According to the Rīga-based newswire, Streļčenoks said in an interview published on Saturday in the daily newspaper Diena that in his opinion the bureau might become an independent institution like the State Audit Office and the Bank of Latvia. In such case, however, there will be a risk that a KNAB head might be appointed who instead of combating corruption would sabotage the efforts to eradicate corruption. To prevent this, a council might be set up that would decide the bureau’s strategic issues, such as structural reforms or budgetary issues.

“The council might comprise three members – the KNAB chief and two deputies,” Streļčenoks was quoted as saying.

According to BNS, he indicated that this would limit the KNAB chief’s powers, although he would still have the final say on certain issues, while strategic questions would be up to the council to decide.

BNS previously reported that Streļčenoks has been shortlisted for the position of KNAB head by a special commission. Streļčenoks has been working in KNAB since 2003 as the chief expert, and since 2006 he has been the deputy head of the KNAB Department for Control Over Activities by State Officials. Since 2005 Streļčenoks has lectured on corruption prevention in the State Administration School. He has also taken part in a group of international experts, analyzing whether Kyrgyzstan has met its liabilities in corruption prevention and combating.

The goal of transforming the Mortgage Bank is to establish a development institution for the implementation of state aid programs using efficient infrastructure and the intellectual and financial potential of the Mortgage Bank, transforming the bank in a way that is beneficial to the state and at the same time ensuring continuity of the implementation of state aid programs. During the transforming process, the operations of the Mortgage Bank are focused on key economic fields, such as financing of small and medium-sized enterprises, promotion of business launching, development of infrastructure, and other national development projects within the framework of CoM approved programs.

Since the development bank/institution mainly plays a complementary role and does not have to compete with other players in the market, the part of the Mortgage Bank – which is not directly linked with the performance of development functions, namely the commercial part – will be provided a possibility to develop in the private sector.

The transformation of the Mortgage Bank is done according to the conception approved by the CoM on November 24, 2009, on transforming the state JSC Mortgage and Land Bank of Latvia into a development bank and the Mortgage Bank transition plan considered by the CoM on April 12, 2011, envisaging separation of the commercial part of the bank, which is not related to the functions of the development bank. In order to develop the Mortgage Bank’s commercial part sales strategy, a commission was established to evaluate potential candidates. As a result of the selection procedure, SEB Enskilda was appointed as a consultant.

When developing the commercial part sales strategy, the consultant SEB Enskilda analyzed several possible solutions and recommended the sale of the commercial part, including the subsidiary, as the most optimal option. Previous market research showed that this solution provided for a possibility to sell the commercial part in an optimal time period, thus receiving the highest possible price. The solution for the strategy offered by the financial consultant SEB Enskilda meets the priorities of the sales process of the Mortgage Bank’s commercial part and will ensure continuity of the implementation of state aid programs and services provided by the commercial part to clients, as well as it is in line with the EU regulations on competition and state aid. After selling the commercial part the Mortgage Bank will focus only on the performance of the development institution’s functions.

Following the approval of the strategy negotiations will be launched with potential buyers in order to start evaluation of their offers by the end of 2011. The transformation process should be finalized by the end of 2013.

The implementation of the strategy will not affect contractual liabilities of clients and the bank. During the whole transformation process, continuity and succession of services will be ensured. Clients will be informed in person and in a timely manner on any changes in services.

According to the Rīga-based newswire, when commenting on the possible selling price of the bank, Jakobsons said that, considering the transactions made over the past couple of years, the value might not be much bigger than 1.5 of the bank’s share capital, which at the end of June 2011 stood at 103 million lats (EUR 146.55 million).

“This is due to the current circumstances — investors are prudent, the world is not expected to see fast growth in following years, on the contrary — there is going to be a recession and problems… In such circumstances it would be naive to expect to sell the bank for a price three or four times higher than the value of the bank’s capital. For that reason, the strategy for selling the bank is to use international competitive bidding,” Jekabsons was quoted as saying.

BNS reported that Jakabsons indicated at the same time that Citadele Bank can now be sold on much better terms than a year ago when it was just separated from the bailed out Parex Bank. “Now we can show the audited results of last year, which are in line with what we had promised. We incurred losses, but their size was in line with what we had promised. By the first half of this year we were afloat already, we earned a small profit thanks to or because of low market activity, as banks have not been lending very actively. Banks are naturally interconnected with the economy, and they cannot develop faster than the economy,” the banker was quoted as saying.

Jakobsons also voiced hopes that the government will recover its investments in Citadele by selling its stake in the bank. “I believe that the bank is worth at least 103 million lats — this is my conviction,” Jakobsons was quoted as saying.

According to BNS, Nomura International Plc, hired by the Latvian government as a sell-off advisor, has started the process for selling the Citadale Bank. The sales process had been started in line with the strategy for the Citadele Bank sell-off approved by the Latvian government on May 17. BNS reported that Citadale Bank will be sold at the auction to be preceded by two rounds of screening of the potential bidders.

The sell-off process should take between six and 12 months.

