AIZKRAUKLES BANKA OFFERS YOU A NEW MEANS OF

COMMUNICATION 003717 775555 AB.LV 7-77-55-55 ANNUAL REPORT 2005 25 FACTS AND NUMBERS A TRUE BANKER TO BE THE BEST MY RIGA RIGA GUIDE THE ISSUE OF THE HOME

The Central Theme RIGA’S STYLE IN THE BANKING BUSINESS contents

MY RIGA 02 Marija Naumova, Agnese Zeltiña, Mårtiña Rîtiñß, and Alvis Hermanis on Riga, its singularity, and their feelings on it.

LETTER FROM THE EDITOR 03 The question of choice and new searches in the bank’s activi- ties.

NEW IN 2005 04 Behind these events – Aizkraukles Banka and people, a brief review of our accomplishments.

RIGA’S STYLE IN THE BANKING BUSINESS 06 AB.LV’s chairman of the board Ernests Bernis’ reflections on the bank’s current and future values.

TO BE THE BEST 10 They have achieved the title, The Best. Coincidence of circum- stances, a great honour or a feeling of great responsibility?

P.S. 13 AB.LV co-owner O¬egs Fi¬s knows the formula of success for a modern company.

GUIDE 14 Our necklace – from the “pearls” of Riga tourism. Try it on for yourself!

THE ISSUE OF THE HOME We will help you build a house and make it modern, striking 16 and homely. AB.LV’s portfolio of credit products and the advice of experts and designers are at your disposal.

SUPPORT 20 Social responsibility – an integral part of any serious business’s reputation. About significant projects supported by the bank in 2005.

FACTS AND FIGURES * 22 And once again about our accomplishments – laconically and graphically! For lovers of statistics, and not only

WHAT DOES IT MEAN TO BE A TRUE BANKER? 24 AB.LV’s best employees paint a written portrait of the modern * Stability. Time is the best advisor (we are in the banking business since 1993). banker. AB.LV is the Riga style in the banking business, combining the best of European banking traditions with an individual approach to each client. Working with us you are doing good FINANCIAL REVIEWS to your business. That's one lasting investment, and we guarantee the security of it. 25 After all, we are a bank. :) ASTROLOGY 64 Not seriously, but perhaps a bit seriously about your business and finances... my Riga editor’s letter

Mårtiñß Rîtiñß, Chocolate ?? Gateau every day! So restaurant owner the people that live at the edge of Niagara Falls or in a luxury suite at The city of Riga contained most of the Venetian in Las Vegas might what little I knew of the history and appreciate what I do when I walk in Cover culture that I was familiar with, so it the woods here minutes outside Riga Experimental style production of Ladies and Gentlemen! was the most exciting. Yet Riga is a and smell the rich humus where the an AB.LV employee small capital for a small country, so morels and 4000 other species of Model – Baiba Jurkåne It took me some time to decide how to address you in everything comes in nice bite-size Style and photo – Dmitrijs Po¬akovs fungus grow, and marvel at the soli- the first pages of this publication that is not very typical proportions that make it easier to tude and sounds of blue forests that Make up – Natålija Vozñesenska for a bank. “Readers”, “clients and partners”, digest and come to grips with. The are so abundant, taking up almost Photographs and illustrations “friends”…. There are many choices, and this is impor- heart and soul of Latvia quickly half of our land mass. I Dmitrijs Po¬akovs reveals itself and shows its strengths, Viesturs Masteiko (photos of objects) tant! At some point you made your choice to begin your weaknesses and uniqueness. Karlîna Vîtoliña (M. Naumova’s photo) collaboration with Aizkraukles Banka. Perhaps you have Photo of A. Zeltiña – from personal England had 20 plus years to grab not yet made this decision, and you need just a couple collection me, Canada about the same, yet “The issue of the home” photo – of arguments for this business contact to take place. In Latvia got to me at first sight. I fell “Müsmåjas” magazine this publication you fill find the missing arguments. for her like a love-struck adolescent Interior visualisations – Aivars Burakeviçs Plan of Riga centre – Dita Målniece Marie Naumova, who is giddy about the future but Alvis Hermanis, In this year he have made our selection in favour of an Horoscope illustrations – Inga Rußmane singer does not quite know why, and an theatrical director informal, and thus more honest manner of contact, of a more modern language of com- everyman in mid-life crisis who Creative group munication, of closer contact with readers, where every reader is an individual, and every I like this city on days when needs to woo and be wooed, but Editor in chief – Viktorija Òakißeva The least stylish places, it seems client a VIP. For precisely this reason we transformed our official, dry-in-form-and-con- warm rain is falling, when old now can truly appreciate the object to me, are Old Riga and Project artist – Dmitrijs Po¬akovs Artistic director – Ûanete Zariña tent bank’s annual review into a striking, attractive and informatively saturated lifestyle ladies are selling flowers in Old of his affection.They say that 'less is Jurmala. Tallinn and Prague Creative director – Andris Romanovskis magazine. You may be accustomed to seeing such magazines in airport terminals, hotel Riga, and horses’ hoofs are more', and it is this observation in have old cities just like Old Riga; Layout designer – Inta Eihmane foyers or your interior design office. Now you have the unique opportunity to find such a thumping in front of a carriage. Agnese Zeltiña, there is no difference. Project manager – Lîga Saidåne Christmas, Midsummer’s Day film actress There is nothing in Old Riga for Executive director – Ilze Apine magazine at our bank’s client centre or representative office. Our magazine, just like its and Easter markets, where one Rigans to do. shiny brethren on store shelves, will tell you about people, tendencies, news and oppor- Text authors can buy real honey and hand- Countless elegant, beautiful places – When guests who have never Marija Naumova tunities, all united by one common style, which we at AB.LV call “Riga’s style in the crafts from true craftsmen. I in stylish interiors one can sink into, been in Riga come to visit me, I Agnese Zeltiña banking business”. enjoy Riga’s quiet little corners and hide and forget everything with take them to the outskirts – Mårtiñß Rîtiñß Alvis Hermanis – the so-romantic pier, where a cup of properly prepared green tea “Maskachka“, Grîziñkalns, and AB.LV’s style has been honed for years through our effective teamwork, and polished by Viktorija Òakißeva the sun sinks into the sea over in hand.. the other side of Çaka Street. Ernests Bernis our professionalism and the commitment of our specialists. Our style has formed and the Daugava, the paths and Teahouses, bookstores, charming little Now that’s interesting! Irina Lastovska developed along with the bank, and that now serves to enhance our reputation. These bridges of Kronvalda Park – so chemist‘s shops, markets, cute shops in We go to the Central Market, Romåns Surnaçovs here are the cornerstones from which AB.LV’s history has developed: stability and securi- mysterious, as if you weren’t the most unimaginable places. of course. Sergejs Mazurs ty, precision and accuracy, a thrifty attitude towards time, and the traditions of a even in the city. The smell of Old Riga is so special that one can In Vecmîlgråvis there is a bath- O¬egs Fi¬s O¬egs Sirotins European business city. But at the core of this history is our client and the client’s trust in fresh bread wafting from bak- walk around there as if among many house, a real one, one of those Liena Britåne Aizkraukles Banka. eries, and outdoor cafes where rooms, constantly discovering some- Soviet-style kind – on Emmas Aivars Burakeviçs you can enjoy a cup of tea thing new and unnoticed – gates, Street. When I am abroad with Påvels Ínejersons while taking your time – churches, cobblestone, courtyards... the theatre, we always visit the Loyalty – that is the code of our style. We are proud to know this code. The components Translation, proofreading moments that so very much with cats, grapevines; the building bathhouses. We look for them that form it may be found in this magazine. You will see what inspires us, as well as in Roberts Lîsmanis remind me of Paris. I like taking roofs and balconies alone are worthy in all cities, all countries. And I Antra Çigure whose name we work, what accomplishments we have reached, and what we strive for, walks in MeΩaparks, listening to of wonder... must say that the experience Natella Grigorjan why we are just the way we are, and why your path leads to our door. However, if for the voices of the zoo’s dwellers, the search for beauty and things to In Riga I have glass, reflections, sha- that is available in Vecmîlgråvis Idea Media some reason words do not convince you, we have also provided you with the numbers. and wandering past colourful, love and value that guides my sens- dows and the music of the wind, tile at the Emmas Street bathhouse Concept, idea copyright Our financial performance will tell you about AB.LV just as eloquently! restored Art Nouveau buildings. es today, and I think that living in roofs, tower roosters and rain on the cannot be had at any Budapest Rhino design agency Co LTD I enjoy this city’s secret, Riga has helped me see that. cobblestones!!!! Fantastic pastries, bathhouse or Arab thermal In choosing a new style of communication, we unvaryingly remain… because every day you see I have seen the Grand Canyon, the chocolate and bran croissants like waters! Here real blokes with Project, execution Rhino design agency Co LTD truly your bank! something new. I Taj Mahal, the Canadian Rockies nowhere else in the world. birch branches, as they say, and the Swiss Alps and they take I get a feel for Riga best when sitting “speak from the heart”!I All rights are protected by the Copyright Law of Viktorija Òakißeva, your breath away! But I have to in FABRIKA restaurant – reserve the the Republic of Latvia. Reproduction without Editor of the 2005 Annual Report breathe. It's just me, but I had to get third table from the entrance to the prior permission by AB.LV and other holders of rights forbidden. AB.LV Head of the Marketing Department, away because it was too rich. right! I International Division Printed in the EU AB.NEWS With the Good ideas continue to abound and In summer of 2005 the bank turned In April 2005 in Riga we opened direct partici- prevail! In 2005 the “For my best its attention to the world’s experien- our new “Krasts” client service pation of friend” campaign continued. The ce in research on the optimisation of centre. AB.LV’s target client in AB.LV, the number of participants compared to business processes. Of the many the- the local market is the econo- Latvian-American 2004 has doubled. Every bank client ories and experience we have select- mically active Riga inhabitant, financial forum (LAFF) was cre- ed a strategy of “frugal production”, in Latvia who received a mortgage In May of 2005 the deputy thus we seek to ensure our ated. The aim of the organisation is to the effectiveness of which has pro- manager of AB.LV’s Mos- clients quality and convenient promote the development of Riga as a ven by the success of Toyota. cow representative office service and always to be within regional financial centre, strengthen the Among the processes, mortgage took part in a reception at grasp. I competitiveness of the country on an loans were selected, since they are the embassy of the Re- international level, and to make Latvia’s the bank’s main field of business in On September 28, 2005 public of Latvia in the business environment transparent and the Latvian market. The aim of the “Mortgage loan AB.LV’s New Year’s party was LNT hosted the premiere Russian Federation. The responsible. LAFF will begin its opera- kaidzen” is the prevention of losses in the process of issu- showing of “The issue of event was organised by the tied to marking a festive and tions in 2006 as a research and educa- loan at AB.LV and brought the bank ing and servicing of mortgage loans, both of the client as the home”. Its creation is President of Latvia in ho- joyful event. In compiling the tional institute, a structure for coopera- a new borrower earned a loan holi- well as the bank. By the way, the word kaidzen translated also a great accomplish- nour of the 60th anniver- annual results, three of our em- tion between the state and private sec- day – no interest for one month. The from Japanese means continuous improvement. I ment of our bank! We sary of victory in the Se- Banks, let’s be friends! This was the decision of the ployees were awarded the title tor, and representative of the interests I gave as a present to our bank paid it in place of the client! cond World War. Oleg Ko- hockey teams of AB.LV and Russian’s MDM bank. In “Best bank employee”. If one and values of its founders: various com- clients new style and rolov had the honour of 2005 two friendship games took place in Riga and takes into consideration that the mercial banks in Latvia. I opportunities! (For more presenting a short speech information see p. 16) Moscow, the result of which, of course, was a friend- main hero of our party was His and meeting the President ly draw! It is our belief that hockey is not only a great Highness the Cinematographer, I in a private discussion. sport, but also a secure investment in the develop- we can safely say that we have ment of mutually beneficial partner relations. I our own Oscar recipients! AB.LV lowered its Who would have thought that our In June of 2005 AB.LV opened its re- mortgage loan inte- bank has so many creative indivi- presentative office in St. Petersburg. rest rate to that of European duals, especially in the field of artistic banks’ rates. Our clients get the photography! Affirmation of this was It is important to us that cooperation In 2005 AB.LV became a member of the European best offer on the market: from the photo competition announced in with our foreign clients be effective and Business Association (EBA) in Russia. Since 1995 the EBA 0.8% + the inter-bank rate. Our 2005. The winners’ best works were comfortable. For this reason we go to has represented the interests of 350 European compa- bank wishes to achieve the stan- included in the 2006 corporate our clients, opening representative nies in Russia, and facilitates their advance in the Russian dards of European quality! calendar. I offices in centres of strategic importan- market. Becoming a member of EBA, we have obtained the possibility always to be informed of what is happen- ce to the bank. At AB.LV foreign clients ing in a centre of our business interests. I The educational programme “What is a loan?” was always have the possibility to visit our created with the direct participation of AB.LV. In In 2005 we offered our foreign office in their native city and consult 2005 the bank attracted students from the Stock- clients two new servi- with our bank’s specialists regarding On September 30, 2005 we invited our clients holm School of Econnomics in Riga for the compa- ces: SMS control of card any issues of interest to them. I in Latvia to an unusual social event – a Kitchen ny popularising this programme. The “What is a transactions, which gua- Party at Radisson SAS hotel, or, more specifical- loan?” competition for youths rantees complete security ly, to its kitchen! Where else is it possible to was announced, “Loan days” International music stars visiting Riga – that is of transactions with pay- speak from the heart, if not in the kitchen? were organised, the web something rare. And making it to their concerts ment cards, and a new About accomplishments and problems, about page www.kasirkredits.lv doesn’t come off for everyone. We like to obtain financial instrument: credit future plans and hopes. And, of course, in the (“what is a loan”) was up- presents and create joy by giving them away, espe- based on pledge of a ship. kitchen it is possible to find various treats, dated, and new booklets cially to our clients! In the spring of 2005, AB.LV starting from traditional crisps to exotic were printed and distribu- More information about invited its clients in Latvia to a Moby concert. The seafood. Guests had the opportunity to test ted. All this was done so that peo- these services is available striking performance will remain in the memories of their ability in creating marzipan figurines ple in Latvia would have access to on our corporate web page the bank’s clients for a long time, also due to the and in various culinary (and not only) competitions. comprehensive information about www.ab.lv. I fact that before and after the concert they had the We are convinced that on this evening our clients mortgage loans and issues related opportunity to talk with bank employees in a special room had fun and that the refreshments were tasty! I arranged for this purpose. We are prepared to establish rela- thereto. I tions with our clients based on trust just about all night long! BUSINESS IN THE BANKING RIGA’S STYLE don’t refuse to provide one-time servi- long-term co-operation. Though we initial trust expressed in us by seeking gloves. We at AB.LV seek to justify the also clients who change banks like services for decades. However, there are people who have been using one bank’s without a doubt partner. I know many cific necessary functions. The bank is the people who work there perform spe- the contemporary world. The bank and idealise or demonise the bank’s role in force. I’ll say this: there’s no need to evil, the balancing factor, driving among various options: the good, consist of today? I once had to choose What does the general mission of a bank owing to people. working for the good of people and not a machine, but living organism This is not acceptable to us – a bank increase a large group of various risks. provide for a certain level of growth, but serves in its work. Impersonal products culture, the philosophy that bank ob- much is dependent upon its corporate product or service are people. Here very share this view. Behind a bank’s every cial supermarket” is used, though I don’t Currently the term “the bank as a finan- bad times in life. experience both the good as well course of life. Along with banks, people son’s ally, companions throughout the tion, banks have become the active per- If I have to give a specific characterisa- a necessity in life for almost everybody. Today banks have achieved the status of Together with my colleagues. the thing that has worked out for me. don’t philosophise much. The bank is how important the bank is in my life, I About the bank. “The client’s loyalty cannot be bought, but it can earned.” when I am asked author interview cess. Loyalty as a factor in suc- ces. It is part of our job. However, when implementing it, we take into account our clients’ needs. sidering and formulating our policy, we principles. Without a doubt, when con- following corporate and professional This contains the essence of our policy – time will become impossible to fulfil. an agreement containing terms that with gorically against the practice of signing from the very beginning. We are cate- properly, in a manner he understands be promising, then we tell the client so tionship, or do not consider a project to the bank do not see potential in a rela- A specific example. If a loan officer and relationship. resolved. Loyalty – it means a special problem or some issue is successfully the client feels, that which arises when a arises from mutual work. It is that which hoping for, we say so directly. Loyalty ble of providing what the client is hind a flashy banner. If we are not capa- titive, we don’t try to hide this fact be- example, turn out to be not very compe- do. If at some point our services, for say to and promise our clients we also our relations with clients. That which we AB.LV is our openness and integrity in work. To me the key to client loyalty over a certain period of time by mutual loited. It appears suddenly, but develops not be purchased and cannot exp- In my opinion, loyalty is that which can- quires serious resources and effort. serious, sometimes hard, work that re- king him yours for many years. That is tant thing is holding on to the client, ma- that is only half the job. The most impor- Though attracting a client to the bank, bank – that is an indisputable fact. Ernests Bernis. Co-owner and Chairman of the Board Aizkraukles Banka Without the client, there is no I maintain informal relations of sorts. rather small circle of people with whom rest toward me. This, of course, is a too, analogically feel a humanistic inte- interest me as people. I think that they, relations with, meet with regularly, and Some clients I know better, maintain the solos of two individuals. pooled, and the end result is more than Interests, needs and knowledge are in our relationships 1 + is more than 2. reliance upon each other. I can say that clients, as well me. Thus forms our mutually beneficial process both for bank’s employees provide. This is a of the level service quality that my the opportunity to learn from clients cannot provide answers. I, in turn, gain those questions to which my employees possible for clients to receive answers contact with me and other managers, it is tionship business. Owing to the personal As I said, the banking business is a rela- a policy. way it will be. Only then can be called ways. That is the way it has been and contrary to our policy, then we must part decisions. If a client’s activities will be must be prepared to adopt unpopular About development. new in banking services. That which has It is difficult to come up with something sources. Information is obtained from various with which we have business ties. country, as well in those countries political and social processes, both in our the development vectors of economic, dencies. To imagine, model, guess, feel transformation. I seek to grasp these ten- of constant motion, development and world around us, society is in a process In the

