Short overview of the bank’s operation in 2008

In 2008 operation of all Latvian banks, including AS”Latvijas Biznesa banka”, was considerably impacted by the world financial crisis, which led to reduction of GDP in Latvia, aggravation of the foreign trade balance, negative dynamics of most industries of the national economy and a crisis in the real estate market of the country.

In spite of the negative influence of the external environment, in 2008 growth rates of the major financial indicators of AS”Latvijas Biznesa banka” surpassed the industry average: thus, it’s assets have increased by 11.8%, in comparison to the industry average of 6%. As of the end of the year, AS Latvijas Biznesa banka assets have reached LVL 133 million, which is the highest figure that the bank ever had since its establishment in 1992. Bank had increased its total assets share of the market to 0.6% and now taking 17th position among the commercial banks of Latvia. The Bank’s deposit portfolio is 67.5 million lats that makes 0.7% from the market.

In 2008 the quantity of the bank’s clients has increased by 39%, and the amount of payment cards issued by the bank has doubled, which, in the conditions of the rigid competition between the banks and the growing cautious attitude of people to the banks caused by the overall economic crisis, reflects the growing trust in AS”Latvijas Biznesa banka”.

In December 2008 the bank, in accordance with provisions of the agreement concluded with Depfa Bank Plc, Nicosia Branch (Cyprus), and Erste Bank der Oesterreichishen Sparkassen AG (Austria), repaid the syndicated loan in the amount of EUR 10 million. The bank has no other syndicated loans.

AS”Latvijas Biznesa banka” has control stake (89.16%) (currently 89.28%) in the Estonian JSC Eesti Krediidipank. As of the end of 2008, the assets of JSC Eesti Krediidipank are LVL 244 million. JSC Eesti Krediidipank is one of the most dynamically developing banks in Estonia. In 2008 profit of the bank’s consolidated group amounted LVL 2.0 million. Considering the complicated macroeconomic situation, in 2008

AS”Latvijas Biznesa banka” devoted special attention to providing its reliable operation by keeping the sufficient capital figures above 14% (the standard value being above 8%), and the current liquidity (solvency) above 40% (the standard value being above 30%). When estimating quality of the assets and forming reserve accruals for the non-standard assets, the bank proceeded from the precautionary principle and assessment of the future cash flows from transactions with clients.

In 2009 the bank's priority will be not be expansion of its operation, but the increased quality of customer service, the larger range of the provided services, minimizing of the operational risks and provision of the banks’ reliability and solvency. For this purpose, the anti-crisis action plan has been elaborated jointly with the Bank of Moscow and is now being implemented. AS”Latvijas Biznesa banka” is constantly working at improvement of it’s internal control system, in accordance with requirements of the European standards (Basel II) and laws and regulations of the Republic of Latvia. In 2009 a lot of attention will be devoted to integration of the bank’srisk management system into the unified risk management system of the all banks belonging to the group.