According to BNS, in late 2008 the Latvian government took over Parex Bank, which was the second largest bank in Latvia at the time, in order to save the privately-owned bank from financial troubles due to the global financial crisis. On March 23, 2010, the Latvian government adopted a decision about restructuring Parex Bank by separating part of the assets to create a new bank, Citadele Bank, which became operational on August 1, 2010.

BNS also reported that the Latvian state holds 75 percent of shares in the Citadele Bank through the Latvian Privatization Agency (LPA); the European Bank for Reconstruction and Development (EBRD) holds 25 percent plus one share.

According to the information from the Latvian Commercial Banks Association, quoted by BNS, Citadele Bank ranked sixth among 30 banks in Latvia in terms of assets at the end of June 2011.

During the negotiations, the Prime Minister thanked the Ambassador for successful work in Latvia during his term of office in coordinating the activities of the Belgium’s presidency of the European Union in the second half of 2010 and in implementing the cooperation programs of Latvia with the region of Flanders, Wallonia, and the French-speaking community of Brussels.

The Ambassador of Belgium informed about the interior policy issues of his country and both officials discussed the current situation in the eurozone.

Latvia-Belgium trade indicators:

In the first half of 2011, the Latvia-Belgium foreign trade volume amounted to EUR 130.2 million, ranking Belgium in the 14th place among the foreign trade partners of Latvia. During this period, as compared with the respective period of 2010, the foreign trade volume of Latvia and Belgium has increased by 41% or EUR 37.9 million. This increase is mainly provided by an increase in imports – by 57.5%. Timber products, copper waste and scraps, and component parts of motor vehicles dominate in Latvia’s exports. Medicinal products, pneumatic rubber tires, and bulldozers prevail in Latvia’s imports from Belgium. 113 Belgium-Latvian joint ventures have been registered in Latvia. Belgium has invested nearly LVL 7 million in the equity capital of Latvian companies.

Dāvidnieks said that BGF.BV was founded in the Netherlands this year for investments in the companies in the Baltic region, the Riga-based newswire reported. The company will be making low-risk investments with a stable return.

According to the newswire, BGF.BV had chosen the Baltic region because of the economic recovery in this region. “It does not make sense to invest in markets that are already developed and could no longer be expected to have great potential for growth,” Dāvidnieks was quoted as saying.

BNS reported that Dāvidnieks said the investors saw opportunities for growth in Latvia and believed that it was a good time for investing in the Latvian companies. But he also admitted that the Dutch investors had certain concerns regarding Latvian tax policies and unstable political environment.

According to the newswire, BGF.BV plans to consider different investment opportunities, which will include buying shares of the companies listed on the Baltic official list and the Baltic second list of the NASDAQ OMX stock exchange and investments in the companies in Latvia and other Baltic states that have the greatest potential.

At present the Dutch investors are considering investments in the companies working in pharmaceutical industry, logistics, and transit as well as wood-processing, BNS reported. Dāvidnieks said that eligible companies should have been in business for at least five years, their sales should be at least 10 million lats (EUR 14.22 million), and exports should account for at least 50 percent of the company’s income.

Dāvidnieks also said that, looking for the companies in which it would be worth to make investments, of all three Baltic states the Dutch investors had chosen to start with Latvia. But so far BGF.BV is not ready to name any specific company in respect of which acquisition talks could begin, BNS reported.

While attending the annual meeting of the Arraiolos Group in Hungary, President of Latvia Valdis Zatlers met with President of Italy Giorgio Napolitano to discuss bilateral relations, opportunities for economic co-operation, as well as aspects of energy and security policies.

Both countries are preparing to take over the rotating presidency of the European Union – Italy in 2014 and Latvia in 2015. For that reason, President Zatlers told his colleague that the two countries should work together in preparing for their presidencies so as to ensure succession in the priorities that are identified.

President Zatlers and President Napolitano also discussed the economic situation in both countries and the things which they have done to facilitate economic recovery. Mr Zatlers said that he supports the European Council’s Euro Plus pact, stating his conviction that the planned steps will promote economic growth and help to maintain financial stability. Mr Napolitano, for his part, spoke about the situation in Italy’s automobile industry – one which has created serious challenges for the Italian economy.

President Zatlers also called on Italian businesses to make investments in Latvia, where macroeconomic indicators have improved and economic recovery is visible. Speaking about the country’s goal of joining the euro zone in 2014, the President said that Latvia is working hard to make sure that it can satisfy the Maastricht criteria already next year.

The two heads of state discussed developments in the Baltic region, including energy issues related to the EU’s common energy policy. President Zatlers said that it is necessary to develop the gas market in the region and to evaluate the need for a liquefied natural gas terminal in Latvia. He and President Napolitano also discussed the European Union’s co-operation with Russia, as well as developments in Latvia’s relationship with that country since the President’s official visit to Russia in December of last year.

The two presidents discussed the European Union’s partnership policy with its neighbours to the South and the East. President Zatlers said that it is necessary to work with the countries in the Eastern Partnership programme so as to draw them closer to Europe.

Also during the Arraiolos Group meeting, President Zatlers met with Polish President Bronislaw Komorowski, with the two heads of state discussing the results of their recent visits to the United States. Mr Zatlers is continuing his participation in the meeting.