Agricultural Bank of China contributes to a €385 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. Then, on February 19, 2007, a syndicate of 49 lenders — 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. In addition to ABC, the following lenders also contributed to and played these roles on the facility: AKA Ausfuhrkredit-Gesellschaft (senior lead arranger); Agricultural Bank of Greece (senior lead manager); Alpha Bank (senior mandated lead arranger); Banco BPI (manager); Banco Popolare di Verona e Novara Scrl (manager); Bank of Kaohsiung (BOK) (senior lead manager); Bank of Overseas Chinese (BOOC) (senior lead manager); Bank of Taiwan (senior mandated lead arranger); BAWAG P.S.K. Bank Für Arbeit und Wirtschaft und Österreichische Postsparkasse Aktiengesellschaft (BAWAG P.S.K.) (senior lead arranger); Bayerische Landesbank (BayernLB) (mandated lead arranger); Banque BIA (manager); BPN - Banco Português de Negócios (manager); BRE Bank (now mBank S.A.) (manager); BRED Banque Populaire (manager); Cathay United Bank (manager); Central Trust of China (manager); Chang Hwa Commercial Bank (manager); Commerzbank Aktiengesellschaft (Commerzbank) (senior mandated lead arranger); Dresdner Bank (senior mandated lead arranger); DZ Bank (senior mandated lead arranger); the Export-Import Bank of Korea (Kexim) (manager); Erste Bank (senior lead arranger); the Export-Import Bank of the Republic of China (manager); HSBC Bank (senior mandated lead arranger); ICICI Bank (senior mandated lead arranger); JPMorgan Chase Bank, N.A. (senior mandated lead arranger); Landesbank Rheinland-Pfalz (senior mandated lead arranger); Landesbank Baden-Württemberg (LBBW) (senior mandated lead arranger); Landesbank Berlin (senior lead manager); Mega International Commercial Bank Co., Ltd (arranger); Mizuho Corporate Bank (initial mandated lead arranger); MKB Bank (mandated lead arranger); National Bank of Egypt (S.A.E.) (manager); Nedbank (senior lead manager); OTP Bank (senior mandated lead arranger); Raiffeisen-Landesbank Steiermark (senior lead manager); Raiffeisen Landesbank Kärnten (RLB Carinthia) (manager); Raiffeisen Zentralbank Österreich A.G. (RZB) (mandated lead arranger); Landesbank Saar (manager); the Shanghai Commercial and Savings Bank (manager); Sparebanken Øst (manager); Sumitomo Mitsui Banking Corporation Europe (initial mandated lead arranger); Taipei Fubon Commercial Bank (senior mandated lead arranger); Taiwan Business Bank (TBB) (Hong Kong and Offshore Banking Branches) (arranger); Taiwan Cooperative Bank (senior mandated lead arranger); UniCredit Bank Austria (manager); and WGZ Bank (arranger). 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.