page 7 page 8 author interview Work is work. bought, but must be earned. about client loyalty, which cannot be refers to what has already been said some extent are not even written. It also following of those principles that to be referred to as consistency. It is the our existence. Although it could better practically from the very first days of bank have not changed our philosophy ness, then it lies in the fact that we as a tain amount of conservatism in our busi- Nevertheless, if I have to admit a cer- we cannot work conservatively. ally be improved; for this reason alone products and technologies must continu- increasing from year to year. A bank’s rapidly, and the speed of this process is Currently everything is developing so removed from the banking business. think, has been created by people far tive business. That is a myth that, I the banking business is not a conserva- which we live, thus I can safely state that rhythm is created by the environment in processes going on around us. The forgetting about our involvement in the determine our level of conservativeness, When discussing the bank, people try to Latvia and abroad. wealth management services, both in clearly feel that the time has come for easy to sell. For example, currently I time comes when particular services are thing good that has been forgotten. A field, though more commonly it is some- business directions appear in the banking circumstances. Without a doubt, new been created earlier is applied to certain People who work at AB.LV are bound a part – of people’s lives. takes up a significant part – but still just professional union, with which contact saying that the work place is first of all a friends. I am already repeating myself by families, distant relatives, and close nationalities and cultures. We employ employs people representing various always be the priority. Our bank This is normal, though work must other relationships with their colleagues. with work relations my employees form ly. It is completely natural that along pable of replacing the employee’s fami- I have never claimed that our bank is ca- pany and colleagues are like family. broadly accepted attitude that one’s com- There is a rather sources, such as processing of automatic tically not dependent upon human re- tion. We have transactions that are prac- tent necessary for each particular situa- Our bank utilises technology to the ex- tion. mankind will never surrender its posi- the desire for contact. For this reason stroyed. Nature has programmed us with foundation of society would be de- impersonal, but in such case all of the individuality may be lost or becomes human relations. The risk arises where capable of replacing the warmth with one another. Technology is not all these years have not lost their live tie him. Because people over the course of plements the person, and doesn’t replace ration, where artificial intelligence com- vides people with a new level of co-ope- discovery in the field of technology pro- the specific historical period. Every new artificial intelligence – this is an issue of this, and what is that of equipment or equipment. What role do people play in gy. That is what connects people with the third – that which we call technolo- (computers and other equipment) ployees and clients), a technical basis are necessary for business: people (em- It is well known that three components and harmony possible? and preserving its humanity? Is symbiosis the same time observing its code of ethics avant garde of technical progress, while at logical advancement. Can a bank be in the company during a period of rapid techno- a great deal about person’s role in the technology. People in the age of high abilities and skills. that corresponds with the employee’s company and contribute with an effort the opportunity to feel like part of a big replaced. It provides the employee with ture. It cannot be measured in money or to and acceptance of this corporate cul- fact with their work express belonging certain amount of time absorb it and in people who have worked with us for a almost inexpressible by words, though that it is a very delicate substance, term “corporate culture”. I would say tain code of behaviour. That which we dable values, a world outlook and cer- by certain things. Close and understan- We are currently talking tors: the economy and client’s reaction. There are, however, two influencing fac- human and technological symbiosis. cisions. I do not have a ready recipe for accordance with which we adopt our de- outlook on the processes occurring, in lely upon technology. We have our own time and be in front, without relying so- constantly changing. We strive to react in changes. Because the world around us is functioning algorithms and monitor for people who create the technology and cess may not be underestimated. It is However, the role of people in pro- gage loans over to paper-less data flow. Currently we are moving issuing of mort- more effective we “switch on”. mic utility. That element that proves viewed from the perspective of econo- activity. Process implementation may be proportions of human and technological opinion, it is rather easy to determine the rithms, people make the decisions. In my However where there are no ready algo- payments. And everything works fine. Riga’s style. have never wanted to move away from I was born and raised in this city, economic status. our task is to prove the city’s once-high years ago was not a coincidence. And 100 completely, but that which occurred since then the world order has changed office on Elizabetes Street. Of course, veau why we have so many beautiful explains why Riga is so beautiful and lopment in the Russian empire. This also production capacity and business deve- burg and Moscow in terms of industrial time also the second city after St. Peters- years ago Riga was the third, but at one Riga has had and still has. One-hundred geographic and historical factors that will have established those favourable results already in a few years, when we lieve that we will be able to judge the of Europe – this is a real possibility. I be- world. Riga as one of the financial centres recognised and understood around the and opportunities to make Riga’s style Currently we have all of the preconditions banking industry. has become one of the trendsetters in ness. Over the years Aizkraukles Banka understand precisely our style of busi- banking business, by Riga’s style we buildings, including AB.LV’s main I am pleased that in the art nou- flexible, alert and decisive. For this very my understanding of the necessity to be pendence. Our current strategy reflects inclination toward stability and inde- bank’s initial strategy was an intuitive would accomplish. I recognise that our Even then I could not imagine what we 100-150 times smaller than it is now. and the volume of our business was ga, when our bank employed 30 people when we just started our business in Ri- 5-10 years. I recall the time 11 years ago today could become real and feasible in which isn’t even worth talking about our northern European region. And that becoming a serious financial centre in for our city and bank, too. Riga is develop. This could create huge potential to climb upward in these ratings and mic ratings, but it has a real possibility Currently Riga is not a leader in econo- that was once our home too. guage. We know and love the country them better, and we speak the same lan- ant to people in Russia. We understand partners are very convenient and pleas- has remained. First and foremost we as by borders, a certain unity between us in this country, which was later divided regard to the many different nationalities up in one and the same country. Without received a similar education and grown Russians well. In the end, we have all great number of people who understand rable geographic location. It is also the rious reasons. It is not only our favou- countries. Their interest in Riga has va- partners from Russia and other CIS We are constantly visited by clients and our home, marks in the stone. roads, and enough difficulties… this is weather, little sun, dampness, poor then. Although there is often lousy Riga and travel somewhere now feelings to form, it is necessary leave ing, “No!” However, in order for these always my answer has been a resound- myself: would I want to live there? And in the world. But I have often asked one’s roots. I like many different places I suppose it is a question of realising ing and working in Riga. ficult times that I have experienced liv- completely comfortable. Even in the dif- bourg wealthier… only here do I feel Salzburg more beautiful, and Luxem- Riga. Although Innsbruck is warmer, want to become similar one of the bank once said that he would never results are achieved. The manager of a Also, I can’t not think about the way new. nal freedom; 3) openness to everything tency in achieving one’s goals; 2) inter- come to three main elements: 1) consis- And so, speaking of Riga’s style, we without it. the banking business one cannot do cance of strategy, although, course, in reason I do not exaggerate the signifi- The meaning of existence. misfortunes, to resolve problems – it is a test of character, stimulus for future work. success, as well failure. By the way, latter also is very useful: ability to overcome from everything that I do. No psychological fatigue. Every day is interesting to me. Both shareholders, managers and employees. I enjoy the fact that most always gain satisfaction talking about material satisfaction. I am the moral return that is felt by all – this business. If I as an employee did not enjoy working here, would leave. And am was dissatisfied with the results of bank’s performance, I would probably discontinue was an inferior manager, the shareholders would request that I resign. If as a shareholder The bank – to some extent it is an instrument of self-fulfilment and self-development. If I bank. This involves many vectors that must be aligned. working together. From these things forms the metaphysical point of existence function. The satisfaction that our employees gain from their work, each investment in The bank cannot simply exist by itself. It is the many people, each one fulfilling a certain What is the point of existence our bank? and believe that your chosen path is the correct one. right place at the time, work in a unified team, sible to defeat a stronger opponent if you are in the This illustration serves as an example to me. It is pos- nights. And then the mighty Persian army surrendered. weapons. But they battled for four days and the choice of surrendering, laying down their that awaited them in Sparta. The Spartans were given lives, managed to defeat a larger and greater enemy They, despite paying a cost of 300 their soldiers’ together or die together.” Sparta’s rulers were wise. Do you know what one of Sparta’s laws says? “Win Spartans. I don’t believe that is a strategic outlook. 300 I page 10 TO BE THE BEST provides food for serious thought. municate with them, and a conversation about the job each one loves honest individuals with a sense of humour. It is truly pleasure to com- work and true bank patriots, but also colourful personalities – smart Surnaçovs and Sergejs Mazurs! They are not only professionals at their Please meet the best AB.LV employees of 2005 – Irina Lastovska, Romåns From left to right: Romåns Surnaçovs, Irina Lastovska, Sergejs Mazurs team’s humanistic characteristics and motivation. reader with a better image of the whole AB.LV of a monologue, which, we hope, will provide the Our laureates’ answers are presented in the form banker (see page 24). clusion they painted a written portrait of true strategy i.e. “Me in the president’s chair”. In con- work as a whole, and the bank’s development Riga’s style, the nomination “Best Employee”, vidually. The questions fall into four categories: particular style, which everyone experiences indi- and work, and, of course, about Riga Riga’s We asked 2005’s best various questions about life for sure: working with money requires the bank president. But I know one thing some difficulty I can imagine myself as more of an exception than the rule. With heading a department at large bank is in a management position at bank or for itself. I must say that a woman being our bank. Our strong performance speaks All in all, I wouldn’t change anything at results. That is the only way to achieve good leagues and for them to be like-minded. ance. It is very important to inspire col- and feel responsibility for their perform- they get a better feel for the process itself ees fully take part in the work process, stant state of development. When employ- on mutual understanding. We are in a con- department are family-oriented and based accomplish anything. Relations in the professionalism it would be difficult to my department. Without their support and cognition for the work of my colleagues in tially my merits, but most importantly, re- bination of factors outside my control, par- philosophical one. It is the result of a com- My stance towards the nomination is a ished….” say, “Now we’re done; the job is fin- are allowed to reach the point where we we cannot ease up. Neither the bank, nor I in motion. We always have to be front; our bank, where everything is constantly opment. In Riga I see a similarity with the city with stability and constant devel- nature, and the architecture. I associate everything is in harmony – the people, more fitting place to live and work. Here “I was born in Riga, and I can’t imagine a And proud of it. riage, and 10 years at Aizkraukles Banka. work”. As proof of this – 20 years mar- source of quality in both personal life and motto: “Stability and inner harmony – the streamlining the work process. Life’s in the chain”, which are removed by regarded as a result. Dislikes “weak links transfers. Notices everything! Is highly cards, checking operations, and money operations and investments, payment bank’s activities, as they relate to loan Currently heads a broad spectrum of the Correspondent Accounts Department. 1996. Began her career working in the Started working at Aizkraukles Banka in Investment Accounting Department Head of the Loan Operations and Irina Lastovska, under his management is a pleasure. In colleagues: “Working with him and unfolds in the recognition of his closest humanistic and professional reputation of the Payment Cards Department. His reaching the responsible position of Head ior private banker, until successfully ment card specialist, private banker, sen- career ladder, being promoted to pay- payment operator. Rapidly climbed the Started working at the bank in 1999 as a Department Head of the Payment Cards Romåns Surnaçovs, increase while eating. mum, and may the client’s appetite is to simplify the procedure its mini- sary purchases. The most important thing delay (up to his credit limit) for any neces- thy client, he may receive cash without that if he has proved himself as a trustwor- bank in search of a better deal, knowing client won’t start running from bank to quickly get used to what is good. The a new line of credit each time. People simplified, without the need to reapply for repaid. This way transactions could be dit, up to the amount that has already been repeated access to an existing line of cre- loan repayment, the client would also have a regular basis. Depending on the rate of while providing them with a statement on dit lines for those who like to spend freely, off, I would offer secured, long-term cre- to attract funds for clients that are better Further, with regard to programs that seek found in the private sector. funds, thus idle money may only be ingly effective with handling their surplus funds. Companies are becoming increas- lopment of new bank products to attract to increase, thus I would promote deve- ments among the population is expected living in Latvia, the number of invest- tions. Due to the increasing standard of logies, and increase in the scope of opera- vices, development of the bank’s techno- ge, as well implementation of new ser- bright minds and being prepared for chan- I would emphasise being well informed, probably invest in local manufacturing. intertwined things. For this reason I would development – two inseparable, mutually able bank and an economy in a state of matic, rising development. A stable, reli- strategy for the bank. I believe in syste- banker can make is choosing the wrong good sense. The most dangerous mistake a I

