krājbanka ,Nordea, and SEB. When people use their payment card to pay any sum at the store, they can also receive cash from the till. The minimum sum per purchase is one santīms, and the maximum is 50 lats. Where ATMs only issue bills, coins are also available in this new process. For instance, the client can ask for LVL 7.50 in cash after making the purchase. Requirements at various stores will differ, however, and there may be instances in which the till does not contain the necessary amount of cash for the payout.

The withdrawal of cash will not be different from an ordinary purchase for card users. When shopping, just tell the cashier that you want to withdraw cash. You’ll be asked to enter the card’s PIN code, and information about the withdrawal will appear on your receipt.

The shops, which offer the cash payout service will feature a violet and round sticker. It will read “Naudas izmaksa” (Cash Payout), and it will be alongside the stickers of Visa, MasterCard, Maestro, Visa Electron and American Express. The process will allow retailers to reduce the amount of cash that is in their tills.

“I use cards very actively every day, and I do not have cash in my pocketbook. I usually remember this only when my kids ask me for pocket money. Now this eternal problem has been resolved, because when I shop for food, I can also withdraw a few lats for the children,” says the Baltic executive director for First Data, Zanda Brīvule-Jansone.

The service is already available at nearly 400 retail operations in Latvia. It is provided by retailers such as IKI, Saule stores in Latgale, and many regional petrol stations. More precise information about all of this is available at www.naudasizmaksa.lv.

“We’re proud that IKI is the first network of retailers in Latvia to offer new conveniences for shoppers, allowing them to withdraw cash as easily as from an ATM. We always seek to provide useful services to our clients to make their lives easier, and I hope that this new service will be of particular benefit to people in the country’s region, because there is not always an ATM close by for them,” says SIA Palink executive director Dace Zundure.

Retailers who wish to offer the cash payout service at their stores are asked to contact their nearest Citadele branch.

Starting from 18 August clients will be able to choose between the new and the old version of the Online Banking. Full switch-over to the new version will take place gradually, and we will provide information duly.

The new version of the Online Banking was developed considering clients’ needs and it is the first step in a much more extensive improvement program within the scope of which we are planning to introduce modern solutions in the functionality of the Online Banking.

The present version of the Online Banking was launched 2001 and it needed both – improvements in terms of design in line with Citadele bank’s brand as well as technical improvements in order to supplement the Online Banking with new and modern functions.

Online Banking is a convenient way of making payments, carrying out money transfers, applying for new services of the Bank and performing other operations at any time and place convenient for you as long as the internet is available. The use of Online Banking helps to save time, you do not need to visit the Bank’s branch office in person. Citadele will continue to improve its Online Banking in order for it to be a safe, convenient and modern assistant in your and your company’s everyday life.

Good things happen!

“We are very grateful to the State of Latvia, residents and our clients for their loyalty and the opportunity that they have given us. During the first year of activity, our main task was to start working solidly and with profit. We have achieved a positive result in the first half year already which is better than the restructuring plan had anticipated. What is more, the profit of LVL 0.2 million must be seen in context. Citadele launched operations with huge obligations, and the economy in the Baltic States has grown slower than previously planned,” says J. Jākobsons

13’963 new clients chose Citadele Bank since August 2010: Citadele has acquired more than 11’000 new clients in retail customer and small and medium enterprises segment and more than 180 new clients in corporate services sector in Latvia, over 700 new clients in Estonia and in private capital management sector – over 1,600 new clients.

"The fact that Citadele earned a profit during the first half of this year sends a very powerful signal to shareholders and potential investors. Successful operations by the bank allow us to expect serious investor interest, which means that the government of Latvia, as the shareholder, will be able to demand better terms for the transaction,” comments Vladimirs Loginovs, Head of Business Service Department at Privatization Agency.

“I am proud and grateful for the immense contribution and loyalty of our employees which was of special significance in achieving better six-month results than anticipated,” comments J. Jākobsons.

According to the final data for the first half of 2011, Citadele’s total assets amount to 1.25 billion Lats. The Bank’s loan portfolio is 641 million Lats and the amount of capital and reserves is 84 million Lats. The total amount of deposits with Citadele Bank at the end of the first half year of 2011 reached 1.01 billion Lats. The bank’s capital asset ratio is reported as 13% and its liquidity ratio is a healthy 62%.

According to data of 30.06.11, Citadele is the third largest bank in Latvia in terms of attracted deposits (9.7% market share), the sixth largest bank according to the amount of assets (6.5% market share) and the fifth largest by the total amount of loans issued (5.2% market share).

Information about Citadele’s first year of activity

Practicing long-term cooperation with American Express and paying special attention to regular customers of these credit cards enables Citadele to acquire the leading position in Latvia’s credit card market. Citadele Bank has maintained exclusive rights to issue American Express® credit cards and to attract trade companies to American Express network in Latvia.

During its first year of activity, Citadele has started offering such new and unique products for the Baltics as New Mortgage Loan and Citadele Payment Card.

In order to facilitate business development, Citadele has practiced active lending and worked on development of new loan offers during 2011. Citadele Bank has started issuing funding of European Investment Bank to small and medium enterprises the total amount of which is 100 million Euros.

According to the data of Association of Commercial Banks of Latvia for 2011: even though the total amount of loans issued since the beginning of 2011 has decreased by 5.4%, Citadele Bank has acquired a 7.2% share of issued loans thus making its way to the 4th place among most active banks in Latvia in terms of lending. Citadele is ranks 3rd among most active lenders and it has a 9.1% share of the market. 

“Citadele Bank will continue developing products relevant to Latvia’s and Baltic States’ markets and it will carry on investing in development of Latvian economy by supporting entrepreneurship and offering new opportunities to every resident,” explains J. Jākobsons. Our goal is to become the most valuable financial group in the Baltic States and we are purposefully approaching it.”

Awareness of Citadele in the society – 92%

According to data of market and public opinion research centre SKDS, during its first year, Citadele succeeded at increasing the share of Latvia’s residents who see the Bank being stable, safe, convenient and advantageous. After foundation, the general awareness of Citadele Bank is significantly higher than the one of other banks which are active in Latvia’s market for a longer period.

A study conducted by Data Serviss Finance Track research agency also serves as proof of this tendency – Citadele’s results are the 4th best on the market in all awareness indices – the total awareness of the Bank is 92%. The study shows that clients became more ready to suggest Citadele’s services to others after the Bank changed its brand. The indicator of positive feedback continues growing.

As announced previously, during its first year of activity, Citadele Bank reimbursed a total of 44.9 million Lats or 63.9 million Euros invested by the State already twice before deadline. During its first year, the Bank has paid the State a total of 12.8 million Lats in interest payments for the received support.

During the first year of activity, Citadele completely retired Eurobonds for the amount of 200 million Euros thus successfully settling long-term liabilities.

Presently 75% minus one Citadele Bank’s shares are possessed by the Privatization agency on behalf of the Latvian State and the owner of 25% plus one share is the European Bank for Reconstruction and Development (EBRD).

The Bank has 44 branch offices in Latvia and 7 other countries – Estonia, Germany and Sweden. It has 19 subsidiaries which work in various sectors of the financial market. The Bank is represented in the Baltic States, Sweden and Ukraine; representative offices in Azerbaijan, Kazakhstan, Ukraine, Russia, Belarus and a subsidiary in Switzerland.

Citadele Bank's group provides an extensive range of financial services the main types of which are bank accounts, payment cards, deposits for retail customers and enterprises, consumer loans and mortgage loans, corporate lending, guarantees and letters of credit, leasing and factoring, distribution of American Express credit cards in Latvia and Lithuania, private capital management services and Concierge Service, life insurance, asset management incl. management of 2nd and 3rd level pension funds as well as closed 3rd level pension funds for enterprises.

Citadele Bank was founded on 30 July 2010 and launched its activity on 1 August 2010.

“The results from the first six months of the year show that Citadele has kept its promise in terms of implementing successful changes. We’ve done better during our first year of operations than was planned in our restructuring plan. Our goal is to become the most valuable financial group in the Baltic States, and that is exactly the direction in which we are moving,” says Jākobsons.

Citadele was established on June 30, 2010 and began full operations on August 1 of the same year. 75% of shares in the bank belong to the Latvian state, as represented by the Privatisation Agency, while 25% plus one share are controlled by the European Bank for Reconstruction and Development.

Citadele is a universal bank in terms of the services which it offers – bank accounts, payment cards, consumer loans, mortgage loans, term deposits for individuals and enterprises, distribution of American Express credit cards in Latvia and Lithuania, services related to second and third-level pension plans, lending and relending for companies, guarantees and letters of credit, leasing and factoring, third-level closed pension funds for companies, life insurance, private banking and concierge services, and investment of money in more than 20,000 domestic and foreign investment funds.

The press conference will be held in the conference room at Citadele headquarters, Republikas Square 2A (enter from Eksporta Street).

• Use of bank account;
• Money transfers;
• Use of payment cards;
• Cash transactions, etc.

For detailed information please contact your client manager, visit your nearest Customer Service Centre or see information provided on the Bank’s website. Please call our round-the-clock information hotline +371 67010000 for detailed information.

The new support instruments, financing of the European Investment Bank, and the microcredits allow entrepreneurs to receive long-term credit funds at a fixed interest rate. Moreover, microcredits are available without providing a real estate collateral. Both types of financing can be combined with the European Union or state support instruments.

“The aim of Citadele in the entrepreneurship sector in Latvia is to promote activation of the domestic market, by particularly supporting small, medium, and micro enterprises, which currently need help the most. Small and medium enterprises constitute more than 99 % of all economically active enterprises in Latvia. It is the development of small, medium, and micro enterprises that form a pre-requisite for establishing a stable middle class and less unemployment in Latvia,” maintains the Chairman of the Board of Citadele Bank Juris Jākobsons.

Stability and Predictability are Important for Entrepreneurs

Results of the Citadele Index study for the 1st quarter of this year show that nearly a half or 44 % of entrepreneurs, especially heads of micro and small enterprises, would choose a fixed interest rate for long-term loans.

