
Article 1 
The following measures constitute State aid within the meaning of Article 107(1) of the Treaty:

((a)) the grant to Parex banka of subordinated loans with an initial maturity exceeding the terms of the measure approved in the Rescue Decisions and the Parex Final Decision (the First Measure);
((b)) the grant to Citadele of an additional 18-month extension of the maturity of LVL 37 million of subordinated loans (the Second Measure);
((c)) the grant to Reverta of liquidity support in excess of the maximum limits approved by the Commission in the Parex Final Decision (the Third Measure).
Article 2 
The aid measures referred to in Article 1 are compatible with the internal market pursuant to Article 107(3)(b) of the Treaty in light of the commitments undertaken by Latvia as set out in Annex I.
Article 3 
The deadlines to divest the Wealth Management Business (WMB) of Citadele, by 30 June 2013 without a Divestiture Trustee or by 31 December 2013 with a Divestiture Trustee (the Fourth Measure), recorded in recital 73 of Commission Decision C(2010) 6202 final corr. of 15 September 2009 on the State aid C 26/09 (ex N 289/09) which Latvia is planning to implement for the restructuring of AS Parex Banka are amended in line with the commitment provided by Latvia which is set out in Annex II.
Article 4 
This Decision is addressed to the Republic of Latvia.
Done at Brussels, 9 July 2014.
For the Commission
Joaquín ALMUNIA
Vice-President
ANNEX I

The Latvian Authorities offer to clarify and strengthen their commitments as regards the principal and interest due in respect of the Legacy Subordinated Loans as follows:

((a)) Citadele banka and Reverta (formerly Parex banka), as well as their affiliated undertakings shall not pay any interest, dividends or coupons on existing capital instruments (including preference shares, B shares, and upper and lower tier-2 instruments) (either due or accrued) or exercise any call rights in relation to the same, to any subordinated debtholders or shareholders, who are not strictly the Latvian State or the European Bank for Reconstruction and Development (EBRD), until and unless the State aid to Reverta and/or Citadele has been fully repaid and unless there is a legal obligation to do so. To the extent such legal obligations exist, the Latvian Authorities undertake to remove them as soon as possible (and in any event by 30 April 2015 at the latest).
((b)) The Latvian Authorities also commit not to repay any outstanding debt (principal) of the Legacy Subordinated Loans (unless and until all State aid to Reverta/Citadele is fully repaid), which will be either:

((i)) subject to a binding order that no payments under the Legacy Subordinated Loans shall become due and payable; or
((ii)) converted into non-voting Tier 1 capital; or
((iii)) written down;
to the extent necessary to cover the negative net asset value of Reverta, and provided a legal base is available.
((c)) The Latvian Authorities will undertake all necessary measures to ensure that any legal provisions needed to comply with the commitments above are put in place by no later than 30 April 2015.
((d)) The maximum total amount of capital provided to Reverta by the Latvian Authorities shall be reduced to LVL 49,5 million, from LVL 118,7 million previously.

ANNEX II

(1) The Latvian Authorities and Citadele undertake to apply their best efforts to obtain as soon as possible and in any event before […] binding bids for the sale of the entire stake of the Republic of Latvia in Citadele (including WMB). The sale shall be completed by […] at the latest. It shall be let to the discretion of the Republic of Latvia (and its advisor) to decide what the appropriate structure and modalities of the sale transaction are (e.g. a trade sale or IPO), as long as the Republic of Latvia eventually divests its entire stake in Citadele by […]at the latest. In case of an IPO, the Republic of Latvia commits to agree on a binding prospectus with the Latvian FCMC by […].

(2) The Latvian Authorities and Citadele also commit that a divestiture trustee will be appointed if, by […], no binding bids have been received or, in case of an IPO, having the same objective, no prospectus has been agreed with the FCMC. In such case the Republic of Latvia will take the necessary steps so as to ensure that the divestiture trustee is appointed and is operational as of […]. It is understood that the financial advisor for the sale of Citadele could also be appointed as divestiture trustee as of […]. If a divestiture trustee is appointed, the Latvian Authorities and Citadele commit to receive binding and irrevocable for all parties bids by […]and enter into a binding and irrevocable agreement for the sale of the full stake of the Republic of Latvia in Citadele by […], to be closed by […] at the latest.

(3) Further the Latvian Authorities and Citadele commit that as of […] Citadele will […] new business and the remaining business of Citadele […], if the Republic of Latvia has not entered by […] into a binding and irrevocable agreement, providing for the closing of the sale by […] of the full stake of the Republic of Latvia in Citadele, or if the IPO does not allow for the Republic of Latvia to sell its entire stake in the New Bank by […].

(4) The Latvian Authorities and Citadele commit to close the sale and purchase transaction for the sale of the full stake in Citadele of the Republic of Latvia by […]. If the sale of that stake has not been completed by […] they commit that Citadele will […] new business and the remaining business of Citadele will be […] from […].

(5) If Citadele business is […] in any of the above mentioned events, any parts of the business of Citadele, for which there is an interest of third parties, can be sold and transferred by the Republic of Latvia and/or Citadele to such a third party (without prejudice to the principle of […] and no new State aid).