page 11 page 12 to be the best be discussing, the result was always same: AB.LV – banking sector. Regardless of the topic we happened to banks, as well some people working outside of the English. The group consisted of employees various Once a colleague and I took course in business useful and beneficial to our bank. bend over backwards to make sure everything we do is ness like our own. We take part in the experience and surpass our earlier accomplishments, and treat the busi- patriots. We diligently follow the ratings and strive to And with regard to patriotism. We truly are AB.LV this capital. Our clients know us well and trust us. capital for our clients; now the time has come to oversee we have developed well the initial stage of formation king traditions. For this we have all the preconditions: actively asset management and develop real private ban- rupted development. Also, I would begin to develop employees to further their education. We need uninter- would I change? expand the opportunities for correct, turned out to be the only correct ones. What ven that decisions, even those initially didn’t seem les Banka is undisputable and final. Experience has pro- AB.LV. The authority of the shareholders Aizkrauk- I’m not even thinking about assuming the “throne” at strengthened. Thus, something is working out. my conviction that I have chosen the right path has guess I just got noticed more often. After this nomination else, seeing as we all work like the devil? I don’t know, all of my work at AB.LV. Why me, and not someone is a gesture of appreciation (the very highest, no less) for for “accomplishments in the field”…. In my opinion, this I think that just like Juliet Roberts, received an Oscar named best employee in the fourth quarter was still fresh. any event I wasn’t flustered. The feeling of having been that I wasn’t even surprised, as funny sounds. In The title “Best Employee – 2005” came so unexpectedly I love my city! after being in Moscow, when I especially feel: God, how Riga is my city, home. It good to return dar, “AB.LV – OK”! the telephone, smiles and notes in his appointment calen- about children…. All so that the client, when hanging up resolving problems, about the weather, recreation, our services, about business, specific tasks, tively: contact, and contact once again. About banker, which may be characterised easily and defini- clients, this style is definitely the hard work of a private “Riga’s style. With regard to the bank and working with the birth of his daughter. 2005 he considers the most striking event in his life to be would increase the work drive at any workplace.” In graceful and respectful attitude toward his colleagues tasks and various problems that arise in his work, addition to all of Romåns’ other skills in handlings his sibility to everything one may need within of the city, for its compactness and acces- every home one can feel the singular soul the fact that on its every street and in toward their home, Riga. I love Riga for many languages and are very considerate pitable and generous like Slavs, speak and orderly like westerners, but also hos- and Eastern Europe. Rigans are reserved bridge of sorts between Western Europe equally well, given our location on a understand eastern and western culture larity of Rigans lies in the fact that we create its unique atmosphere. The singu- only of buildings, but also people who cosiness. The city of course consists not the compactness of Riga and its unique of history in the streets Old Riga. I like western Ukraine. I like to feel the presence that I was born in the city of Lutsk vourite city in the world, despite fact lues. I can safely refer to Riga as my fa- of life, world outlook and system va- – it’s a particular combination of rhythm ted it since; I made a point to ask her. bank as an employee! And hasn’t regret- porate patriotism that she joined us at the the students was so surprised by this cor- We convinced everybody of this. One the best bank, according to all indicators! chairs” caf to mind is strong black coffee at the “13 “Riga’s style? The first thing that comes day on a business trip to Moscow. and Barcelona, celebrated his birth- largest islands with friends, visited Kyiv became a godfather, visited Estonia’s Manages to get a lot done: in 2005 And his involvement is contagious! of customer service business processes. he is currently working with optimisation cient production. Became so involved that In 2005 discovered a new direction – effi- process development: the bank’s system. plex and responsible field of business and led projects related to the most com- in the Business Technologies Department Afterwards became the youngest analyst economics at a school proved useful. in teaching information technology and training centre. His wealth of experience became a training specialist at the AB.LV the Transactions Department and soon Joined the bank in 2002 as an operator Specialist Business Process Optimisation Sergejs Mazurs, é on Dome Square. Riga’s style I products. After all, I’m the president… about the development of other demanded Without a doubt, I am not forgetting ordered over the internet). apartment (when a courier delivers goods whether it be a shop, travel agency or an chases that could be financed on the spot, develop consumer loans, and also pur- today by finding a stable job, I would For those wishing to improve their lives individual investment portfolios. products – mutual investment funds and with support in the form of investment wishing to increase it should be provided Clients having access to free capital and quality. must be easy to process and of superior will have it in future. All of these services currently have money, and for those that these would be services for clients that tions for development. In a few words, would simultaneously choose two direc- Yes, it’s not easy managing a bank…. I we don’t develop professionally. can’t be truly happy and, second of all, job that we don’t love, then first of all are awake to work, and if we doing a We devote up to 40% of the time that we must first of all love the job that he does. that not only the best, but each employee good is a double pleasure. It my view tion, and the fact that it does bank me with a great deal of joy and satisfac- develop. I got lucky; my work provides not to the award itself, but desire changes in my professional life are related Has anything changed? I think that the and the attention given to them…. ence of favourable factors: events, timing, have been noticed is partially a congru- But the fact that my work and its results that works to its best ability every day. ful, talented, and professional workplace employees at AB.LV. We have a wonder- that there are very, very many superior with people every day, I’ve come to learn And a good deal of fortune. Working The nomination is a great honour for me. ries and plans. I love it that’s that. ly, home, friends, work, interests, memo- everything is here that I call my life: fami- ish, inhabitants. I love Riga because running trams and very different, yet styl- 1-2 kilometres, and due to its regularly p.s. big AB.LV sports festival. ties, and every summer we all attend the offers its employees various sports activi- very athletic, and for this reason the bank time with their colleagues. We are all that our employees like to spend their free best motivation. It is also pleasant to note colleagues at the bank. To me this is I am pleased when see smiling, active appropriate environment. lopment. And we in turn offer them an life and are ready to focus on career deve- our people are in the most active stage of AB.LV employees is 30. This means that have nearly 500. The average age of didn’t even have 50 names. Currently we branch in 1995, the list of employees When Aizkraukles Banka opened its Riga of the best work for us. ria when hiring, but I can say that the best I can’t say that we abide by certain crite- competitiveness. People are coming to us. achievements increase the bank’s overall requires competitive professionals whose formance. Our bank’s sphere of business cognition for reaching a new level of per- for the fruits of one’s labours, but also re- AB.LV employee” is not only recognition gratitude. For this reason the title “Best quires a special culture of expression foster individual development. This re- addition to this we strive discover and for the good of bank (i.e. a salary). In rial appreciation for their everyday work and logical that employees receive mate- professional development. It is customary ployees highly and are interested in their we as the bank’s managers value our em- nomination we show our employees that visible part of our appreciation. With the ce over the course of year, is only and also after evaluating work performan- awarded to our colleagues each quarter, nation “Best AB.LV employee”, which is employees not only in words. The nomi- an axiom. We appreciate and respect our this is not a philosophical question, it The value of an employee at a company – co-owner and the bank’s Deputy Chairman of Board by O¬egs Fi¬s simple formula for success. bank gets a loyal employee. See, such work brings him satisfaction, and the the bank provide him with. And then and sees the advantages that working at mation, then he is grounded in real values like. If a person has access to such infor- ments are; and what our public image is bank; what our aims, plans and achieve- informed about what is happening at the to work there. Our employees are always pany where he works, must be proud For an employee to be loyal the com- cator of 100%. ment of our dreams. Our goal is an indi- cates a great deal, but it is not the fulfil- future with optimism. This figure indi- with their work at the bank and view 84% of AB.LV employees are satisfied to the latest survey results, more than conduct corporative surveys. According tudes towards the workplace, we regularly desires of our employees and their atti- to understand and assess the needs for any contemporary business. In order Employee loyalty – this is a current topic quality and effectiveness of decisions. teamwork increases by several times the process. At the same time co-ordinated ployees complicates the decision-making between bank management and em- that a barrier or great distance in relations tive is never punished. It well known ations that arise at work. With us, initia- their opinions and offer solutions for situ- provided with the opportunity to express enormous. Our employees are always employees on the daily work process is I would like to note that the influence of Speaking of corporate culture at AB.LV, vice or assist them with a particular task. ved. If needed, we provide them with ad- forcements, and new faces are well recei- “old”, united team is always open to rein- usual way of fitting in at a workplace. Our cially for new employees. That is the Informal contact is very necessary, espe- > I AB good old Europe! culinary shops. A small fragment of modern stores, refined restaurants and structed buildings and visit art galleries, along the tiled paths between recon- noisy centre of Riga. Here one can walk 5. 3. 1. with an aesthetic treat. bourhood will provide connoisseurs of architecture tions of 2004”. A walk around the immediate neigh- received first place in the category “Best Reconstruc- Art Nouveau pearls. In 2004 the renovated building Street – an outstanding example of Riga’s architectural set and the fans will let their feelings show! intense but honest battle, new records will be believe that on the ice there will be an who will be crowned champion, but we hockey championships. We still don’t know structed for the needs of 2006 world residential neighbourhood. largest exhibition centre; a public swimming pool; and an exclusive lar due to its delicious food and first-rate service. Nearby is îpsala, the ly successful businessman, and real “sea dog” – Måris Gailis. It is popu- The Riga Sports Arena was specially con- Berga bazaar – a real oasis in the AB.LV’s central office building on 23 Elizabetes 4 spas – all these things await you in summer. concert hall, cosy restaurants, hotels and tors to Latvia. Jomas Street and Dzintaru not only for Rigans, but also many visi- mer camps, first romantic meetings…. And symbol. It is also nostalgia, memories, sum- 4. Jürmala – this is without a doubt our . 2 2. prime minister of Latvia, current- not only for its owner, former GUIDE Fabrika Restaurant, famous 7 9 1 10 6 5 Moscow, where the theatre regularly performs on tour. have the opportunity to attend performances in and his talented troupe. Though our foreign clients impressive are the style and vision of Alvis Hermanis reserved a year in advance – that’s how unique and New Riga Theatre have to be 8. 7. enjoy the beautiful view that opens up of old city. fuzzy blanket with a class of cognac in hand, you can roof restaurant. Even on a chilly evening, wrapped in tourists, but of Rigans as well, not least because its hotel has deservedly captured the attention not only of Riga, the tourist mecca of Latvia. This intimate, homely city: the Dome Cathedral. check out the most noteworthy structure in old rejoice until morning, when, on your way out, you can tails, and you will be among fun people ready to music, the courteous bartenders prepare special cock- in Old Riga. Here you can always listen to quality 9. Gütenbergs Hotel is located in the very heart of Old Tickets to performances of the Balsam Bar – one of the most popular party places ational area for Rigans. adjacent to the Opera is a popular recre- beyond Latvia’s borders as well. The square masters are an event not only in Riga, but that productions of Latvia’s opera and ballet porary theatrical genres. It’s no coincidence ing, stately classical architecture and contem- 6. 10. more do you need to have fun? the best local beers, catchy music – what ment. Tasty foods (just like homemade), door recreational zone and entertain- wooden architecture, comfortable out- selection and good kitchen, but also its LIDO is popular not only with its broad National Opera of Latvia – union strik- The largest national-style restaurant 3 8 OPINION EXPERT they must manage to see the local symbols. so because our clients always have little time, and miss Old Riga, Jürmala and Sigulda. All the more If our guest asks where to head, I tell them not trees – that all seems exotic and a treat to them. Jürmala. Jomas Street, the sea, dunes and pine restaurants and shops are. And, of course, clients are amazed how “inexpensive” Riga’s rhythm of your Russian megapolis. Our Muscovite peace and quiet rest well from the crazy nothing will bother you here. You can enjoy like a resort spa. But that is the very point – minute walk through the park. To them Riga is riences culture shock when we say: it’s a five driving directions to our bank practically expe- hotel in the centre of Riga, client asking for nutes from the centre! But when staying at a Just think about it – the airport is located 15 mi- as if nothing is happening, the small distances.... our clients from Russia remark how quiet Riga is, troubles at home; here he RELAXES. For example, to visit us, the client leaves all of his problems and To our clients Riga is a comfort. When he comes suasion that it is impossible to resist them! employees, who possess such a talent for per- clients thanks to the charisma of some our have acquired many of our faithful, long-term efforts. Although I cannot fail to mention that we be only positive, we work hard and with all our friends. In order for these recommendations to commendation of their colleagues, partners or most cases clients come to us based upon the re- sought to find effective solutions together. In they have experienced problems; rather, we times. We have never turned away from clients if with us experienced complicated and difficult future. Aizkraukles Banka’s clients have together it for years, that means our business has a develop a relationship with client and maintain ness of relationships. If we have managed to uniqueness of the banking business – it is a busi- thing – special treatment. Therein also lies the that the client can only be surprised with one world have standardised their offers so very much bank, no style. Today, all banks throughout the the client there wouldn’t be anything at all – no style, brings one to an obvious thought: without client’s place in the hierarchy of values this with regard to our bank, and about the Theorising about style in general and Head of International Division O¬egs Sirotins