“Financing of the European Investment Bank and microcredits at a fixed interest rate allows enterprises to plan precisely and fix monthly expenses, because these credit funds do not depend on market fluctuations of the LIBOR rate. Besides, the economists are forecasting that LIBOR rates will be gradually increasing over the upcoming years,” says the head of the Corporate Banking Sector of Citadele Bank Agnese Paegle.

“Financing of the European Investment Bank and microcredits are types of financing that will provide assistance to the pressing needs of the small and medium enterprises – for increasing liquid assets, for purchasing raw materials, goods, equipment, and tools, for modernising production units, and for increasing their effectiveness, as well as for developing new entrepreneurship directions, starting production of new goods and rendering new services,” says A. Paegle.

Financing of the European Investment Bank and microcredits will be available for the support of industrial, agricultural, trading, and service sector enterprises.

Citadele Index data show that leaders of 89 % of enterprises, who need credit funds, have pointed out that the optimum term would be two and more years.

Financing of the European Investment Bank is available also at a fixed interest rate for up to three years with the maximum maturity – 10 years. Financing available for one enterprise ranges between 4 thousand and 12.5 million euro.

Meanwhile, the microcredit is available at a fixed interest rate for up to 5 years, without a real estate collateral. The financing amount for one enterprise – 5 thousand to 30 thousand lats or equivalent amount in euro or US dollars.

In the process of granting credit funds of the European Investment Bank, Citadele Bank will continue collaborating with Latvian Chamber of Commerce and Industry (LCCI), within the framework of which in evaluating the applications by enterprises the bank will have the option to receive an expert examination of LCCI.

LCCI Chairperson of the Board Endziņš: “In overcoming economic crisis, financial accessibility is one of the key issues in growth and increasing international competitiveness of enterprises and consequently of the state. Being the biggest organisation uniting entrepreneurs, we can ascertain that the mutual collaboration between the banks and entrepreneurs during the last couple of years has considerably improved, it has been a lesson learned in the times of the crisis. Collaboration between LCCI and Citadele Bank in preparing criteria for granting credit funds of the European Investment Bank is the first pilot in creating higher quality collaboration in the field of crediting between the bank, entrepreneurs, and NGOs uniting entrepreneurs. The next step in this successfully commenced collaboration – an expertise to be performed by LCCI upon involving associations of the sector to evaluate specific projects for the bank.”

Citadele Index – Bank Financing for Enterprises is Still Relevant

Bank financing has grown to be a significant support for development of companies. Citadele Index data of the 1st quarter of this year show that overall bank financing is needed for ¼ of enterprises operating in Latvia. Small and micro enterprises need it most – 32 % and 23 % respectively.

Bank financing is important also for implementing projects co-financed by the European Union. Citadele Index data show that 43 % of companies implementing or planning to implement a project co-financed by EU need bank financing.

Out of all sectors, financing is most needed in enterprises operating in manufacturing and trading – 32 % and 34 % respectively.

Bank financing for enterprises is needed most to increase liquid assets (52 %), as well as for purchasing equipment and inventory (43 %). Meanwhile, projects co-financed by the European Union mainly are planned for improving production effectiveness, increasing production capacities, introducing innovations, and improving effectiveness of service rendering.

Citadele Index data of the first quarter of this year indicate that the entrepreneurs’ mood is gradually improving – the optimism of large and medium enterprises by the number of employees is now taking over also the small enterprises, and the entrepreneurs’ future forecasts are rather optimistic. However, at the same time it can be observed that the big enterprises by means of turnover (with turnover exceeding 1 million lats) and enterprises with foreign capital are optimistically inclined. Meanwhile, the small and micro enterprises by means of turnover (turnover up to 75 thousand lats) and enterprises with domestic capital only are rather pessimistically minded.

We apologise to our clients for any inconvenience that this might cause, and we would also like to remind you that holders of Citadele payment cards in Latvia can withdraw cash not just from Citadele ATMs, but also from those of Latvijas Krājbanka, the Mortgage and Land Bank (Hipoteku banka) and GE Money Bank, doing so on the basis of the same terms as apply to our own ATMs.

“Citadele has ensured successful retirement of Eurobonds by resources attracted by it. As a result, the Bank has performed its long-term liabilities fully and in due time toward investors who had invested their funds in these securities, ensuring investors with the expected profit. This is a positive signal for the State, investors and rating agencies which speaks volumes for stability and growth of Citadele. Settlement of these liabilities has a positive influence on the Bank’s total worth,” says Juris Jākobsons, Citadele’s Chairman of the Board of Directors.

He informs that Citadele started repurchasing Eurobonds prior to term as early as last year in order to decrease the Bank’s liabilities and increase its profit. The mentioned securities were emitted in 2005 with a maturity term of 5 years. The annual profitability rate of these securities was 5,625% and they had been purchased by investors from many parts of the world.

About Citadele Bank

Citadele is the largest local Bank in Latvia with branch offices in other countries. AS “Citadele Banka” was established to inspire people and enterprises to growth and enhance regional development. It is the only collaboration partner of American Express^® in Latvia and Lithuania who is entitled to issue American Express credit cards. Presently, 75% of its shares are owned by Privatization Agency and the European Bank for Reconstruction and Development possesses 25% plus one of its shares. The value of Citadele Bank’s assets is 1.4 billion Lats.

The rapid increase in business volumes has allowed Citadele Life to increase the value of its Unit-linked premiums by 53% to LVL 3.09 million. That represents an increase in market share to 5.05% at the end of April.

“Saving up money through life insurance policies is a good and advantageous alternative to deposits for many people, because interest rates on deposits in the banking sector remain low. Contributions toward life insurance are an effective way to save up money, also providing the client with insurance, making it possible to receive tax discounts from the state, and allowing clients to leave their savings to their heirs,” says Citadele Life board chairman Uģis Vorons.

“Our practice shows that among all types of agreements, Unit-linked policies are most popular among our clients, because they represent long-term investments which allow clients to earn more money,” Vorons adds. “Our goal is to become one of the leading players in the life insurance market in Latvia. We have been implementing a new strategy on the development of our company, and we have substantially improved the range of products, which we offer. Because of rapid growth at Citadele Life, we’ve been able to expand our operations and our staff. We are hiring active and targeted sales personnel for our team.”

Citadele Life finished the year 2010 with a profit of LVL 40.545, which was 48% more than in 2009.

About Citadele Bank

Citadele is the largest local Bank in Latvia with branch offices in other countries. AS “Citadele Banka” was established to inspire people and enterprises to growth and enhance regional development. It is the only collaboration partner of American Express® in Latvia and Lithuania who is entitled to issue American Express credit cards. Presently, 75% of its shares are owned by Privatization Agency and the European Bank for Reconstruction and Development possesses 25% plus one of its shares. The value of Citadele Bank’s assets is 1.4 billion Lats.

The Citadele Baltic High Yield Fund was a closed fund with a specific term of operations which ended on May 9, 2011, ensuring positive results for investors.

Citadele Asset Management senior portfolio manager Andris Kotāns: “The aim of the fund was to invest in profitable Baltic securities with a higher level of risk, but also the possibility of higher revenues in comparison to other investment alternatives. Closed investment funds usually have a specific term of operations. The Citadele Baltic High Yield Fund was established in 2005. In 2009, its term was extended to 2012 so as to optimise the investments that were made under the auspices of the fund. Most investors, however, wanted to get their money back as quickly as possible, and we took this into account, paying out funds to several investors in 2009 and 2010.

In comparison to comparable investment funds that were available in the Baltic States, the Citadele Baltic High Yield Fund, taking into account the payouts that were made to investors in 2009 and 2010, could provide its depositors with positive results from the very beginning – a bit less than 3% a year, and this in spite of the serious financial crisis which prevailed in the Baltic States. This was possible thanks to the proactive work which Citadele Asset Management staff did in terms of intensive co-operation with emitters of securities so as to restructure and optimise the relevant obligations during the course of the crisis. We believe that we may establish a new and similar fund in the future, depending on how the market situation develops and what the interests of investors may be. Investor interest in the Baltic region has once again been rising in recent times.”

About Citadele

Citadele Banka was established to inspire people, enterprises to growth and enhance regional development. It is the only collaboration partner of American Express in Latvia and Lithuania that is entitled to issue American Express credit cards. Presently, 75% of its shares are owned by Privatization Agency and the European Bank for Reconstruction and Development possesses 25% plus one of its shares. The value of the Bank’s assets amounts to 1.4 billion Lats.

“Economics in the Baltics has started to activate however at significantly slower pace than planned before. Regardless of that, the results of Citadele are continuously improving. During the first three months of this year we have continued with sound business growth and we have worked on development of new products that are unique in the market. Thanks to purposeful work of our team, we have completed year 2010 in accordance with the plan and the 1st quarter of 2011 was completed even better than planned. We plan to finish year 2011 with profit,” says Juris Jākobsons, Chairman of Citadele Bank’s Board of Directors.

He indicates that similarly as in 2010, one of Citadele’s main tasks during the 1st quarter of 2011 was repayment of funding invested by the State as soon as possible.

“Unlike group banks that operate in Latvia, there is no investor behind Citadele’s back with “deep pockets” therefore we are taking care of refinancing ourselves. We are very grateful to Latvia’s government and inhabitants for the support they have given to the bank and repayment of this funding is one of our main tasks,” emphasizes J. Jākobsons.

In January 2011, half a year ahead of schedule, Citadele reimbursed 32.8 million Lats to the State. During the 1st quarter, the Bank has paid the State a total of 1.3 million Lats in interest payments for its borrowings.

During the first three months of 2011, more than 5’200 new clients chose Citadele Bank’s services: Citadele has acquired more than 4’200 new clients in retail customer and small and medium enterprises segment and more than 80 new clients in corporate services sector in Latvia, over 250 new clients in Estonia and in private wealth management sector – over 600 new clients.

Average turnover of American Express cards continued to grow in the 1st quarter of 2011: the turnover in American Express® Gold credit cards increased by 13% and in American Express® BLUE – by 16%. Practicing long-term cooperation with American Express and paying special attention to regular customers of these credit cards enables Citadele to acquire a significant position in Latvia’s credit card market.

