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Press Release of May 14, 1998

 

On May 14, 1998, the Council of the Bank of Latvia approved the new version of the "Regulation for Issuing and Registering Credit Institution Guarantees", and gave its consent to opening of the JSC Parekss-Banka branch abroad.

"Regulation on Issuing and Registering Credit Institution Guarantees" (in effect as of June 15, 1998) was adopted to comply with Article 56 of the Law "On Credit Institutions" stipulating that all guarantees issued by credit institutions must be registered at the Bank of Latvia, as well as to prevent fraud and issuing of counterfeit guarantees, and to monitor accounting of these obligations at banks. The preceding version of "Regulation for Issuing and Registering Credit Institution Guarantees", approved on April 6, 1995 before the adoption of the Law "On Credit Institutions", prescribed general requirements to information contained in a guarantee and the procedure for registering guarantees at the Bank of Latvia. The new regulation defines the notion of a guarantee that a credit institution must register at the Bank of Latvia, stipulates precisely and comprehensively procedures for issuing a guarantee and information to be contained in a guarantee. It also details the procedure for registering a guarantee at the Bank of Latvia and for registering amendments to or renewal of a guarantee.

 

Those guarantees that have been registered in accordance with the preceding regulation for issuing and registering guarantees are valid, and need not be re-registered at the Bank of Latvia by credit institutions.

The Council of the Bank of Latvia resolved to allow the JSC Parekss-Banka to open a branch in Vilnius (Lithuania). The JSC Parekss-Banka must also obtain permission from the Bank of Lithuania.

The JSC Parekss-Banka has already received permission to open a branch in Bishkek (Kirgizstan) and Karaganda (Kazakhstan). Nine Latvian banks have opened 25 foreign branches with the Bank of Latvia's permission.

The Law "On Credit Institutions" gives the following definitions for a branch and a representative office of a credit institution.

A branch of a credit institution is the organizational unit of a credit institution that conducts banking operations (transactions) inherent in the business of the credit institution, is located outside the legal address of the credit institution, and is not a legal entity.

A representative office is the organizational unit of a credit institution that is located in another country, represents the interests of the credit institution, and does not conduct banking operations (transactions).