lpp. 15 AB Müsmåjas chief editor of Liena Britåne, most original ideas! The transformations depicted in these pho- a small budget sometimes permits the implementation of A style of sorts emerges also from having a limited budget – but magazine as the person occupying space. that the stylist could afford it, as well there was nothing superfluous! So that in every person‘s living space large and small rooms. Oh how I wish are large and small homes, there bring into their homes. Just as there contrast are the styles that designers lives of simple Rigans; just as full contrasts. As full of contrast are the tos took place in Riga – a city full of . HOME kind of experiment is completely understandable: while doing home of positive emotions in every family. People’s desire to take part this Already after the show’s first season it was clear that aroused a wave well worth seeing! emotional dessert of viewing the home before and after renovation. It’s of the year”. At conclusion each show viewers are treated to convert even the greyest room into a magazine illustration of “Interiors tions and the skill of construction workers their eyes. The designer’s recommenda- the show’s guests are transformed before the emotional experience as homes of Viewers of “Måjok¬a jautåjums” share in indifferent No one will remain next renovation project row interesting design ideas for their from a professional designer, and bor- room in their home, receive advice folks are given the chance to renovate a ved a loan from our bank. These lucky of one family in Latvia that has recei- the home”. Each show turns fortune “Måjok¬a jautåjums”, or “The issue of hand by offering viewers a new show: to lend the people of Latvia a helping ration with Aizkraukles Banka decided On September 28, 2005, LNT in coope- in my place! would come and finish the renovation ner, have dreamed – if only somebody wallpaper glue and the ceiling white- torn-apart apartment, in-between the powerlessly numb in the middle of a be interrupted. Many of us, standing vation cannot be finished, it can only dy’s life. As an old adage says, a reno- a catastrophe that occurs in everybo- Home renovation – this is more or less dreams come true! Issue of the home – local market. ty business direction in the Aizkraukles banka’s priori- Mortgage loans are I before rate toilet facility was installed and fur- vated, but the hallway as well, and a sepa- saw that not only was the bathroom reno- We were pleasantly surprised when we pation in the show ‘Måjok¬a jautåjums’. says, “I am very satisfied with my partici- moved practically everyone in Latvia, in front of the camera and by doing so who ventured to propose his girlfriend ular emotionality. Didzis Kurzemnieks, Certain shows stand out with their partic- our own work through clients’ eyes!” lives. We wanted to witness the results of live and how they strive to improve their takes place in real life, how our clients ing for us to observe how everything participate in this project: “It was interest- jersons describes our bank’s decision to Division and board member Påvels Íne- AB.LV’s Head of the Customer Service after the show! lus to continue the home improvements room or kitchen – this serves as a stimu- novated bathroom, living room, child’s not share these emotions with them. A re- they behold their redone homes, we can’t that the show’s guests experience when describable joy and genuine excitement apartments renovated. Witnessing the in- 18 Aizkraukles Banka clients had their In 2005, thanks to “Måjok¬a jautåjums”, thing QUITE LIKE THAT!” home: “Well, we weren’t expecting any- when crossing the threshold of their new first words that the surprised guests utter is demonstrated by the exclamations and jautåjums” manage to surprise them. This almost always the hosts of “Måjok¬a they would like their home to look, but gramme participants try to imagine how Usually at the beginning of pro- AB.LV and LNT, now it is possible! nal and often bold ideas. Thanks to pay a professional designer for his origi- renovations not everyone can afford to you very much to the show for this experience!” own home, though we got used to the changes pretty quickly. Thank on television. At first it was hard to believe that we were in our visit and were surprised that in reality everything looks even better than level, and everything works perfectly! After the show friends came to nished. All the renovation work was conducted at a high professional I after