During the 1st quarter of 2011 Citadele has expanded the network of sales points where American Express credit cards are accepted. The network of sales points accepting these credit cards has increased by more than ventures 100 in Latvia during the first three months of this year. Citadele has started issuing a new type of payment cards – Citadele payment cards, and worked on development of several new products that are unique in the market.

In order to facilitate business development, Citadele has practiced active lending and worked on development of new loan offers during the 1st quarter of 2011.

Citadele Bank is the largest local bank in Latvia with branch offices in other countries, the third largest bank in Latvia in terms of attracted deposits (9.7% market share), the fifth largest bank according to the total amount of assets (7.1% market share) and loans issued (5.1% market share). The Bank’s liquidity is stable and it significantly exceeds minimum requirements.

Total sum of Citadele Bank’s assets was 1.42 billion Lats (1.58 billion Lats for the Group) during the 1st quarter of 2011. The Bank’s loan portfolio was 650.2 million Lats (the group’s – 751.7 million Lats) and the amount of capital and reserves was 82.7 million Lats (the group's - 80.7 million Lats). The total amount of deposits with Citadele Bank reached 1.02 billion Lats (the group’s – 1.18 billion Lats) at the end of the first quarter of 2011.

Citadele Bank is a universal bank in terms of the range of services offered. Main types of its services are the following: servicing of current accounts; payment cards; consumer loans and mortgage loans; term deposits for retail customers and enterprises; distribution of American Express credit cards in Latvia and Lithuania; development of 2nd and 3rd level pension savings; provision of loans and refinancing services to enterprises; guarantees and letters of credit; leasing and factoring; 3rd level closed pension funds for enterprises; life insurance; private banking services and Concierge service; investment of funds in more than 20’000 local and foreign investment funds.

“The decision adopted on sales strategy for government-possessed Citadele's shares and clarity acquired in this matter are praiseworthy steps. First and foremost, this is good news for the Bank's clients and all inhabitants of Latvia for this step serves as proof that a stable investor will be sought for the Bank which is going to invest funds in further development of the Bank and its new products. This is a message for inhabitants of Latvia and economy on the whole that the State can recover funds once invested in the Bank in foreseeable future,” says Juris Jākobsons, Chairman of Citadele Bank's Board of Directors.

“The process of change in ownership of the Bank will not influence the Bank's activity – Citadele will continue to work and develop, servicing retail customers as well as enterprises and institutions, and also working capital management sector. We highly appreciate the support of the State and the whole society in ensuring the Bank's activity and stability of the State finance. We are also interested in the State's recovery of funds invested in the Bank as soon as possible in order for these funds to be channelled for more urgent necessities of people.

Now when Citadele Bank is working independently and solidly, income exceeds expenses and the bank is developing new products, it is a much more advantageous time for initiating selling of Citadele's shares than the period immediately after development of the new Bank when work in several types of services had to be started almost from scratch. Attraction on a quality and diligent investor will only be beneficial to Latvia's economy,” says J. Jākobsons.

Presently 75% of Citadele Bank's shares are possessed by the Privatization agency on behalf of the Latvian State and the owner of 25% plus one share is the European Bank for Reconstruction and Development (EBRD).

As announced previously, during its first half year of activity, Citadele Bank reimbursed a total of 44.9 million Lats invested by the State already twice prior to term.

State investments in Citadele Bank presently are as follows: 77.3 million Lats in the Bank's core capital; 98.2 million Lats in the shape of term deposits; subordinated loan of 45.2 million Lats.

Citadele Bank is the largest local Bank in Latvia with branch offices in other countries. According to data of 31.12.2010, Citadele is the third largest bank in Latvia in terms of attracted deposits (10.4% market share), the fifth largest bank according to the amount of assets (6.9% market share) and loans issued (5.2% market share). The Bank's liquidity is stable and it significantly exceeds minimum requirements. The aim of Citadele Bank is to become the most valuable financial group in the Baltic States.

Citadele Bank is a universal bank in terms of the range of services offered. Main types of its services are the following: servicing of current accounts; payment cards; consumer loans and mortgage loans; term deposits for retail customers and enterprises; distribution of American Express credit cards in Latvia and Lithuania; development of 2 nd and 3 rd level pension savings; provision of loans and refinancing services to enterprises; guarantees and letters of credit; leasing and factoring; 3 rd level closed pension funds for enterprises; life insurance; private banking services and Concierge service; investment of funds in more than 20'000 local and foreign investment funds.

About Sales Strategy for State-Owned Citadele Bank's shares

Sales strategy of State-owned Citadele Bank's shares provides transparent and competition- facilitating sales approach and it will take place in line with the restructuring plan approved by the European Commission.

Sales strategy of State-owned Citadele Bank's shares, including criteria for assessing investors' proposals, was developed by “Nomura International plc”, international financial consultant.

During the sales process, investors will have an opportunity to submit initial proposals and if the latter comply with the sales strategy approved by the government, investors will be invited to carry out an in-depth study and to submit binding proposals. The sales process, including procedures for preparing the selling as well as negotiations with investors and assessment of proposals, will be organized by “Nomura International plc”, international financial consultant, and VAS “Privatizācijas aģentūra”.

Sales of State-owned shares of a/s “Citadele banka” will be launched after a decision is adopted by the government. The sales process, according to plans, is going to take from six to twelve months.

“Nomura” is one of the largest investment banks in the world and is a provider of consultancy services with representative offices in 18 countries. The enterprise has extensive regional experience in selling assets and banks, including selling of “Vojvodjanska bankas”, the largest State—controlled bank in Serbia, and “NKBM”, second largest bank in Slovenia.

The research suggests that the sentiment of rural entrepreneurs’ has significantly improved during the 1st quarter of 2011, exceeding sentiment indicators of entrepreneurs who work in Riga and other cities of Latvia. In comparison to the last quarter of 2010 when it reached the lowest point of the whole year, the sentiment can be characterized as rather optimistic.

Conversely, observing sentiment of entrepreneurs by regions, Citadele Index data suggests that entrepreneurs who work in Riga feel comparatively better however their sentiment can still be characterized as rather pessimistic, just like the one of entrepreneurs from other regions (Riga district, Vidzeme, Kurzeme, Zemgale, and Latgale).

Citadele Index data shows that improvement of conditions in their represented industry (+8.7 points) and a more positive assessment of the company’s turnover (+7.6 points) were the reasons that determined improvement of entrepreneurs’ sentiment.

Simona Striževska, Economist of Market Analysis Department at “Citadele Asset Management” says: “Increase in purchasing prices during the last six months could be the reason why rural entrepreneurs’ sentiment was influenced in positive direction. For example, purchasing prices in grain cultivation, on their part, were almost twice as high as last year. In dairy and livestock farming industries increase in purchase prices has been comparatively modest and as of end of March was below 22% and 4%. Dynamics of resource purchase prices partly were also determined by increase in turnover in these industries – turnover in these industries during the last half year has increased by 35% in comparison to a corresponding period last year.”

Observing changes in entrepreneurs’ sentiment by location of enterprises, Citadele Index data shows that during the 1st quarter of this year the sentiment of entrepreneurs who work in Riga has slightly went into the pessimistic direction in comparison to the end of the last year. In other cities of Latvia, however, entrepreneurs’ sentiment has increased if compared with the end of the last year. However, regardless of the significant improvement of company heads who work in rural areas during this quarter, which presently can be characterized as rather optimistic, the sentiment of entrepreneurs in Riga and other cities of Latvia still remains rather pessimistic.

Considering the sentiment of entrepreneurs by regions, Citadele Index research shows that during the first quarter of this year, sentiment indicators have significantly increased for company heads in Zemgale, Kurzeme and Latgale comparing to the end of the last year when they still felt expressly pessimistic whereas now they are rather pessimistic. Since the end of the last year already, entrepreneurs in Riga and its surrounding district and in Vidzeme are in a better sentiment than their colleagues in Zemgale, Kurzeme and Latgale the sentiment of which has not changed notably since the end of the last year. However, both – now and in the end of last year it could be characterized as rather pessimistic.

Citadele Index research is conducted in Latvia on a quarterly basis in order to find out entrepreneurs’ evaluation of the present situation and prognoses for the next 6 months in such fields as general economic activity in the State and corresponding business field. The previous research, which was carried out in March 2011 polled 750 heads of companies of various sizes from all regions of Latvia representing various spheres of national economy.

About Citadele Index

The key task of Citadele Index is to obtain a unified index that characterizes entrepreneurs’ subjective assessment of economic conditions in the state. Citadele Index is calculated by summing up and assessing poll results obtained from heads of 750 enterprises of various volumes and representing various industries. The index also reflects entrepreneurs’ opinion and situation prognoses for economic activity in the State, economic activity in different industries and various business activity indices: profitability, turnover, financial condition, number of employees and amount of investments. If the index exceeds the value of 50 points, it speaks of optimism among entrepreneurs. Pessimism can be observed when it drops below the value of 50. Citadele Index study is performed on a quarterly basis.

About Citadele Bank

Citadele is the largest local Bank in Latvia with branch offices in other countries. SC “Citadele Banka” was established to inspire people and enterprises to growth and enhance regional development. It is the only collaboration partner of American Express^® in Latvia and Lithuania who is entitled to issue American Express credit cards. Presently, 75% of its shares are owned by Privatization Agency and the European Bank for Reconstruction and Development possesses 25% plus one of its shares. The value of Citadele Bank’s assets is 1.4 billion Lats.

In the end of last year, after Parliament elections and changes introduced in taxation, general sentiment of entrepreneurs in Latvia had become much more cautious and prognoses were rather pessimistic. Now, entrepreneurs' prognoses for the nearest half year have recovered optimism.

Citadele Index data suggests: when thinking about the nearest half year, entrepreneurs are cautiously optimistic toward business activity of their companies and economic development of the State in general whereas in December 2010 the mindset was rather pessimistic.

“Development of the State is anticipated and tax policy is of great importance for entrepreneurs. The fact that entrepreneurs have recovered optimism regarding the nearest six months is most probably related with what several State ministers have said: no more rapid changes in taxation are planned and further corrections in the budget will not directly apply to business environment and basic taxes. It was still December last year when entrepreneurs’ prognoses for the nearest half year were rather pessimistic and this was directly related with decisions adopted on increase of taxes for the purpose of consolidating the budget.

