Agricultural Bank of China contributes to a €200 million EUR syndicated loan to Parex banka for refinancing purposes

Project narrative

On or around March 3, 2006, a syndicate of 31 lenders — including the Agricultural Bank of China (ABC) — entered into a €200 million EUR syndicated loan agreement with JSC Parex banka — a private Latvian bank — for refinancing purposes. The facility carried a maturity period of one year as well as an interest rate of 57.5 basis points (bps) over Euribor. The original €100 million EUR facility was oversubscribed to €200 million EUR during syndication. The proceeds of the loan would be used to refinance a €69.5 million EUR facility, first signed in February 2005. The facility marked the largest loan to a single Latvian financial institution at the time of its issuance. ABC acted as a lead manager on the €200 million EUR facility, captured by Record ID#110032. In addition to ABC, the following lenders also contributed to and played these roles on the facility: Alpha Bank (mandated lead arranger, or MLA); Bankgesellschaft Berlin (co-arranger); Banco Popolare di Verona e Novara (manager); Bank of Kaohsiung (BOK) (lead manager); Bank of Overseas Chinese (BOOC) (co-arranger); Bank of Taiwan (lead manager); Bayerische Landesbank (BayernLB) (MLA); BRE Bank (now mBank S.A.) (manager); Cathay United Bank (lead manager); Central Trust of China (lead manager); Chinatrust Commercial Bank (now CTBC Bank) (manager); Commerzbank Aktiengesellschaft (Commerzbank AG) (co-arranger); Dresdner Bank (lead arranger); DZ Bank (MLA); Export-Import Bank of the Republic of China (lead manager); ICICI Bank (co-arranger); International Commercial Bank of China (now Mega International Commercial Bank Co., Ltd.) (co-arranger); Landesbank Saar (SaarLB) (manager); Landesbank Sachsen Aktiengesellschaft (SachenLB) (co-arranger); Mizuho Bank (mandated lead arranger); National Bank of Egypt (S.A.E.) (co-arranger); National Savings and Commercial Bank (now OTP Bank) (MLA); Privredna banka (MLA); Raiffeisen Zentralbank Österreich A.G. (RZB) (co-arranger); Sanpaolo IMI (lead manager); Shanghai Commercial and Savings Bank (manager); Taipei Fubon Commercial Bank (lead arranger); Taiwan Cooperative Bank (MLA); UniCredit Bank Austria (lead manager); Unicredito Italiano (now UniCredit) (manager). Then, on February 19, 2007, a syndicate of 49 banks — including the Hong Kong Branch of ABC — entered into a €385 million EUR (Ls 271 million LVL) syndicated loan agreement with Parex banka for refinancing purposes. The loan carried a maturity period of 1 year and carried an interest rate of 50 bps over Euribor. The proceeds of the loan would be used to refinance the €200 million EUR syndicated facility issued in or around March 2006. ABC acted as manager on the €385 million EUR facility, captured by Record ID#110080. Then, on or around February 22, 2008, a syndicate of 38 lenders — including ABC — entered into a a €275 million EUR syndicated loan agreement with Parex banka for refinancing purposes. The facility carried a maturity period of one year as well as an interest rate of 55 bps over Euribor. The loan was oversubscribed from €225 million EUR to €275 million EUR during syndication. The proceeds of the loan would be used to refinance the €385 million EUR syndicated facility issued on February 19, 2007. ABC acted as a manager on the €275 million EUR facility, captured by Record ID#110068. However, on November 8, 2008, the Latvian Government assumed control of Parex banka due to large market and credit losses as well as liquidity problems. Authorities were skeptical that Parex banka could pay back its €775 million EUR in senior syndicated loans, which included the €275 million EUR maturing in February 2009 and a €500 million EUR loan maturing in June 2009.