page 17 home

Bridging loan The “Bridging loan” is a specially designed mort- most convenient customer service cen- gage lending programme to ease the client’s process tre and photos of our loan officers, but of moving to a new home. Clients have one year to also on how to arrange for a meeting fix up their new home, and only then move into it with the loan officer of your choice at a and sell their current home. time of your choosing. The main advantages of this loan: • a year’s time to move; Loan processing fees • during this time client pays bank only interest, can be added to the postponing repayment of principal; loan amount • loan of up to 105% of value of home (both proper- Upon request of the client, EXPERT Påvels Ínejersons ties - old and new – serve to secure loan). loan processing fees can be OPINION Head of the Customer Additional advantages: added to the loan amount, per- Service Division • bank covers state and chancellery duties for regis- mitting you to utilise funds more What is the typical Aizkraukles Banka tration of mortgage in property register; effectively – for example, to furnish client? • discounts on acquisition of furniture and furnish- your new home. Unlike other banks, It is not easy to answer this question today, ings. where the bank usually offers to include when the number of clients is in the thou- various commission payments in the loan sands. The people who choose us as their Down payment loan amount as long as the total does not home lending bank are very different. The down payment loan is intended for clients lack- exceed the maximum loan amount per- Statistics indicate that Aizkraukles Banka ing funds for the down payment when purchasing an mitted, Aizkraukles Banka provides the borrowers are mostly people in their active apartment in a newly constructed apartment building. opportunity to tack on the commission to years: from 25 to 40 years old. Generally Bank clients may receive a loan of up to 10% of the the loan, even if the maximum loan they are family people with an average In Riga like nowhere else in the world are value of their new home. This is enough entirely or amount is issued. income who require LVL 25 – 30,000 to buy very able people who can create interesting partially to cover the seller’s required deposit. After a home. They tend to be cautious when successful construction of the building the bank’s Home improvement loan borrowing, and try to repay the loan as things in a very short time without much client may take out a mortgage under especially fa- up to 85% quickly as possible. experimentation. In Riga people like quality vourable terms. As of September, Aizkraukles Banka has For these people we are the right bank. The materials and proven values. The down payment loan is unsecured. The basis for also improved the terms on home im- hopes with which clients come to us are all receipt of the loan is the concluded purchase agree- provement loans. Loans of up to 85% of unique, and the contact develops very indi- ment between client and seller for acquisition of the the value of the home are available for a vidually. We seek to create a common lan- Advises designer Aivars Burakéviçß home. With the help of this loan clients can afford to term of up to 20 years. This loan is in- guage and, whether it be issuing loans or reserve the apartment that best meets their means tended for renovation, reconstruction or just a routine payment, not to disappoint and desires while the building is still being construc- improvement of an apartment or house. people’s hopes. Riga’s style is a functional minimalism. But not only. People strive ted, and upon successful completion the loan turns In 2005 the market for new homes con- There is no magic way to achieve the high to create an atmosphere seeking wooden floors, old metal items, and into a mortgage, without any significant change in tinued to expand rapidly – Aizkraukles satisfaction of all clients. But it is possible to something from industrial machinery and old furniture. The unique is the amount of the loan payment. Banka also paid particular attention to work every day so that every client will be sought. It is current to mix everything natural with the artificial. developing elastic and favourable offers fully satisfied with our services. And that 30-year term on loans on mortgages for new homes. means one thing – to exceed the client’s Riga’s interiors typically feature clean lines, monolithic forms and a The term on loans for new and renovated homes was expectations every day. Do we manage to tasteful selection of materials. Untreated or polished natural materials extended up to 30 years for new and renovated do this? We seek to monitor this by asking exist along with the absolutely synthetic. Wenge, teak, walnut, glass – homes successfully completed beginning 2003. We finance new homes this question in our client survey and by ask- and then perforated plastic that reminds one of ladies’ net stockings. based on the assessed ing clients to tell us if there is anything in Sometimes a fully functional room will contain a completely non-func- Notary services at the Bank amount our service we can improve. If you, reader, tional object worthy of an art installation. At the Bank’s Loan centres “Elizabete” (21 Elizabe- Aizkraukles Banka offers its clients fi- are a client of Aizkraukles Banka, I will be tes Street, Riga), “Marija” (13 Marijas Street, Riga) nancing on acquisition of a new home happy to learn your opinion about our ser- For those seeking homeliness – warm, light colours with slight con- and "Vairogs" (226 Brivibas Street, Riga), for the based on the assessed amount, not taking vice and will help to resolve the problem, if trasts: beige with dark brown, green, all kinds of shades of white. A lit- ease of the client the Bank also offers notary services into account the amount of acquisition there has been one. Please write me at tle bit of kitsch combined with an Eastern ethno – interior yogis create on the premises, which greatly lessens the time the indicated in the purchase agreement. [email protected]. their environment in harmony with ancient, Eastern-culture interior client has to spend on mortgage loan processing. This permits clients to receive a loan not decorating only on 100% of the value of the home, Based on what we know – that our number principles. Now it’s possible to arrange but also an additional amount for home of clients is increasing and clients recom- a meeting with a loan officer improvements. II mend us to their friends – we are on the Latvian understanding of homeliness – we utilise ethnographic ele- electronically right path. I know that we still have some way to go, and we will never be able to say ments combined with artefacts from modern life. It is current to mix in Since late 2005 Aizkraukles Banka’s homepage that we are at the end of this path. something from modern Scandinavian and Italian furniture design. I www.ab.lv has provided not only information on the I am thankful to every one of our clients for trusting us with one of the most important financial decisions in their lives – selecting a mortgage. And we trust our clients, because due to them, Aizkraukles Banka exists. I Projects of Aivars Burakéviçs page 18 page AB page 20 projects important to the country”. from the state, but also assist it in implementing principle in society that businessmen not only ask According to O¬egs Fi¬s for formation of a healthy society. help create a saturated emotional and energetic fund activity in this field as a priority that will foster and For this reason our bank views its sponsorship spheres of life and work important to the country. no less important than investing funds in other We are convinced that investing in culture and art is tional Experts Council. been elected to be chairman of the current Interna- ner and chairman of the board Ernests Bernis has ans from various European countries. AB.LV co-ow- and to offer employment leading expert art histori- ble a collection of artwork an international scale – The museum has staked out a lofty goal – to assem- in the world of culture and art – one million lats. 2005 to 2015, granting it a donation unprecedented in Latvia financial support for the museum during its creation from the newly founded Museum of Modern Art. AB.LV will ensure accordance with which the bank became main patron of Aizkraukles Banka concluded a cooperation agreement, in On September 23, 2005 the Ministry of Culture Latvia and “We want to popularise the I pearl of Latvia, which tourists and true symbol of Latvia. It is the cultural monument of architecture and art is a development of Rundåle Castle. This over the course of three years for undertaking of a support programme statement of intent that anticipates Foundation of Latvia, AB.LV signed a In 2005, together with the Culture for the new and beautiful. tion in every way and their aspirations future we will support our new genera- the future, and for this reason also in dren are the key to blossoming of our hopes as well. We believe that chil- and understanding, greatly relates to of children, belief in miracles, patience which celebrates the unlimited fantasy Visitors”. This wonderful production, dren’s opera “Amal and the Night sponsor of the Gian Carlo Menotti chil- Aizkraukles Banka became the general National Opera of Latvia, in 2005 In supporting various projects at the supported by the bank: Other significant projects . SUPPORT I singing, which is steeped in tradition. artistry and the art of Latvian choir to show music lovers in Russia their treasures of Russian culture – as well cities in the world – a repository of nity to visit one of the most beautiful The boys from Latvia had the opportu- burg for the organisation of this concert. support to our consulate in St. Peters- sic. AB.LV gladly provided financial Glinka St. Petersburg School of Mu- M. Riga High School of Music and the Mediña the boys’ choirs from J. cellent acoustics, two choirs performed: its longstanding, rich traditions and ex- Glinka State Academy chapel, with M. choirs”. In the renovated famous wonderful concert, “Meeting of two consulate in St. Petersburg organised a independence of Latvia, the Latvian the anniversary of declaration On November 18, 2005, in honour of society. res is part of our responsibility toward visit. Helping to preserve such treasu- guests from around the world come to I I projects, because music is a language pleased to support interesting musical Our bank has always been particularly prove upon with every year. form that we have mastered and im- and from the heart – this is also an art what you do and to work exceptionally has set forth. To be a professional at also coincides with the goals our bank val’s motto, “Art as a model for life”, of the year in cultural life. The festi- newspaper Ministry of Culture Latvia and project, and received a prize from the dependent, non-commercial cultural recognition, gained the status of an in- The festival has garnered European drawing approximately 8000 viewers. performances to Latvia, each festival Novus years ago. In this time, the six tially took place in Daugavpils ten festival sor to the VI International New Theatre In 2005 AB.LV became general spon- festivals have brought over 50 Homo Novus. Diena’s award as the event This festival ini- I Homo with its virtuoso vocal art. stirred our experienced Riga audience The Real Group • The excellent jazz quintet concert by event; performance into an unforgettable cal styles, this musician transforms his and values. In uniting numerous musi- very close to us in terms of spirituality • The female vocal interpretation; an original, unique and sensuous sitions that were once very popular, in gans with European rock music compo- Nouvelle Vague, • The refined French musical project sponsor to: ries. In 2005 our bank was general ites us and knocks down any bounda- understood by everyone, one that un- Moby concert, the art of which is from Sweden, which which presented Ri- I