The permanence of this optimism will depend on further decisions of the government and on its ability to keep promises regarding entrepreneurship. Entrepreneurs’ prognoses were similarly optimistic in the first quarter of 2010 and they stayed in the same level until the fourth quarter of last year when the government adopted a decision on increase of taxes substantial in business which resulted in a notable fall in entrepreneurs’ mood,” says Agnese Paegle, Head of Corporate Services Directorate of Citadele Bank. Citadele Index research is conducted in Latvia on a quarterly basis in order to find out entrepreneurs’ evaluation of the present situation and prognoses for the next 6 months in such fields as general economic activity in the State and corresponding business field. The previous research which was carried out in March 2011 polled 750 heads of companies of various sizes from all regions of Latvia representing various spheres of national economy.

About Citadele Index

The key task of Citadele Index is to obtain a unified index that characterizes entrepreneurs’ subjective assessment of economic conditions in the state. Citadele Index is calculated by summing up and assessing poll results obtained from heads of 750 enterprises of various volumes and representing various industries. The index also reflects entrepreneurs’ opinion and situation prognoses for economic activity in the State, economic activity in different industries and various business activity indices: profitability, turnover, financial condition, number of employees and amount of investments. If the index exceeds the value of 50 points, it speaks of optimism among entrepreneurs. Pessimism can be observed when it drops below the value of 50. Citadele Index study is performed on a quarterly basis.

About Citadele Bank

Citadele is the largest local Bank in Latvia with branch offices in other countries. SC “Citadele Banka” was established to inspire people and enterprises to growth and enhance regional development. It is the only collaboration partner of American Express^® in Latvia and Lithuania who is entitled to issue American Express credit cards. Presently, 75% of its shares are owned by Privatization Agency and the European Bank for Reconstruction and Development possesses 25% plus one of its shares. The value of Citadele Bank’s assets is 1.4 billion Lats.

“Large enterprises are the first ones to feel changes in the market followed by medium and small entities. Therefore the prognosis is that micro companies will soon feel the positive tendencies of market growth as well. These companies are still rather pessimistic and are also cautious in their prognoses for the future. Purchase power in Latvia is beginning to strengthen and even grow. Small and medium enterprises mainly operate in sales and services industries therefore they start feeling the improvement in purchase power faster,” says Agnese Paegle, Head of Corporate Services Directorate of Citadele Bank.

Although generally managers’ spirits are still rather pessimistic in 1st quarter of 2011, comparing to the end of 2010, entrepreneur’s assessment of their company’s turnover, economic stability in the represented industry and company’s financial condition has improved. Comparatively smaller growth is observed in indicators of general economic activity in the State, company’s profitability, number of employees working for the enterprise and competition in the represented industry.

Assessing enterprises by turnover, companies with large turnover are in a more positive mood in 1st quarter of 2011. However comparing to the previous quarter, the value of sentiment index has increased also for a part of enterprises which have a comparatively low turnover.

Observing enterprises by the origin of capital, it can be inferred that companies with foreign capital were more optimistic in the end of 2010 and in the 1st quarter of this year. Companies with local capital still are rather pessimistic.

Citadele Index research is conducted on a quarterly basis in order to find out entrepreneurs’ evaluation of the present situation and prognoses for the next 6 months in such fields as general economic activity in the State and corresponding business field. The previous research which was carried out in March 2011 polled 750 heads of companies of various sizes from all regions of Latvia representing various spheres of national economy.

About Citadele Index

The key task of Citadele Index is to obtain a unified index that characterizes entrepreneurs’ subjective assessment of economic conditions in the state. Citadele Index is calculated by summing up and assessing poll results obtained from heads of 750 enterprises of various volumes and representing various industries. The index also reflects entrepreneurs’ opinion and situation prognoses for economic activity in the State, economic activity in different industries and various business activity indices: profitability, turnover, financial condition, number of employees and amount of investments. If the index exceeds the value of 50 points, it speaks of optimism among entrepreneurs. Pessimism can be observed when it drops below the value of 50. Citadele Index study is performed on a quarterly basis.

About Citadele Bank

Citadele is the largest local Bank in Latvia with branch offices in other countries. AS “Citadele Banka” was established to inspire people and enterprises to growth and enhance regional development. It is the only collaboration partner of American Express^® in Latvia and Lithuania who is entitled to issue American Express credit cards. Presently, 75% of its shares are owned by Privatization Agency and the European Bank for Reconstruction and Development possesses 25% plus one of its shares. The value of Citadele Bank’s assets is 1.4 billion Lats.

In Latvia, Citadele offers a range of American Express Cards to meet the diverse needs of its customers. It offers The Platinum^® Card, the American Express^® Gold Card and Blue from American Express^®. For business customers, it also offers the American Express^® Business Card and the American Express^® Gold Business Card.

The American Express Cards are specifically designed to serve Citadele’s customers at home and abroad, helping them to meet the demands of their evolving lifestyle needs by providing unique access to an exclusive range of benefits and services.

“Our partnership with American Express is fundamental to our business strategy in Latvia. Our renewed agreement will allow us to continue building knowledge and experience in providing excellent card services to various types of customers – from Blue to exclusive Platinum cards,” said Guntis Belavskis, Member of the Board of Citadele Bank.

Debra Davies, Senior Vice President, American Express Global Network Services commented, “We are highly committed to growing our relationship with Citadele Bank, and we are excited by the opportunity to further extend American Express’ presence in Latvia through the continued provision of high quality premium products specifically tailored for the market”.

Since 2005, American Express Cards have been issued in Latvia by Parex Banka. In 2010, as a result of Parex Banka’s restructuring, Citadele Bank and American Express signed a card-issuing and merchant-acquiring agreement in the second half of last year.

About Citadele

Citadele Banka was established to inspire people, enterprises to growth and enhance regional development. It is the only collaboration partner of American Express in Latvia and Lithuania that is entitled to issue American Express credit cards. Presently, 75% of its shares are owned by Privatization Agency and the European Bank for Reconstruction and Development possesses 25% plus one of its shares. The value of the Bank’s assets amounts to 1.4 billion Lats.

About American Express

American Express is a global services company, providing customers with access to products, insights and experiences that enrich lives and build business success. Since 1996, American Express has been pursuing a strategy of opening its merchant network and card product portfolio to third party issuers around the world. By leveraging its global infrastructure and the powerful appeal of the brand, American Express has gained even broader reach for its network worldwide. American Express has now established 129 partnerships in 131 markets across the world. Learn more at www.americanexpress.com/gns.

Regardless of the complicated situation with restructuring of AS Parex banka, 2010 was generally successful for the company. Increase in main sectors of the financial markets ensured good investment management results and facilitated the interest of clients in using investment management services. During the period of account, the company achieved notable results in asset management: profitability of “Universal”, State-funded pension scheme investment plan, reached 9.01% for 2010 and the profitability of “Active” was 11.80%. These were the best results in conservative and active plan groups correspondingly.

The total amount of assets managed by Citadele Asset Management IPAS increased by 13% to 306.6 million Lats during the period of account, the largest proportion of which (slightly more than one third or 106 million Lats) was shaped by State-funded pension scheme assets whereas the total amount of client assets in individual management was 88 million Lats or 29% of the total sum.

In comparison with 2009, income from commission for asset management increased by 16%, reaching 2.8 million Lats.

Income from core activity of Citadele Asset Management IPAS totalled to 3.1 million Lats which is an increase by 20% comparing to 2009. In order to optimize the company’s activity, we continued to implement measures for decreasing expenses – expenses in total for 2010, compared to 2009, were reduced by 7%.

Company’s net profit for the period of account was 420 thousand Lats (179 thousand Lats in 2009).

Annual Report for 2010 (Latvian)

From August until December of year 2010 the portfolio of Citadele’s client deposits has increased by 52.8 million Lats and the total amount of deposits with the Bank amounted to 1.1 billion Lats at the end of 2010. During this period, more than 6’000 new clients chose Citadele Bank’s services; the Bank has issued 24’918 new payment cards. From August until December 2010, the Bank’s loan portfolio decreased by 58 million Lats, reaching the amount of 690 million Lats at the end of the year. Citadele Bank performed the first early repayment of funding to the Ministry of Finance of the Republic of Latvia for the amount of 17.3 million Euros or 12.2 Lats as early as in September of 2010.

The changes provide that starting from 9 April this year, collection of principal amount and interest accruals from term deposits in cash from the account will be available at the bank without commission fee in pre-determined periods:

• Principal sum of term deposit – within 14 days of expiry of term deposit contract or early termination date;
• Interest accruals – within 14 days of transfer of term deposit interest to your account.

After expiry of the 14 day period mentioned above, a commission fee for receipt of cash from account at the bank specified in the Bank’s pricelist will be applied to withdrawal of term deposit in cash.

Citadele Bank encourages clients to keep track of the expiry date of your term deposit contract and to use the opportunity of receiving your accruals in cash without commission fee!

We would like to remind that private customers are welcome to carry out transfers of term deposits and related accruals between Citadele Bank’s accounts via internet bank free of charge at any time convenient for you. Likewise, private customers can withdraw cash in Latvian Lats without commission fee at ATMs of Citadele Bank (Latvia), GE Money Bank, Latvijas Krājbanka and Latvijas Hipotēku un zemes banka at any time using those payment cards of Citadele Bank that do not have commission fees determined for cash withdrawal in the Bank's pricelist.

Detailed information about the Bank’s pricelist for services

Citadele Bank’s around-the-clock information hotline: 67010000.

