The Cabinet of Ministers (hereinafter - CM) approved a strategy for attracting investors to Citadele Bank. The strategy envisages a dual track process of simultaneously contacting strategic and financial investors with the purpose of selling shares via a trade sale whilst also exploring the potential for an initial public offering.

Preliminary marketing will be carried out to determine the interest of the various categories of potential investors. The decision on the specific sale model will be taken after marketing activities have been completed in [March 2014].

A dual track sale process has been favoured in order to maintain maximum flexibility. An advantage of a dual track approach is the ability to speak to a large number of different types of potential investors whilst leaving the final decision on the specific sale model until this initial pre-marketing process is completed. This approach encourages the greatest competition among investors, with a view to ensuring the best outcome for the shareholders of Citadele Bank.

In order to ensure that the sale process is well supervised and effectively coordinated among stakeholders, the Government has been informed that high level committees to supervise the sale have been established. The supervising committee will include representatives of the Ministry of Economics, Prime Minister's Office, Ministry of Justice, Ministry of Finance and the Association "Society for transparency - Delna" representative as an independent observer. The project steering committee, set up by JSC "Privatization Agency" (hereinafter - LPA), will include representatives of the Ministry of Economics, the LPA, the European Bank for Reconstruction and Development, the Prime Minister's Office, Ministry of Finance, State Treasury, Citadele Bank, the financial advisor and the legal advisor. The supervising committee will supervise the overall sale process and will be responsible for strategic issues whereas the project steering committee will oversee tactical and operational issues.

In July 2013, the Government decided to resume the process of attracting investors to Citadele Bank. In a report submitted to the Government it was concluded that the initial goal set by the restructuring plan – to establish a financially stable financial institution – had been achieved. Having achieved the objectives of the restructuring plan, Citadele Bank is successful and profitable, and its further development requires private capital.

As reported earlier in the tender process Societe Generale, the international investment bank, was selected as the financial advisor to the LPA in connection with the Citadele Bank sale. The financial advisor will assist the LPA in determining the best model for attracting investors in addition to assisting with the organisation of its practical implementation. International law firm Linklaters has been selected as the legal advisor for the sale process.

In less than three years, since its inception in 2010, Citadele Bank has become profitable. In the first half of 2013, the Group announced a EUR5.8 million profit, an increase of 27% as compared with the same period in 2012. Operating income in the first half of 2013, as compared with the same period in 2012, has increased by 12%. In 2012, the Baltic Institute of Corporate Governance recognized Citadele Bank as the best managed state-owned enterprise in the Baltic States.

Approximately 75% of Citadele Bank shares are held by the State Joint Stock Company Privatization agency and the owner of approximately 25% is the European Bank for Reconstruction and Development.

Important Information
Societe Generale is acting solely for the LPA in connection with any arrangements, services or transactions referred to in this document and no one else. Societe Generale is not and will not be responsible to anyone other than the LPA for providing the protections afforded to the Clients of Societe Generale or for providing advice in relation to the arrangements, services or transactions, referred to in this documents.

Societe Generale is a French credit institution (bank) authorised and supervised by the Autorite de Controle Prudentiel et de Resolution (the French Prudential Control and Resolution Authority). Societe Generale is subject to limited regulation in the Financial Conduct Authority and Prudential Regulation Authority. Details about the extent of Societe Generale’s authorisation and regulation by the Prudential Regulation Authority, and regulation by the Financial Conduct Authority are available from Societe Generale on request.

This announcement is not for distribution, directly or indirectly, in or into the United States (including its territories and possessions, any State of the United States and the District of Columbia). This announcement does not constitute or form a part of any offer or solicitation to purchase or subscribe for securities in the United States. The Shares mentioned herein have not been, and will not be, registered under the United States Securities Act of 1933 (the “Securities Act”).

The shares may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act. There will be no public offer of securities in the United States.