page 21 AB page 22 . FACTS

page 23 cnh. 24 true banker portrait of a mer sports festival. * Sergejs – actively takes part in the corporate concerts that bank’s employees organise on New Year’s and sum- • How else to describe him? When in a hurry – AB.LV’s orange umbrella! graphs. • An expert on Japanese cooking, mobile telephones and cities the shore of Mediterranean Sea. Like to take photo- • Regularly pays for cable television, but has no time to watch it. • Drives a car to work and takes the lift, but walks runs at gym, which he visits three times week. New Year’s and the summer sporting games)*. and is not afraid twice a year to display these abilities the entire bank (at employees’ corporate concerts on • Always ready to help colleagues and improve the mood at workplace with a dose of healthy humour. Sings, dances important thing is the result – reaching an understanding with client. • Fluently speaks and writes in at least two languages. Other languages pose no problem for him either, because the most his colleagues. • Never postpones unfinished work until tomorrow, finishes what he has started, without regard for his time, or that of • During the working day, of greatest importance to him are client’s values. And no “ifs”! can wait for it. But if he doesn’t know, then certainly knows someone who does. • Knows how to count money (of course!) and plans his time very well: knows by what send or when he • Arrives at work on time. But if not, then thinks of 10 convincing and excusable reasons. What pertains to a true banker… Hmm… Well, here it is: Sergejs Mazurs hobbies are the most diverse, and that in our free time from work we know how to relax have fun! per the descriptions of our colleagues’ travels? Where do bankers not go in their This demonstrates that interests ice, wear suits and ties during the day at bank, doing work I spoke of earlier?! Or to read in bank’s electronic ne Aizkraukles Banka’s hockey team, is it possible to imagine that these boys, who are so reckless on the With regard to the banker’s private life... everything is “prim and proper”, although, if you look at compromise. requires a different approach: with some one must be strict, others seek out nates, and he must be a psychologist in this field, because people are very different, each one but intuition also. Being a banker means being constantly in touch with partners, clients, and subordi- tics of the post-socialistic area. For this reason bankers must be gifted not only with very acute logic, ence of other countries are not always applicable to our situation, considering the specific characteris- Moreover, as we know, in these interesting times laws drafted other countries based on the experi- countries or regions can influence our business not only to a great extent, but also very quickly. speed of information exchange is rapidly increasing, and economic political changes in other of trends around the world as a whole. Business occupies increasingly greater global proportions, nomics both on a macro level, as well specific production level. A banker must also be aware informed about what is happening in economics and politics, must understand the laws of eco- What is a true banker like? Banks are considered economic indicators, therefore bankers, too, must be Romåns Surnaçovs ary between his private life and work. clear. Otherwise he is not understood. He social and democratic. has drawn a bound- to listen and knowledgeably precisely expresses his thoughts. His speech logic are A true banker is a person of the mind, not emotion. He progressive, farsighted, knows how Irina Lastovska wspa- and AS Aizkraukles banka consolidated report

for the year 2005

Contents:

Report of the Council and the Board 26 Bank Council and Board 29 Statement of Responsibility of the Council and the Board 30 Financial Statements Income Statements 31 Balance Sheets and Memorandum Items 32 Statements of Changes in Shareholders’ Equity 33 Cash Flow Statements 34 Notes 35 Auditors’ Report 63 Page 26 AIZKRAUKLES BANKA I REPORT OF THE COUNCIL AND THE BOARD Report of the Council and Board increase in the Bank’s assets has not been as rapid the beginning of year have been overachieved. The Bank, it should be noted that the financial objectives set at Having estimated the aggregate financial results of against average assets per annum) was 3.59%. return on assets (ROA) (measured as fiscal year’s earnings average shareholders’ equity) reached 49.34%, whereas the on equity (ROE) (measured as fiscal year’s earnings against According to the financial results of 2005, Bank’s return Bank’s gross loan portfolio has reached LVL 278 million. to the beginning of year. As at 31 December 2005, LVL 547 million, which constitutes a 23% increase compared As at the end of 2005, assets Bank amounted to the preceding year. of LVL 18 million, which is 2.2 times as much the result for the Bank. During year Bank has derived net profit The year 2005 was yet another successful financial period Financial Results material transactions. control of budget execution, as well risk assessment scheme and risk management system, budget approval porate culture, development of an employee incentive trol and analysis of their execution, formulation the cor- of the Board encompass approval business plans and con- assigned to the Board were strictly defined. Major functions To optimise the Board’s operations, functions to be financial and operational planning analysis. The decentralisation process promoted effectiveness of structural changes in the Bank’s management and divisions. The year 2005 was marked also with implementation of strengthening of its positions in the international market. ment of lending products in the domestic market and Aizkraukles banka continued intensely focusing on develop- According to the strategic goals set by Bank, in 2005 and even surpassed planned results. gy pursued during the reporting year, Bank has reached considerable financial results. Owing to the successful strate- Aizkraukles banka or the Bank) has succeeded in achieving commercial banking, AS Aizkraukles banka (hereinafter, In 2005, despite of the tough competition in market Business Partners of Aizkraukles Banka, Dear Shareholders, Customers and key role in attracting new customers. its business partners in Russia and other CIS countries played a new customers. The Bank’s Moscow representative office and high-risk customers, the Bank was also focusing on attracting customer structure and refusing business relationships with Regardless of the aforementioned work at optimisation International Market and the customer service centre Krasts customer service. In April a new service centre In the beginning of 2005, Aizkraukles banka optimised its risks. pendent assessment and decision-making in respect of credit Division. The purpose of such segregation is to achieve inde- merged under a new division – the Loan Administration the Customer Service Division. These two functions were making) and credit risk assessment functions from those of the Bank decided to segregate loan administration (decision- Having analysed customer service at the domestic market, standards of credit risk management. in lending. The Bank its operations keeps to the highest these account for the excellent results achieved by Bank well as the high level of customer service culture – all adapt to the wishes of any customer, competitive offers, as The well-considered lending policy, flexibility, i.e. ability to of the highest results among Latvian commercial banks. to private individuals in Riga and region, which is one pies approximately 18% of the market mortgage lending vate individuals is confirmed by the fact that Bank occu- of the Bank’s leading position in field lending to pri- as at the beginning of year by 123%. The strengthening housing reached LVL 188 million, thus exceeding the result end of the reporting period, amount loans issued for tion in the Latvian market of mortgage lending. As at In 2005, Aizkraukles banka continued consolidating its posi- Domestic Market the shareholders of LVL 30 per share. meeting approve a resolution on payment of dividends to The Board will recommend that the general shareholders' number of high-risk customers. result, the Bank has refused business relationships with a expected, which is due to intensified customer control. As a was opened to combine the settlement centre Imanta. Motors got actively involved in the implementation of these process- was assigned to the Customer Control Committee, which anti-money laundering mechanism. The key function here In the beginning of 2005, Bank introduced an improved money laundering purposes. management related to possibilities of the Bank’s misuse for laundering, the Bank decided to allocate more funds risk government and Latvian commercial banks to combat money In view of the intention commonly expressed by Latvian Know your Customer whereas the average portfolio amount was LVL 2.1 million. return on the trading portfolio in 2005 reached 11.6%, credit institutions and privately held companies. The annual the Latvian government and other non-OECD governments, undefined-period portfolio encompass debt securities issued by amount in 2005 was LVL 64.7 million. Investments held for an undefined period portfolio was 12.5%, and its average OECD area. The annual return on investments held for an securities issued by credit institutions incorporated in the return reached 3.55%. The liquidity portfolio comprises debt December 2005 amounted to LVL 37.5 million and the annual The average balance of the Bank’s liquidity portfolio as at 31 due to an efficient and well-balanced investing strategy. one of the greatest achievements 2005, which is basically The Bank considers its success in investment business to be Investment Business lion as at 31 December 2005. increased as high 1.7 times, having reached LVL 29.4 mil- period. Compared to 2004, the amount of issued loans non-residents was also rapidly growing during the reporting ning of the year by 25%. The amount loans issued to LVL 480 million, thus exceeding the result as at begin- In 2005, the amount of funds attracted by Bank reached well as ensuring new advantages for Latvian capital in the USA. creating a new dimension for US companies and investors, as facilitate economic cooperation between Latvia and the USA, bility of the business environment. The Forum members wish to competitiveness worldwide, and the transparency responsi- to enhance development of the Latvian financial centre, its banka being one of the founders. The objective Forum is Latvian-American Financial Forum was established, Aizkraukles In the end of 2005, an open social organisation called partner to For the second year in a row, Aizkraukles banka has been be granted for 10 years to compile museum collections. Latvia whereby financing in the amount of LVL 1 million shall agreement with the Ministry of Culture Republic Contemporary Art. The Bank signed a long-term cooperation project – establishment of the Latvian Museum In addition, the Bank joined implementation of a national thousand to various sponsorship and charity purposes. In 2005, Aizkraukles banka donated funds totalling LVL 745 Aizkraukles Banka in the Community Ev.-Luth. Parish. to support construction of a new centre for the Riga Luther In 2005, the Board of Bank decided to grant LVL 35,000 support programme for development of the Rundale Palace. intent whereby Aizkraukles banka shall commence its and the Latvian Cultural Foundation signed a statement of In March 2005, Aizkraukles banka, Rundale Palace Museum book nificant project supported by the Bank is publishing of a passion, responsiveness and mutual support. One more sig- pany TV3. The mission of this project is to encourage com- implemented jointly by newspaper to carry out the hard work of detecting criminals. tory bodies and law enforcement actively joined efforts of the world. For this reason, financial institutions, their regula- ly difficult, and criminal threats may be expected in any corner other countries. The fight against money laundering is extreme- dence in the safety of financial system both Latvia and institutions worldwide. It can lead to undermining public confi- Money laundering is a global problem faced by all financial position on further combat against money laundering. wherein the banks declared their clear, implacable and firm Banks to take aggressive action against money laundering, declaration issued by the Association of Latvian Commercial On 15 June 2005, all Latvian commercial banks signed the Market Commission and correspondent banks. accomplished in consultation with the Financial Capital and and employees were given specialised training. This was es. As a result, additional controlling structures were set up, Personalities in Latvian Democracy. avjslpus(The Pride of Latvia), Latvijas lepnums Diena and television com- a project

Page 27 AIZKRAUKLES BANKA I REPORT OF THE COUNCIL AND THE BOARD Page 28 AIZKRAUKLES BANKA I REPORT OF THE COUNCIL AND THE BOARD musicians: world-famous musician In 2005, the Bank supported Latvian concerts of several and Riga, 20 February 2006 Ernests Bernis Chairman of the Board Aleksandrs Bergmanis Chairman of the Council for your trust and loyalty to the Bank! The management of Aizkraukles banka express its gratitude Aizkraukle. un Skrîveri ASK/AB.LV, to the Latvian Handball Federation, leading club In sports, Aizkraukles banka continued rendering its support Visitors Homo Novus ects supported by the Bank, International Theatre Festival Report of the Council and Board The Real Group. at the Latvian National Opera should be mentioned. and the children’s youth handball club and children’s opera Among other significant cultural proj- Amahl and the Night Moby , Nouvelle Vague Deputy Chairman of the Council Member of the Council Member of the Board. On 4 April 2005, the Council appointed O¬egs Sirotins as Chairman of the Council The Council of the Bank Bank Council and Board J V A å l l n a e d i k s i s

m a K n r i r î d g s

r e K s r

u s B t e o r v g o m j s a n i s

Deputy Chairman of the Board Members of the Board Riga, 20 February 2006 Ernests Bernis Chairman of the Board Aleksandrs Bergmanis Chairman of the Council Chairman of the Board The Board of the Bank A O O P E å r l ¬ ¬ n e e e v e k g g e s s l s s s t a