“Corporate lending for development of Latvia’s economy is an important area of Citadele Bank’s business activity. Participation in the Board of British Chamber of Commerce which is the largest union of entrepreneurs in Latvia will make Citadele Bank an even stronger partner for entrepreneurs not only in the scope of Latvia but also in terms of strengthening international cooperation, mutual expansion of trade network and attraction of investments between Latvia, the UK and other countries,” says Philip Allard. In Citadele Bank, Philip Allard is responsible for managing financial resources. He has more than 25 years of experience in the financial sector in various European countries. P. Allard has worked as Finance Director of banks in the UK, France, Germany and several other European countries for Citibank and ABN Amro and has held the post of International Finance Director of Norwich Union, an insurance company. Mr. Allard has worked in Latvia since May 2010 when he was invited as a consultant to support the successful implementation of Parex banka’s restructuring process and for coordinating the work of the bank’s Finance and Treasury Directorate. After completion of the bank’s restructuring process, Philip Allard agreed to continue working for Citadele Bank by professionally contributing to ensuring the Bank’s stability and development.

Apart from Philip Allard, Douglas Balchin, CEO of “Zebra Friendly Movers”, and Cameron Greaves, Member of the Board of “VCG” Ltd, were elected in the Board of the British Chamber of Commerce. The Board is elected for a period of two years.

British Chamber of Commerce in Latvia was founded in 1996 and it is the largest union of entrepreneurs in the state. Companies from Latvia, the UK, Sweden, USA, Finland, Denmark, Iceland and Norway are among its members.

The Chamber of Commerce provides entrepreneurs with an opportunity to meet with topical international experts, facilitates mutual trade and supports responsible and sustainable business practice in Latvia. Citadele Bank actively participates also in the US Chamber of Commerce in Latvia and Latvian Chamber of Trade and Commerce by developing close cooperation with companies which participate in these organizations and by offering them both – the Bank’s experience and expertise in business development and financing.

About Citadele Bank

Citadele is the largest local Bank in Latvia with branch offices in other countries. AS “Citadele Banka” was established to inspire people and enterprises to growth and enhance regional development. It is the only collaboration partner of American Express^® in Latvia and Lithuania who is entitled to issue American Express credit cards. Presently, 75% of its shares are owned by Privatization Agency and the European Bank for Reconstruction and Development possesses 25% plus one of its shares. The value of Citadele Bank’s assets is 1.4 billion Lats.

“In September last year, the spirits and prognoses for the future of entrepreneurs were much more optimistic and the level of optimism at that time reached the highest result since the beginning of 2008. Research shows that after the Parliament elections and taxation changes that were introduced entrepreneurs’ state of mind is much more cautious than in September,” says Agnese Paege, Citadele Bank’s Head of Corporate Services Directorate.

Research results indicate that the ones who see the present economic situation and future perspectives optimistically are large and medium enterprises in terms of the number of employees and turnover as well the companies with foreign capital. However heads of companies with local capital assess and the small companies the present economic situation and future perspectives see rather pessimistic.

According to the opinion of Citadele Bank’s experts, this can partly be explained by the fact that economic recovery processes in the most important export markets for Latvia – Scandinavian countries, Germany and Russia – are taking place at a greater pace therefore companies related with these countries have good grounds for looking toward the future with greater hope. Local companies that work only in the Latvian market, on their part, face challenges in re-orienting their business to other types of entrepreneurship or expanding their sales to other markets. Entrepreneurs frequently view development of new business directions with certain cautiousness because that involves assuming new risks.

In accordance with the research results large and medium enterprises are more prone to approve of their turnover, profitability, general financial situation as well as economic activities taking place in their represented and in the State on the whole.

80% of the polled heads of companies evaluated taxing changes carried out in the end of 2010, such as increase of VAT and the minimum wage as well as other measures, as negative, besides 44% assessed these changes as strictly negative. Entrepreneurs substantiated this opinion with the fact that changes in the taxation system are going to leave a negative impact on the operation of the companies run by them.

Two thirds or 66% of company heads indicated that during the first 6 months of 2011 they do not plan to change salaries of their employees but 13% of entrepreneurs state that they are planning to increase them slightly; most frequently this was indicated by heads of large enterprises and companies with foreign capital.

Citadele Index research is conducted on a quarterly basis in order to find out entrepreneurs’ evaluation of the present situation and prognoses for the next 6 months in such fields as general economic activity in the State and corresponding business field. The previous research which was carried out in last December polled 750 heads of companies of various sizes from all regions of Latvia representing various spheres of national economy.

About Citadele Bank

Citadele is the largest local Bank in Latvia with branch offices in other countries. AS “Citadele Banka” was established to inspire people and enterprises to growth and enhance regional development. It is the only collaboration partner of American Express^® in Latvia and Lithuania who is entitled to issue American Express credit cards. Presently, 75% of its shares are owned by Privatization Agency and the European Bank for Reconstruction and Development possesses 25% plus one of its shares. The value of Citadele Bank’s assets is 1.4 billion Lats.

“Clients are our main asset and our main goal is to ensure the best possible quality of services and servicing. Therefore references from each of our clients are of great importance for us and we value such references highly. Ensuring high level of client servicing is a continuous task throughout the whole year and we are working on it purposefully. This campaign is both – an opportunity to study evaluation on our achievements from our clients and to assess future tasks, as well,” says Juris Jākobsons, Chairman of the Board of Citadele Bank.

Clients are encouraged to give their references on servicing quality in all of Citadele Bank's Customer Service Centres and branch offices across Latvia by filling in a special questionnaire. References on good servicing quality can also be submitted on “Praise good services!” website, by calling 1188 information hotline or by sending a free-of-charge SMS to 1188, entering MARTS code and giving your praise with reference to Citadele Bank.

Citadele Bank has a wide network of branch offices in Riga as well as in regions of Latvia: 20 Customer Service Centres and branch offices are located in Riga and 23 other branch offices and Customer Service Centres are situated in regions – Aizkraukle, Balvi, Bauska, Cēsis, Daugavpils, Gulbene, Jēkabpils, Jelgava, Jūrmala, Liepāja, Limbaži, Līvāni, Ludza, Madona, Ogre, Rēzekne, Salacgrīva, Saldus, Talsi, Tukums, Krāslava, Valmiera and Ventspils.

“Praise good service!” campaign takes place in Latvia for the seventh year already and it will continue until 31 March. More than 100 companies wishing to encourage clients to express their positive experience and praise provided services participate in this year’s “Praise good service!” campaign.

About Citadele Bank

Citadele is the largest local Bank in Latvia with branch offices in other countries. AS “Citadele Banka” was established to inspire people and enterprises to growth and enhance regional development. It is the only collaboration partner of American Express^® in Latvia and Lithuania who is entitled to issue American Express credit cards. Presently, 75% of its shares are owned by Privatization Agency and the European Bank for Reconstruction and Development possesses 25% plus one of its shares. The value of Citadele Bank’s assets is 1.4 billion Lats.

The opportunity of filling the questionnaire in at www.tautasskaitisana.lv is valid from 1 until 10 March in Latvia. The inhabitants who have not filled in the questionnaire online will be visited by census counters from 17 March until 31 May at inhabitants’ place of residence.

Population and Housing Census questionnaire can be accessed online by entering one’s personal identity number and passport code, Internet bank ID or e-signature. In order to fill in the questionnaire for your family members, all you need to know is their personal identity numbers.

Population and Housing Census questionnaire can also be filled in at 874 public libraries in Latvia where inhabitants are welcome to use the Internet free of charge.

As announced previously, Population and housing census is going to take place in Latvia from 1 March until 31 May 2011. This is the first Census for Latvia since joining the European Union (EU) and it is also the first one where questionnaires can be filled online. Summarization and publishing of Census results is planned to take place in 2012 and 2013.

About Citadele Bank

Citadele is the largest local Bank in Latvia with branch offices in other countries. AS “Citadele Banka” was established to inspire people and enterprises to growth and enhance regional development. It is the only collaboration partner of American Express^® in Latvia and Lithuania who is entitled to issue American Express credit cards. Presently, 75% of its shares are owned by Privatization Agency and the European Bank for Reconstruction and Development possesses 25% plus one of its shares. The value of Citadele Bank’s assets is 1.4 billion Lats.

Considering the complicated restructuring process of A/s Parex banka and the complexity of reflecting it in financial statements, additional time is necessary for A/s Citadele Bank to ensure preparation of clear and truthful information in accordance with International Financial Reporting Standards in both shareholders’ interest.

The reports published by Citadele Bank for 9 months as well as final indices for 2010 show that the Bank’s business results in 2010 correspond with the anticipated ones in general and they are in line with the restructuring plan approved by the Cabinet of Ministers and European Commission.

From August until December 2010 the portfolio of Citadele’s client deposits increased by 52.8 million Lats and the total amount of deposits with the Bank amounted to 1.1 billion Lats at the end of 2010. During this period, more than 6’000 new clients chose Citadele Bank’s services; the Bank has issued 24’918 new payment cards. From August until December 2010, the Bank’s loan portfolio decreased by 58 million Lats, reaching the amount of 690 million Lats at the end of the year. Citadele Bank performed the first early repayment of funding to the Ministry of Finance of the Republic of Latvia for the amount of 17.3 million Euros or 12.2 Lats as early as in September of 2010.

Since August last year when Citadele Bank launched its activity, a stable increase in the number of new clients exists in the corporate segment. Comparing data of January 2011 with data of January 2010, it is evident that the number of such clients has doubled.

The number of new clients in small and medium enterprise segment, on its part, has increased by 20% during this period.

Along with the increase in the number of new clients with Citadele Bank, existing clients are also increasing their activity – the number of active clients who regularly carry out their business transactions at Citadele Bank has went up by 58%.

“I am glad that the entrepreneurs’ trust toward the Bank grows with each Citadele’s business day. The client and his/her interests are our core value and we will continue to work purposefully in the future so that new clients are interested in Citadele’s services and we will also continue to work in close collaboration with the existing clients, carrying on with the initiated corporate loyalty program as well as continuing to improve the range of products and services offered by the Bank,” says Agnese Paegle, Head of Corporate Services Directorate of Citadele Bank.

About Citadele Bank

Citadele is the largest local Bank in Latvia with branch offices in other countries. AS “Citadele Banka” was established to inspire people and enterprises to growth and enhance regional development. It is the only collaboration partner of American Express^® in Latvia and Lithuania who is entitled to issue American Express credit cards. Presently, 75% of its shares are owned by Privatization Agency and the European Bank for Reconstruction and Development possesses 25% plus one of its shares. The value of Citadele Bank’s assets is 1.4 billion Lats.

