This past weekend Latvia announced that it would “take over the country’s second largest commercial bank ‘Parex banka.’” In its statement addressing the Latvian government’s action, Parex banka noted that the seizure was in line with “the principles developed by leaders of Europe Union member states, granting State support to the financial sector in the context of the global liquidity crunch.”

Pursuant to the terms of the financial package, the Latvian government will guarantee Parex banka’s liabilities, “enabling the Bank to preserve the liquidity at a sustainable level, and obviating possible doubts on the Bank’s capabilities of raising funds in the international debt markets.” In return, the Latvian state-owned bank, Mortgage and Land Bank of Latvia, will purchase 51% of Parex banka’s shares for nominal consideration, “with existing shareholders having the rights to buy out the stakes.”

The government in its announcement also indicated that it would enter into discussions with “potential strategic investors about the sale of ‘Parex banka.’”