s F S n Í

i i B ¬ d n r s o e r e s t t r j

i e n n P r i s å s s

o Ω e n s

Page 29 AIZKRAUKLES BANKA I BANK COUNCIL AND BOARD Page 30 AIZKRAUKLES BANKA I STATEMENT OF RESPONSIBILITY OF THE COUNCIL AND THE BOARD years then ended. changes in the shareholders’ equity and cash flows for December 2005 and 2004, the results of its operations, 31 fairly the financial position of Bank and Group as at pared in accordance with the source documents and present The financial statements set out on pages 31 to 62 are pre- Republic of Latvia applicable to credit institutions. and Capital Market Commission other laws of the Latvia Law on Credit Institutions, Regulations of the Financial pared in compliance with the requirements of Republic (hereinafter – the Group). The financial statements are pre- consolidated financial statements of the Bank and its subsidiary cial statements of the Bank, as well for preparation Management) are responsible for the preparation of finan- The Council and the Board of Bank (hereinafter – Statement of Responsibility the Council and Board Riga, 20 February 2006 Ernests Bernis Chairman of the Board Aleksandrs Bergmanis Chairman of the Council Republic of Latvia applicable to credit institutions. Financial and Capital Market Commission other laws of the pliance with the Law on Credit Institutions, Regulations of also responsible for operating the Group and Bank in com- irregularities in the Group. The Management of Bank are Group’s assets and prevention detection of fraud other nance of proper accounting records, safeguarding the The Management of the Bank are responsible for mainte- of the financial statements. mates have been made by the Management in preparation concern basis. Prudent and reasonable judgements esti- International Financial Reporting Standards and on an ongoing tently, applying accounting policies in conformity with the The aforementioned financial statements are prepared consis- The accompanying notes form an integral part of these financial statements. Net profit for the period Net profit for the year Corporate income tax Corporate income tax Profit before corporate income tax Profit before corporate income tax Release of previously established allowances Release of previously established provision Allowances for possible credit losses A for possible credit losses Other operating expense Other operating expense Depreciation and value adjustments of fixed assets Depreciation of fixed assets and their value adjustments Administrative expense Administrative expense Operating income Operating income Other operating income Other operating income Profit on trading with financial instruments Profit on trading with financial instruments Net commission and fee income Net commission and fee income Commission and fee expense Commission and fee expense Commission and fee income Commission and fee income Income from securities Income from securities Net interest income Net interest income Interest expense Interest expense Interest income Interest income for the years ended 31 December 2005 and 2004 Income Statements Riga, 20 February 2006 Ernests Bernis Chairman of the Board Aleksandrs Bergmanis Chairman of the Council Notes 11 10 10 20 9 8 7 6 5 5 4 4 LVL '000 1 608) (11 8000 18 590 20 833 33 292 18 383 24 2590) (2 643) (1 164) (1 091) (6 Group 334 9 780 5 944 6 2005 (420) (389) 817 413 14 LVL '000 1 606) (11 3831 33 292 18 383 24 8000 18 590 20 1164) (1 091) (6 2590) (2 643) (1 334 9 780 5 944 6 Bank 2005 (420) (389) 411 817 14 LVL '000 0142 20 917 11 677 14 1234) (1 274) (1 922) (8 068) (1 760) (2 Group 111 8 345 9 473 3 277 4 345 5 2004 (765) (250) 414 474 1 LVL '000 0142 20 917 11 677 14 1234) (1 274) (1 921) (8 068) (1 760) (2 112 8 346 9 473 3 277 4 345 5 Bank 2004 (765) (250) 414 474 1

Page 31 AIZKRAUKLES BANKA I INCOME STATEMENTS Page 32 AIZKRAUKLES BANKA I BALANCE SHEETS AND MEMORANDUM ITEMS The accompanying notes form an integral part of these financial statements. Financial commitments Contingent liabilities Funds under trust management Memorandum items Total liabilities and shareholders’ equity Total shareholders’ equity Shareholders’ equity Total liabilities Subordinated liabilities Other liabilities Current corporate income tax liabilities Deferred corporate income tax Deferred income and accrued expense Derivatives Deposits from customers Balances due to credit institutions and central banks Liabilities and shareholders’ equity Total assets Other assets Corporate income tax prepayment Prepaid expense and accrued income Investment properties Tangible fixed assets Intangible fixed assets Investments in subsidiaries Investments in associated entities Derivatives Available-for-sale investments Fair value through profit and loss investments Loans and advances to customers Balances due from credit institutions Cash and demand deposits with central banks Assets as at 31 December 2005 and 2004 Balance Sheets and Memorandum Items Other contingent liabilities Guarantees Retained earnings brought forward Fair value revaluation reserve of available-for-sale investments Reserve capital and other reserves Share premium Paid-in share capital Term deposits Demand deposits Term deposits Demand deposits Shares and other non-fixed income securities Debt securities and other fixed income Debt securities and other fixed income Other balances due from credit institutions Demand deposits Retained earnings for the period Notes 28 28 28 29 27 11 11 26 17 25 24 23 11 22 21 20 20 19 18 17 16 15 15 14 13 12 oe 11.2 31.12.01. 31.12.02. Notes 31/12/2005 LVL '000 4 379 547 0 516 501 379 547 4 943 140 325 339 268 480 0 212 101 905 102 773 276 3236 43 863 45 000 18 5000 15 988 15 2805 12 911 86 716 99 801 40 Group 2333 4562 6895 4099 9525 1583 1500 7731 1038 1499 8155 8655 7231 1205 1114 1693 1033 1033 255 343 258 982 601 742 500 12 – – 31/12/2005 LVL '000 4 386 547 0 212 101 905 102 773 276 4 386 547 0 523 501 4 943 140 332 339 275 480 5288 15 2805 12 911 86 716 99 801 40 3236 43 863 45 000 18 5000 15 231 7 205 1 114 1 693 1 033 1 033 1 333 2 562 4 895 6 099 4 525 9 583 1 500 1 731 7 038 1 499 1 155 8 655 8 Bank 343 258 707 255 982 601 742 500 12 – 31/12/2004 LVL '000 4 492 444 642 414 3 146 138 390 164 1 473 313 861 382 492 444 4577 24 850 29 000 15 399 14 8005 98 767 98 722 66 668 97 870 18 9388 69 044 12 Group 813 1 297 3 110 5 685 6 111 8 413 3 571 1 500 1 727 6 168 2 168 2 194 8 194 8 936 7 308 1 255 258 762 810 224 789 458 695 12 78 – – – 31/12/2004 LVL '000 4 499 444 648 414 1 479 313 867 382 499 444 3 146 138 390 164 4577 24 399 14 9851 29 000 15 9388 69 344 11 005 98 767 98 6722 66 668 97 870 18 813 1 297 3 110 5 685 6 727 6 112 8 413 3 571 1 500 1 194 8 194 8 308 1 936 7 168 2 168 2 Bank 255 810 224 458 695 789 707 258 762 78 12 – – The accompanying notes form an integral part of these financial statements. As at 31/12/2005 Net profit for the year 2005 Change in deferred corporate income tax result of sale Charge to income statement as a for available-for-sale investments Change in fair value revaluation reserve Dividends paid As at 31/12/2004 Net profit for the year 2004 Change in deferred corporate income tax result of sale Charge to income statement as a reserve of available-for-sale investments Change in fair value revaluation Sale of own shares Increase in reserve capital Increase in paid-in share capital Dividends paid As at 01/01/2004 for the years ended 31 December 2005 and 2004 Statements of Changes in Shareholders’ Equity adi hr hr On eev arvlerv- eandTotal share- Retained Fair value reva- Reserve Own Share Paid-in share V 00LL‘0 V 00LL‘0 V 00LL‘0 LVL ‘000 LVL ‘000 LVL ‘000 LVL ‘000 LVL ‘000 LVL ‘000 LVL ‘000 5000 15 000 15 000 10 aia rmu hrs aia uto eevserig holders’ equity earnings luation reserves capital shares premium capital 000 5 – – – – – – – – – – – – 255 255 255 – – – – – – – – – – – – – (3) 3 – – – – – – – – – – – – – – 500 1 500 1 250 1 250 – – – – – – – – – – – – 2775) (2 1771) (1 583 1 789 2 571 1 926 2 239 177 (2) – – – – – – – 7525 27 000 18 1525 11 0463 10 2000) (2 5000) (5 800) (1 112 8 (250) – – – – – – – 5863 45 000 18 4891 24 9851 29 1800) (1 2775) (2 000) (2 771) (1 789 2 112 8 177 239 (2) 3 – –

Page 33 AIZKRAUKLES BANKA I STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY Page 34 AIZKRAUKLES BANKA I CASH FLOW STATEMENTS The accompanying notes form an integral part of these financial statements. ** See the components of cash and equivalents in Note 32. * Short term investments comprise fixed income securities and shares included in fair value through profit loss availab Cash and cash equivalents at the end of period** Profit/ (loss) from revaluation of foreign currency positions Cash and cash equivalents at the beginning of period Increase in cash and equivalents (Decrease) in cash and equivalents from financing activities Sale of own shares Dividends (paid) Subordinated loans attracted Cash inflow/ (outflow) from financing activities (Decrease) in cash and equivalents from investing activities Sale of fixed assets (Purchase) of equity investments in other entities and long-term (Purchase) of fixed assets and investment properties Cash inflow/ (outflow) from investing activities (Decrease)/ increase in cash and equivalents from operating activities (Corporate income tax paid) activities before corporate income tax (Decrease)/ increase in cash and equivalents from operating Increase in deposits from customers (Increase) in loans and advances to customers (Decrease)/ Increase in balances due from credit institutions (Increase) in short-term investments* (Decrease)/ increase in other liabilities (Increase) in other assets (Increase) in prepaid expense and accrued income Increase in deferred income and accrued expense in assets and liabilities, as a result of operating activities Increase in cash and equivalents before changes Loss from revaluation of foreign currency positions Increase in provisions for possible credit losses Depreciation and value adjustments of fixed assets Profit before corporate income tax Cash inflow/ (outflow) from operating activities for the years ended 31 December 2005 and 2004 Cash Flow Statements portfolios. 18229) (138 2 690) (23 504) (22 3 988) (30 LVL '000 2 968 127 703 158 1 984) (13 2000) (2 298) (5 0591 20 7407 97 469 12 354 22 2763) (2 5325) (5 186) (1 2000) (2 Group 1643 2005 (389) (173) (631) 804 751 253 27 – – – 18229) (138 2 690) (23 3 988) (30 2 504) (22 LVL '000 2 968 127 703 158 1 984) (13 2000) (2 298) (5 0590 20 7408 97 469 12 353 22 5325) (5 2763) (2 2000) (2 1186) (1 1643 Bank 2005 (389) (173) (631) 253 804 751 27 – – – LVL '000 (13 019) 100 548 161 343 158 703 (73 679) (14 707) (13 049) 15 152 68 316 90 577 98 665 11 155 (1 799) (1 883) Group 6 727 1 683 4 931 1 274 9 344 2004 (602) (190) 190 347 240 (37) 30 3 – le-for-sale LVL '000 (13 026) 158 703 100 555 161 349 (12 349) (73 679) (14 707) 68 316 90 577 98 672 15 152 (1 799) 11 156 (1 883) 6 727 4 931 1 683 1 274 9 345 Bank 2004 (190) (707) (602) 240 190 347 (37) 30 3 Subordinated liabilities Deferred income and accrued expense Deposits from customers Balances due to credit institutions and central banks Liabilities Prepaid expense and accrued income Available-for-sale investments Fair value through profit and loss investments Loans and advances to customers Balances due from credit institutions Assets The following table summarizes the reclassifications made: which are in accordance with International Financial Reporting During 2005, the Bank has consistently applied accounting policies, ended 31 December 2005 and 2004, is set out below. applied consistently (unless otherwise stated) throughout the years A summary of the principal accounting policies, all which have been Policies 2. Information on Principal Accounting the year ended 31 December 2004, unless otherwise stated. Information given herein in brackets represents comparative figures for Institutions. to render all the financial services specified in Law on Credit Latvia and a licence issued by the Bank of that allows The Bank operates in accordance with the legislation of Republic ment. lending, fund transfers, foreign currency exchange and asset manage- and two lending offices in Riga Jürmala. Its main scope of activity is The Bank operates seven customer service centres, two lending centres 23, Riga. company. At present, the legal address of Bank is Elizabetes Street Aizkraukle, Republic of Latvia, on 17 September 1993, as a joint stock AS Aizkraukles banka (hereinafter – the Bank) was registered in 1. General Information Notes to the Financial Statements Debt and other fixed income securities Debt and other fixed income securities reported LVL ‘000 8 563 382 967 137 273 164 6688 96 688 96 708 6 015 1 191 8 726 1 133 2 133 2 As 11/0431/12/2004 31/12/2004 Group LVL '000 Group. effect has no impact on financial year 2004 profit of the Bank and cash flow statement and notes for the year then ended. Reclassification items of the balance sheet as at 31 December 2004, income statement, Statements of Banks. The Bank has performed reclassification certain Financial and Capital Market Commission’s Regulations on The financial statements are prepared in accordance with IFRS and the c) Basis of Preparation Financial and Capital Market Commission. Financial Reporting Standards (IFRS) and the Regulations of purpose of fair presentation in accordance with the International tion as disclosed below, with adjustments and reclassifications for the maintained under the historical cost convention, modified for revalua- pared in accordance with legislative requirements. These records are These financial statements are based on the accounting records pre- b) Basis of Accounting stated. The financial statements are reported in thousands of lats (LVL’000), unless otherwise a) Reporting Currency explanation for the policy related to accounting investment in subsidiary (see the financial statements for year ended 31 December 2004, except Standards. These accounting policies are in line with those disclosed tement 1648) (1 Resta- 317 1 317 1 (320) 298 179 117 19 35 35 3 o )). Restated LVL ‘000 8 861 382 146 138 390 164 8005 98 005 98 727 6 194 8 168 2 168 2 695 78 reported LVL ‘000 8 569 382 967 137 273 164 6688 96 688 96 708 6 015 1 191 8 726 1 133 2 133 2 As LVL '000 Bank tement 1648) (1 Resta- 317 1 317 1 (320) 298 179 117 19 35 35 3 Restated LVL ‘000 8 867 382 146 138 390 164 8005 98 005 98 194 8 168 2 168 2 727 6 695 78