Such a response was received from 52% respondents. Another 30% pointed out that they are planning to take a loan in order to purchase new equipment necessary for business activity; 25% said they are planning to buy or build real estate; 8% are planning to buy motor vehicles and 8% are going to re-finance or cover their existing liabilities.

Agnese Paegle, Head of Corporate Services Directorate of Citadele Bank informs that “analyzing by industries, up to now companies that operate in energy sector have been the ones who take greatest interest in loans or lines of credit in order to invest in development of manufacturing units or to use the available support mechanisms provided by European Union funds. Large interest from farms and companies who operate in agriculture and milk processing sector as well as companies capable of exporting can be observed. We have come to the conclusion that more than fifty percent of entrepreneurs attract funding from the European Union in their new investment and development projects,” says A. Paegle.

In accordance with the results of the research, presently 25% of companies in Latvia need credit funds – loans or lines of credit – but 71% of respondents pointed out that their companies are not in need of credit funds for the time being. Most frequently, the ones to indicate necessity for credit funds are managers of comparatively large enterprises and agriculture entities. It should also be mentioned that managers of companies with solely foreign capital, have indicated necessity for credit funds in a comparatively rarer number of cases than the managers of companies with solely local or local and foreign capital.

Citadele Index data shows that generally within the nearest half a year, 10% of Latvian companies are planning to take a loan from a bank; the proportion of such companies is comparatively higher among enterprises with a large turnover. Loan sums which might be necessary differ greatly – from 3 thousand to 17 million Lats.

During the last six months, a total of 13% of entrepreneurs have turned to banks in order to borrow money. This proportion is comparatively higher in manufacturing and trade company groups (19% and 20% correspondingly) whereas the proportion is smaller in construction (11%) and services (9%) company groups. A tendency appears that up to now a bigger proportion of companies that have larger amount of employees and turnover have turned to banks: 40% large enterprises, 33% companies with highest turnover rates, only 7% micro enterprises and 3% companies with lowest turnover.

According to data acquired in the research, 45% of companies presently have credit liabilities but 54% - do not. This proportion is comparatively higher in manufacturing and trade company groups (53% and 51% correspondingly) whereas the proportion was smaller in services (42%) and construction (34%) company groups. A total of 28% of entrepreneurs whose companies presently have credit liabilities would be interested in decreasing their monthly loan payments, suspending reimbursement of core sum for a certain period.

Citadele Index is run by Citadele Bank in collaboration with market and public opinion research centre SKDS. This research took place in December 2010 and it involved 750 companies throughout whole Latvia.

About Citadele Bank

Citadele is the largest local Bank in Latvia with branch offices in other countries. AS “Citadele Banka” was established to inspire people and enterprises to growth and enhance regional development. It is the only collaboration partner of American Express^® in Latvia and Lithuania who is entitled to issue American Express credit cards. Presently, 75% of its shares are owned by Privatization Agency and the European Bank for Reconstruction and Development possesses 25% plus one of its shares. The value of Citadele Bank’s assets is 1.4 billion Lats.

“Qualification of Citadele Asset Management as one of the best investment management companies in the Baltic States proves that many market participants highly evaluate the results of our work and our experience in international financial markets. The basis of our previous success and future accomplishments is our professional team which manages to find the best investment solutions and the main task of which is to ensure our clients with high quality investment services,” says Vladimirs Ivanovs, Chairman of the Board of Citadele Asset Management.

Nominees of annual award for investment management were determined by voting which took place from June until December 2010. Citadele Asset Management qualified in top 3 among the best investment management companies.

The final decision on the award winner will be adopted by the jury of the contest and winners will be announced in July-August issue of World Finance magazine.

World Finance is the leading financial magazine in the world issued by World News Media from its Headquarters in London.

IPAS Citadele Asset Management is a subsidiary of Citadele Bank and the leading investment management company in the Baltic States. Citadele Asset Management offers asset management services for retail clients as well as corporate clients, investment funds, 2nd and 3rd level pension plans of pension system and insurance companies. Subsidiaries of IPAS Citadele Asset Management offer asset management services also for clients in Lithuania, Ukraine and Russia. Citadele Asset Management has representative offices in Kazakhstan and Belarus, as well.

In 2007, Funds Europe magazine announced Citadele Asset Management as the best specialized investment company in Europe.

About Citadele Bank

Citadele is the largest local Bank in Latvia with branch offices in other countries. AS “Citadele Banka” was established to inspire people and enterprises to growth and enhance regional development. It is the only collaboration partner of American Express^® in Latvia and Lithuania who is entitled to issue American Express credit cards. Presently, 75% of its shares are owned by Privatization Agency and the European Bank for Reconstruction and Development possesses 25% plus one of its shares. The value of Citadele Bank’s assets is 1.4 billion Lats.

“Citadele’s deposit portfolio is stable with a tendency to grow: since Citadele started operating in August 2010, our client deposit portfolio has increased by 5.7% or 52.8 million Lats, regardless of the fact that deposit rates have decreased in the market and in Citadele as well. From August to December 2010, over 6’000 new clients chose Citadele Bank. This shows that clients trust Citadele,” points out J.Jākobsons.

Presently, the total amount of client deposits in Citadele is 981.5 million Lats.

Individual persons, small and medium enterprises in Latvia and Estonia as well as clients in private capital management sector have been the ones to choose services of Citadele most actively. From August to December 2010, Citadele has attracted more than 4’900 new clients in individual and small and medium enterprise segment in Latvia and more than 350 new clients in Estonia. In private capital management sector, on its part, Citadele attracted more than 600 new clients last year in period from August to December.

“Citadele’s advantages lie in highly professional personnel with extensive experience in finance, a varied range of services and high quality. For individual persons, Citadele is interesting with beneficial and convenient services for performing daily payments and developing accruals; for small and medium enterprises – with a wide range of financing and loan products for carrying out everyday financial operations and ensuring company’s development. But in private capital management system we are leaders in profitability in 2nd and 3rd level pension plans and we also provide high quality services to private banker clients,” explains J. Jākobsons.

Regarding types of services, Citadele’s new clients selected Maxi account most frequently, which simultaneously enables to make money deposits and use the accrued funds at any time. From August to December 2010, new clients chose this service by 97% more frequently than in this period 2009. The second most demanded service among new clients was Maxi salary card, which provides an opportunity of paying for utilities at Citadele’s ATMs without commission, receiving back 0.5 percent from the sum of purchases made during the month of account as well as other advantages. From August to December 2010, new clients of Citadele chose Maxi salary card by 9% more than in this period 2009.

From August to December 2010, Citadele issued 24’918 new payment cards. Turnover in American Express credit cards per one client per month increased as well: the turnover in American Express Gold credit cards increased by 13% and in American Express BLUE – by 16%.

About Citadele Banka

Citadele is the largest local Bank in Latvia with branch offices in other countries. AS “Citadele Banka” was established to inspire people and enterprises to growth and enhance regional development. It is the only collaboration partner of American Express^® in Latvia and Lithuania who is entitled to issue American Express credit cards. Presently, 75% of its shares are owned by Privatization Agency and the European Bank for Reconstruction and Development possesses 25% plus one of its shares. The value of Citadele Bank’s assets is 1.4 billion Lats. International Rating Agency Moody’s Investors Service assigned a Ba3 rating to Citadele Banka.

Juris Jākobsons, Chairman of the Board: “One of our main goals is to repay the funds invested by the State at the earliest convenience and we are approaching this goal purposefully. Thanks to professionalism of the employees of Citadele’s branch offices and managers as well as to loyalty of our clients, we have achieved better results in attracting deposits than it was planned. This has enabled Citadele to repeatedly repay the State a part of the funding ahead of the schedule.”

After the repayment, the amount of funds deposited in Citadele Bank by the Ministry of Finance has decreased to 139.8 million Euros or 98.2 million Lats.

In accordance with previous announcements, Citadele Bank repaid 17.3 million Euros or 12.1 million Lats ahead of plan in September 2010.

Citadele is the largest local Bank in Latvia with branch offices in other countries.

About Citadele Bank

AS “Citadele Banka” was established to inspire people and enterprises to growth and enhance regional development. It is the only collaboration partner of American Express^® in Latvia and Lithuania who is entitled to issue American Express credit cards. Presently, 75% of its shares are owned by Privatization Agency and the European Bank for Reconstruction and Development possesses 25% plus one of its shares. The value of the Bank’s assets amounts to 1.5 billion Lats. International Rating Agency Moody’s Investors Service assigned a Ba3 rating to Citadele Banka.

Therefore we invite you to perform all necessary payments and transactions in due time until January 1. As of January 2 all bank’s systems, including the internet bank and ATM network will operate as usual and clients will be able to use them at their convenience. There will be no interruptions in operation of payment cards during the system upgrade process and clients will be able to use their cards for their purchases in Latvia and abroad as well on the internet.

Also, payments in Estonian kroons will be accepted in bank's client service centres and internet banking system until December 30, 15:00 o'clock. After that clients will not be able to choose Estonian kroon as the currency of their payments. Instead, clients will be able to make their payments in euros or any other available currency.

If you have any questions please contact our Client service centre by the 24/7 hotline 6 701 0000.
We are sorry for your inconveniences.

Clients wishing to convert their accounts in Estonian kroons to other currencies are welcome to do so in Citadele bank’s internet-banking system or visit any of bank’s client service centres until the end of bank’s working day in December 31, 2010. Opening times of bank’s branches can be found here.

Citadele will continue to exchange EEK banknotes untill further notice, according to the standing pricelist.

If you have any questions, please contact bank by 24/7 info line +371 67010000, by sending your message via Citadele internetbank or via e-mail info@citadele.lv.

Valery Hudorozhkov, deputy Managing Director of AP Anlage & Privatbank AG, points out that this year is successful for the bank: “We have acquired many new clients and extended our activity this year. Financial results can also be regarded as good since interest rates are low in Swiss market after the financial crisis. AP Anlage und Privatbank AG will continue to put its best efforts into ensuring its contribution to achievement of Citadele group’s aims to the extent possible.”

On 29 October 2010, implementation of changes in shareholder structure of AP Anlage & Privatbank was completed. Introduction of these changes was already anticipated in Parex banka’s restructuring plan. Along with these changes, bank Citadele became an owner of 100% of the bank’s shares. Permit for change of shareholders was issued by FINMA, Swiss Financial Market Supervisory Authority, on 24 September this year. Presently, AP Anlage& Privatbank AG assumes an important role in Citadele group’s private equity management segment.

The Swiss bank attends accounts and payment cards of its clients and provides deposit, trust and investment services.

About bank Citadele

Bank Citadele has been established with a view to inspire people and businesses for development and facilitate growth of the region. The Bank provides excellent client service and a variety of services for individuals, businesses and wealth management clients. Bank Citadele is the exclusive partner of American Express^® in Latvia and Lithuania entitled to issue American Express credit cards. 75% of the Bank’s shares are held by Privatization Agency, while the European Bank for Reconstruction and Development (EBRD) owns 25% plus one voting share. The total assets of the Bank reach LVL 1.5 billion. Moody’s has assigned the Bank long term rating Ba3.

Launched by Latvian investment management company Citadele Asset Management in March 2004, the fund invests in stocks that are domiciled in, or derive the majority of revenues from, Russia. It is benchmarked against the RTSI index, although this is only used for performance comparison and, given the 10% maximum stock weighting, the fund will be structurally underweight the largest index constituents.

Vitalij Sostak has been the portfolio manager on the fund since November 2008. This represents his first lead fund manager role but he does have some previous experience as a co-manager and as a securities broker. He makes good use of the wider investment team in generating investment themes, with the head of the portfolio management team, Edgars Makarovs, being influential. The group has recently increased the resources devoted to Russian equities through the addition of an analyst to assist Sostak.

“Sostak is afforded significant flexibility in managing the fund and, as a result, deviations at the stock and sector levels can be large. Cash is also used as a separate asset class and, in the recent extreme market conditions, was raised to the 20% level. Since taking over the portfolio, Sostak has seen some success against the peer group median and, given this and the adequate resources, the fund achieves an S&P Fund Services A (New) rating,” says Simon Dorricott, S&P Fund Analyst.

"We are honored to be the first company in Latvia to receive an S&P fund management rating. We appreciate the evaluation of our regional expertise and ability to provide quality fund management services. Going forward, co-operation with S&P Fund Services will help us to continue to deliver superior performance for our clients," comments Vitalij Sostak, of Citadele Asset Management.

The individual fund report can be downloaded from the Standard & Poor’s Fund Services website at www.fundsinsights.com.

About Standard & Poor's Fund Services

Standard & Poor’s Fund Services is one of the world's leading providers of qualitative, forward-looking fund management research reports. Our fund research reports are based on in-depth analysis of the funds investment culture, due diligence approach, operational risk assessment, team’s experience, skill, flair and stability, fund specifics and other factors. The research is also based on an evaluation of qualitative (management, investment process and organisation) and quantitative (historic performance, portfolio construction and volatility) factors, which may contribute to long-term performance. Our fund management reports are continuously monitored and updated reports are posted to www.fundsinsights.com We rate funds into the following three categories of AAA (highest) or AA (very high) or A (high) to indicate three different standards of quality based on the fund’s investment process, team’s experience, control of risks and consistency of performance relative to its own investment objectives.

Idelsons says that since the successful restructuring of the Bank, Citadele has stabilised its operations and has a clear prospect for further development, he has decided to accept a new private sector position at an international level.

Citadele Asset Management is the leading investment management firm in the Baltic States. The company offers asset management services to individuals, corporate clients, investment funds, 2nd and 3rd level pension plans and insurance companies. The subsidiaries of Citadele Asset Management offer asset management services to clients in Lithuania and Ukraine. While Private Capital Management Sector of Citadele provides services to wealthy clients from the Baltic States and the CIS, offering a full range of banking services in the area of private capital management.

About bank Citadele

Bank Citadele has been established with a view to inspire people and businesses for development and facilitate growth of the region. The Bank provides excellent client service and a variety of services for individuals, businesses and wealth management clients. Bank Citadele is the exclusive partner of American Express^® in Latvia and Lithuania entitled to issue American Express credit cards. 75% of the Bank’s shares are held by Privatization Agency, while the European Bank for Reconstruction and Development (EBRD) owns 25% plus one voting share. The total assets of the Bank reach LVL 1.5 billion. Moody’s has assigned the Bank long term rating Ba3.

Changes in the Citadele Index since Q1 2004

Changes in the present index and future index since Q1 2004

The greatest increase in optimism among surveyed businesspeople related to overall economic processes in the country (+15.9 points), economic activity in their own sector (+10.6 points), company revenues (+8.8 points), profitability (+8.4 point) and the company’s overall financial situation (+8.3 points).

Bank Citadele board member Guntis Beļavskis: “The global recession continued for 18 months and was the longest recession since World War II. As the economies of developed countries began to recover some time ago, anyone who is more or less familiar with macroeconomic principles could see that it would be only a matter of time before growth was reinstated in Latvia, as well. I’m an optimist, and I hope that growth will be rapid so that recovery can be speedy, as well. During the first month of Citadele’s operations, I have met with many of our clients – managers of small and medium businesses all over Latvia. After I have heard and seen their mood and their ambitions, I find that the results of the Citadele Index are not surprising to me. We are on the right path.”

Businesspeople in the construction industry are the most optimistic among Latvia’s various economic sectors (+12.6 points), even though ever since mid-2007, people in the building sector have been the most pessimistic. Next on the list after construction firms are manufacturers, service providers and retail companies.

Big companies (more than 250 employees), companies with foreign capital, and companies in Riga tend to have people with more optimistic views than the average.

Arnis Kaktiņš, director of the SKDS public opinion research centre: “The Citadele Index is a forecasting index – it shows how other macroeconomic indicators such as GDP will change in future. If the indicator in the Citadele Index has returned to optimism, then we can say with great certainty that GDP in Latvia will return to growth in the next several quarters, as well. That will only happen, however, if the election and the budget consolidation do not destroy that optimism. We all know that the one thing which businesses need the most is clear rules of the game and an ability to forecast operations. The campaign and the related rhetoric among politicians is instead creating ambiguity and an atmosphere of concern.”

Survey respondents in the Citadele Index were asked whether the approach of the parliamentary election has led the government and Parliament to take decisions which are more favourable for businesses. 59% of respondents said no, while 29% said yes. Moreover, 73% of respondents think that in its next session, Parliament must help to promote entrepreneurship by cutting taxes (73%), making use of European Union funding (45%), promoting exports (43%), helping to promote innovation (31%), and ensuring the implementation of energy-efficient and environmentally friendly technologies (26%).

The Citadele Index (former Parex Index), which is Latvia’s first indicator of business activities in this regard. The Citadele Index helps to forecast the development of macroeconomic indicators in Latvia in future. The study offers a characterisation of the subjective views of Latvian businesspeople as to the economic situation which prevails in the country. The index is based on surveys completed by 750 businesspeople from Latvian companies of various sizes and from various sectors.

Results of the survey of Latvian entrepreneurs

About bank Citadele

Bank Citadele has been established with a view to inspire people and businesses for development and facilitate growth of the region. The Bank provides excellent client service and a variety of services for individuals, businesses and wealth management clients. Bank Citadele is the exclusive partner of American Express® in Latvia and Lithuania entitled to issue American Express credit cards. 75% of the Bank’s shares are held by Privatization Agency, while the European Bank for Reconstruction and Development (EBRD) owns 25% plus one voting share. The total assets of the Bank reach LVL 1.5 billion. Moody’s has assigned the Bank long term rating Ba3.

• information about Asset Manager has been changed from “Parex Asset Management” IPAS to “Citadele Asset Management” IPAS; data in Asset Manager licenses has been changed as well;
• information about Members of the Board and Council of Asset Manager has been changed;
• information about private pension fund pension plans managed by Asset Manager has been changed;
• “Citadele Active Pension Plan” investment plan prospect has been supplemented with a new sub-clause 6.2.4. Assessment of investments in commercial entities’ capital.

Amendments to State funded pension scheme investment plan "Citadele Aktīvais pensiju plāns" and "Citadele Universālais pensiju plāns" prospects shall become effective on 20 September 2010.

Investment plan prospects are available on the following website (www.manapensija.lv) and on Citadele website www.citadele.lv and from 20 September 2010 also on.

Chairman of the Executive Board of Citadele, Juris Jākobsons: “In the first month of its operations bank Citadele has managed to achieve better results in attracting deposits than expected, especially in the corporate and institutional client segment. One of the Bank’s main priorities is the repayment of the State aid provided to the Bank; hence, we are glad that the improvement of the financial results of Citadele, allows the Bank to repay part of the state deposit shortly after launch of its operations.”

As previously announced, on 1 August 2010 the technical split of Parex banka was performed, as a result part of assets and liabilities was transferred to bank Citadele, including part of the Ministry of Finance deposits.

About bank Citadele

Bank Citadele has been established with a view to inspire people and businesses for development and facilitate growth of the region. The Bank provides excellent client service and a variety of services for individuals, businesses and wealth management clients. Bank Citadele is the exclusive partner of American Express^® in Latvia and Lithuania entitled to issue American Express credit cards. 75% of the Bank’s shares are held by Privatization Agency, while the European Bank for Reconstruction and Development (EBRD) owns 25% plus one voting share. The total assets of the Bank reach LVL 1.5 billion. Moody’s has assigned the Bank long term rating Ba3.

Moody’s has also concluded the review for upgrade on the B2 senior unsecured rating for the bond issue, which was transferred to Citadele banka from Parex banka, by upgrading the rating to Ba3 (from B2).

Commenting the statement, Chairman of the Management Board Juris Jākobsons said: “We are pleased to receive a positive signal from internationally recognized experts providing the first evaluation of financial indicators of the newly established Citadele banka. According to its business plan, Citadele will be profit-making in 2011, thus creating potential for the bank to further improve its rating.”

About Citadele Bank

Citadele Bank has been established to inspire the growth for people and enterprises and to enhance regional development. The Bank strives to ensure outstanding customer service and provide a wide range of retail services, as well as services for enterprises and private capital management clients, and to attract excellent and experienced clients and customer service staff. Citadele Bank is an exclusive dealer of American Express^® in Latvia and Lithuania entitled to issue American Express credit cards. 75% of the Bank’s shares are held by Privatization Agency, while the European Bank for Reconstruction and Development (EBRD) owns 25% plus one voting shares.

Andris Kotāns, Senior Fund Manager of Citadele Asset Management says, “The Fund invests in debt and equity securities of Eastern European issuers. During the period from July 1, 2009 to June 30, 2010, the Fund was performing very well, and we congratulate the Fund’s faithful investors on it! This growth was primarily driven by the strong performance of the hard currency debt markets of Eastern Europe during this period, which at the start of the period formed 85% of the Fund’s assets. Following the late 2008/early 2009 panic and liquidity squeeze, these debt markets offered amazing opportunities with bonds of fundamentally strong issuers offering yields in double digits. Subsequently, the market reacted very positively to the generally strong economic durability of the region, with strong liquidity boost provided by global monetary policy stimuli of the world’s leading central banks. As the Eurobond market rallied and the amount of obviously undervalued debt instruments decreased, the weight of equities in the Fund has increased to 20% due to better forward-looking risk/return balance. Further increase of the equity weighting is expected in the coming months, yet the region’s Eurobonds are still expected to form the backbone of the Fund for the foreseeable future”.

Business New Europe also awarded Citadele Eastern European Balanced Fund as the Best Balanced Fund in 2008.

More information on this: http://businessneweurope.eu

About Citadele Bank

Citadele Bank has been established to inspire the growth for people and enterprises and to enhance regional development. The Bank strives to ensure outstanding customer service and provide a wide range of retail services, as well as services for enterprises and private capital management clients, and to attract excellent and experienced clients and customer service staff. Citadele Bank is an exclusive dealer of American Express^® in Latvia and Lithuania entitled to issue American Express credit cards. 75% of the Bank’s shares are held by Privatization Agency, while the European Bank for Reconstruction and Development (EBRD) owns 25% plus one voting shares.

Additionally to previously nominated Members of Citadele’s Council – Klāvs Vasks and Juris Vaskāns, and the former Member of Parex banka’s Supervisory Council – Laurence Phillips Adams, Ģirts Freibergs, a professional with 10 years of experience in various enterprises in the financial industry, and Geoffrey Dunn, a professional from Nothern Rock, were elected as well. Prior to appointment in bank’s Citadele Council Mr. Freibergs worked as the representative of Creditinfo Latvija and he has also been the representative of MCB Finance Latvia. Ģ.Freibergs acquired his MBA degree at the William E.Simon Graduate School of Business Administration in Rochester University, USA.

Mr. Dunn has held position of Interim Finance Director at Northern Rock in the United Kingdom, when the Bank went through the restructuring process. Prior to that he has worked as Director of Business Performance Management in company Co-operative Financial Services, as well as has been Chief Financial Officer at the Bank of England and the global provider of secure financial messaging services S.W.I.F.T., as well as has gained experience in several other enterprises of financial system in Belgium and the United Kingdom.

As announced previously, bank Citadele launched its operations on 1 August 2010, with its registered equity capital is 103 million Lats. The bank is managed by the Board consisting of three members – Juris Jākobsons was approved Chairman of the Board while Valters Ābele and Guntis Beļavskis were approved as Members of the Board.

About Citadele banka

Citadele banka was established to inspire people and enterprises to growth and enhance regional development. The bank wishes to ensure outstanding customer service and provide a wide range of retail services, services for enterprises and private capital management clients as well as attract excellent and experienced clients and customer service staff. Citadele banka will be the only collaboration partner of American Express^® in Latvia and Lithuania which is entitled to issue American Express credit cards. 75% of the Bank’s shares are held by Privatization Agency, while the European Bank for Reconstruction and Development (EBRD) owns 25% plus one voting shares.

Change of the name will have no impact on clients of these companies as well as participants of 2nd and 3rd level pension plan whose funds are managed by Citadele’s subsidiaries – they will continue to be attended with greatest care and professionalism. Investment fund strategies and terms and conditions of pension management plans provided in investment fund prospect have not been changed – amendments have been made only in the names of the corresponding companies as well as plans and funds.

“Citadele Asset Management” IPAS manages two 2nd level pension plans: Citadele Active Pension Plan and Universal Pension Plan. On 1 August, Profit of Universal Pension Plan has reached 11.09% for the last 12 month period which is among the highest indicators in the industry. Profitability of Citadele Active pension plan as of 1 August, on its part, 11.40% for the period of the last 12 months. Both of these pension plans are among of the largest ones in their category according to the number of participants.

AS “Citadele atklātais pensiju fonds” offers four 3rd level pension plans under new names:

• Citadele Balanced (Citadele Sabalansētais);
• Citadele Active (Citadele Aktīvais);
• Citadele Active USD (Citadele Aktīvais USD);
• Citadele Active EUR (Citadele Aktīvais EUR).

Uģis Vorons, Chairman of the Board of AAS “Citadele Life” and AS “Citadele atklātais pensiju fonds”: “The strategic goal of Citadele Life is to work not only in the Latvian market, but outside of it, as well, for we see that our potential clients might be representatives of various countries. Therefore we resolved to change the name of the company by making it more recognizable internationally – “Citadele Life” will be easier to understand and perceive in our target countries."

About IPAS Citadele Asset Management

“Citadele Asset Management” IPAS is the leading investment management company in the Baltic States which offers asset management services for individual persons as well as corporate clients, investment funds, 2nd and 3rd level pension plans and insurance companies. The company’s subsidiary AAS “Citadele Life” offers life insurance services. Subsidiaries and representative offices of “Citadele Asset Management” IPAS also operate in Lithuania, Russia, Ukraine, Belarus and Kazakhstan.

Meanwhile, the EBRD and Parex banka signed a Novation Agreement and Amended and Restated Subordinated Loan Agreement, stating that the subordinated loan issued by the EBRD to Parex banka will be transferred to bank Citadele, the total amount of the subordinated loan will be 22 million EUR. The first part of the loan has already been issued, while the other part in amount of 3.6 million euros will be provided in one instalment, being the subject of receiving the final EC approval.

The EBRD’s investments will bring with it support and expertise to further develop the bank’s business, contribute to best practice corporate governance and assist in the bank’s return to private sector.

Juris Jākobsons, Chairman of bank Citadele: “The EBRD’s entrance in bank’s Citadele shareholding structure shows their confidence in the new bank and approved the decisions made by Latvian Government in regards to the restructuring of Parex banka and transfer of enterprise to bank Citadele. Moreover, the signing of agreement on the EBRD’s entrance puts significant cornerstone in the Bank’s further development and achievement of the set goals in the business plans.”

Peter Reiniger, Managing Director at EBRD said: “The creation of Citadele was a milestone, which was the result of a great deal of hard work by many people and an example of good cooperation between EBRD and the Latvian Government. Citadele will be able to contribute to Latvia’s economic recovery by lending to SMEs and EBRD looks forward to its continued support of the bank.”

Bank Citadele was established by Privatisation Agency on 30 June 2010 with the share capital of 4 million lats. On 29 July 2010 the Bank’s share capital has been increased by 99 million lats to 103 million lats.

About bank Citadele

Bank Citadele has been established with a view to inspire people and businesses for development and facilitate growth of the region. The Bank will provide excellent client service and a variety of services for individuals, businesses and wealth management clients by employing experienced and motivated client service staff. After the transfer bank Citadele will remain the exclusive partner of American Express in Latvia and Lithuania with rights to issue American Express credit cards.

The new brand is internationally understandable, whilst preserving Bank’s best business traditions and experience. The new brand expresses bank’s new strategic purposes and advantages in Baltic region for bank’s clients, investors and employees. It will be strong and reliable with main positioning: “We will inspire people and businesses for development in order to facilitate growth in our region”.

A Citadel (derived from “cittadella” in Italian) is the heart of a feudal city, a stronghold which also serves as an administrative and cultural centre. Nowadays the greatest advantages of Citadel are next-generation technological solutions and modern environment which is unified with beautiful scenery, thereby creating necessary conditions for business ideas and growth – this will be the purpose of the new bank Citadele. New brand positioning indicates that beside its business aims the bank will play an important economic and social role.

Strategy of the new bank will be based on a stable and profitable business model which will focus on three main business segments: retail, corporate and wealth management. The first two segments concentrate on Baltic market while wealth management will work also in the CIS countries. In terms of product development the new bank will focus on “niche” products and decrease its activities in segment of universal products. The bank will invest in development of electronic services, thereby creating an opportunity for clients to receive bank’s services online.

The new bank will take over the partnership with American Express® and bank Citadele will remain the only partner of American Express® in Latvia and Lithuania authorised to issue American Express® credit cards.

The new bank will operate without any restrictions and it will be an attractive partner for corporate clients and wealthy individuals because in comparison with its competitors bank’s Citadele strongest advantage is experienced and talented employees.

The new brand has been elaborated in cooperation with international brand consultancy agency Wolff Olins and Latvian creative agency Leo Burnett. After restructuring, the new brand will be gradually introduced in all markets the bank is represented in. Positioning of the brand maintains bank’s best business traditions and experience with emphasis on bank’s economic and social priorities which will supplement its business aims.

As previously announced, on 23 March, the Latvian Cabinet of Ministers approved restructuring plan of Parex banka. According to the plan a part of Parex banka’s assets will be used for the creation of a new bank. Bank Citadele will have a stable financial base, which will make it easier to attract investors and repay the resources invested into the Bank by Latvian state institutions at the earliest possible convenience. The main beneficiaries of this will be depositors at the existing Parex banka, as they will be automatically transferred to bank Citadele. The New Bank will service all client accounts, the same as all guarantees and advantages of saving products will be retained.

It is planned that bank Citadele will begin its work on August 1. For more information about bank Citadele please visit www.jaunabanka.lv, where the visual identity of the Bank may be uploaded. Follow the New Bank on Twitter at www.twitter.com/citadele.