Page 35 AIZKRAUKLES BANKA I NOTES TO THE FINANCIAL STATEMENTS Page 36 AIZKRAUKLES BANKA I NOTES TO FINANCIAL STATEMENTS tion reserve. ance sheet items, including securities revaluation and fair value revalua- losses, accrual for employee vacation pay, and the revaluation of bal- tion on fixed assets, general (portfolio) allowance for possible credit arise from differing rates and methods of accounting tax deprecia- when the timing differences reverse. The principal liability is determined based on the tax rates that are expected to apply in the Bank’s financial statements or tax returns. The deferred taxation to the future tax consequences of all events that have been recognised RUB 0.0186 ments is calculated using the liability method. Deferred taxation relates 0.0206 the recognition of items in tax returns and these financial state- 0.703 EUR Deferred taxation arising from temporary differences in the timing of 0.703 reported for the taxation period. 0.516 lations at the rate of 15% (15%) and is based on taxable income 0.593 USD Corporate income tax is calculated in accordance with Latvian regu- h) Corporate Income Tax 31 December 2004 31 December 2005 Reporting date balance sheet were as follows: forth by the Bank of Latvia and used in preparation Bank’s The principal rates of exchange (LVL for one foreign currency unit) set currency positions. the income statement as a profit or loss from revaluation of foreign in exchange rates subsequent to the date of transaction is included Latvia at the end of year. Any gain or loss resulting from a change cies are translated into lats at exchange rates set forth by the Bank of action. Monetary assets and liabilities denominated in foreign curren- exchange rates set forth by the Bank of Latvia at date trans- Transactions denominated in foreign currencies are recorded lats at g) Foreign Currency Translation contributions payable by the employer. Latvian Labour Law, and adding the related statutory social insurance multiplied by the average daily remuneration expense pursuant to sonnel based on the total number of vacations earned but not taken, The accrual for employee vacation pay is estimated the Bank’s per- f) Accrual for Employee Vacation Pay of the effective interest rate. commission income and fee expense form an integral part measured at amortised cost – for these assets/liabilities the respective income and expense directly attributable to financial assets/liabilities statement as they are earned, except for commission income and fee Commission and fee income expense are included in the tive interest method. for financial assets/liabilities measured at amortised cost using the effec- Interest income and expense are recognised in the statement Interest income and expense items are recognised on an accrual basis. e) Income and Expense Recognition provisions of the instrument. when, and only the Bank becomes a party to contractual The Bank recognises financial asset and liabilities on its balance sheet Liabilities d) Recognition of Financial Assets and allowance. account when determining expected cash flows and accordingly the based on the estimated realisable value of asset and is taken into The value of collateral held in connection with loans and advances is losses may vary from the current estimates. affecting loan and advance collectability collateral values. Ultimate as well other relevant factors and current economic conditions, that may affect the borrowers’ ability to repay, collateral’s value inherent risks in the portfolio of loans and advances, adverse situations but not limited to, the Bank’s past loan loss experience, known and of expected future cash flows considering relevant factors including, The level of the allowance is based on present value deemed impaired. or advance for the amount of outstanding balance, which is allowance for possible credit losses is established that specific loan When a loan or advance has been classified as non-performing, an customers. indicates are present in the Bank’s portfolio of loans and advances to the losses “incurred, but not yet known to Bank”, which experience Market Commission. The general element of the allowance relates to with the credit exposure limits determined by Finance and Capital tion, value of collateral, fulfilment loan agreement and compliance uncollectable amounts and is based on the customer’s financial posi- is determined after individually reviewing all credits for potentially allowance for possible credit losses (impairment). The specific considered both specific and general (portfolio) risks in determining the tomers throughout its market area. The Management of the Bank have The Bank issues mortgage, commercial and consumer loans to cus- contractual interest or principal due will not be collected. 90 days or more overdue, the Management otherwise believe that ally due principal is 30 days or more overdue, contractually interest tutions are defined as loans and other credit balances in which contractu- Non-performing loans and advances to customers including banking insti- k) Allowance for Possible Credit Losses a straight-line basis over the lease term. Rentals under operating lease are charged to the income statement on respect of the finance leases. a constant periodic return on the net investments outstanding in finance income is allocated to periods during the lease term produce if lower, at the present value of minimum lease payments. The at the inception of lease to fair value leased property or, Finance leases are recognised as assets and liabilities at amounts equal j) Finance Leases – Where the Bank is Lessor they are transferred to the customer’s current account. Loans and advances to customers are included in the balance sheet as are classified as loans and advances to customers. For the purposes of these financial statements, finance lease receivables amortization. a derecognition or impairment of these assets, as well through Note 10. Profit and loss are recognized in the income statement, upon less allowance for possible credit losses (impairment), as presented in assets are carried at amortized cost using the effective interest method, determinable payments that are not quoted on an active market. Such Loans and receivables are non-derivative financial assets with fixed or i) Loans and Advances to Customers market. Any unrealised gain or loss resulting from marking-to-market Investments in listed shares held for trading purposes are marked-to- Securities m) Shares and Other Non-Fixed Income investment-related risks. limitations set by the Bank and exercising proper management of for a period exceeding one year, in compliance with the restrictions and rities with high credit risk profile and/or fixed interest rate that is investments in financial assets. The portfolio is comprised of debt secu- The objective of the portfolio is to gain maximum profit from long-term Investments Held for Undefined Period Portfolio than one year. market and variable interest rate, or the rate fixed for no more is comprised of high rating debt securities with liquidity in the with a minimum interest rate risk and credit risk. The liquidity portfolio The liquidity portfolio is aimed at forming the Bank’s reserve Liquidity Portfolio and investments held for undefined period portfolio. The Bank’s available-for-sale portfolio is comprised of liquidity Available-for-Sale Portfolio on trading with financial instruments”. the above securities is included in income statement under “Profit trading portfolio, as well any gain or loss resulting from disposal of Any gain or loss resulting from marking-to-market the Bloomberg. ther marked-to-market on the basis of market prices quoted by Securities held for trading purposes are initially stated at cost and fur- defined by the Bank’s trading portfolio policy. cial assets and liabilities to be included in the trading portfolio are The finan- a profit from short-term fluctuations of price or interest rate. loss portfolio if they have been acquired for the purpose of generating Fixed income securities are included in the fair value through profit and Fair Value Through Profit and Loss Portfolio sheet on the date of settlement. and purchase of fixed income securities are charged to the balance mined by the Bank at moment of their acquisition. All kinds sale Appropriate division of fixed income securities into portfolios is deter- – available-for-sale portfolio: – fair value through profit and loss; Fixed income securities are divided into two principal portfolios: Securities l) Debt Securities and Other Fixed Income determined. dures have been completed and the ultimate amount of loss is credit losses. They are not written off until all the necessary legal proce- off-balance sheet accounts and charged against allowances for possible When loans and advances cannot be recovered, they are written off to the available information. mates presented in the financial statements to be reasonable light of the Bank have made their best estimates of losses and believe esti- reporting period in which they become known. The Management of become necessary, they are reported in the income statement The above estimates are reviewed periodically, and, as adjustments investments held for undefined period portfolio. • liquidity portfolio; • fieeupet10-33% 20% Annual rate 16-33% 5.5% incurred. prolongation of useful life are charged to the income statement as Costs of maintenance and repair not resulting in increasing capacity or Office equipment EDP equipment and software Transport vehicles Buildings and property improvements Category The Bank has applied the following depreciation rates: Land is not subject to depreciation. under the course of construction and preparation, are not depreciated. depreciated separately. Fixed assets, including leasehold improvements mated useful life of the asset. Each significant part buildings is Depreciation is provided using the straight-line method over esti- Fixed assets are recorded at cost less accumulated depreciation. q) Tangible Fixed Assets over the estimated useful life of asset. using the straight-line method over period of acquired rights or an integral part of hardware and licences. Amortisation is provided Intangible assets comprise purchased software that does not constitute p) Intangible Assets and liabilities is recorded as goodwill. acquisition price which exceeds the fair value of subsidiary’s assets assets and liabilities of the subsidiary as at date acquisition. An The acquisition price of a subsidiary is attributed to the fair value which took place after the date of acquisition (see Note 19). company balances in the balance sheet and intercompany transactions after the date of acquisition, i.e. 8 March 2004, and eliminating inter- the period-end, as well income and expense items for period combining on a line-by-line basis the respective assets and liabilities at the Group’s financial statements using full consolidation method, The Bank’s and its subsidiary’s financial statements are consolidated in ments. ing policy are not material for the purposes of these financial state- Adjustments resulting from the aforementioned change in account- ments at cost, whereas previously the equity method was applied. investment in the subsidiary is presented Bank’s financial state- been modified following the respective changes in IAS 27. The has The accounting policy to be applied the investment in subsidiary where the Bank held 100% of share capital and voting rights. As at 31 December 2005, the Bank had an investment in a subsidiary, o) Investment in Subsidiary ing rights, are valued using the equity method. of the shares and vot- but less than 50%, rectly holds more than 20%, Investments in associated companies, which the Bank directly or indi- n) Investments in Associate Entities for trading purposes, are included in the available-for-sale portfolio. Shares and other non-fixed income securities, which are not acquired on trading with financial instruments”. the above securities is included in income statement under “Profit the listed shares, as well any gain or loss resulting from disposal of

Page 37 AIZKRAUKLES BANKA I NOTES TO FINANCIAL STATEMENTS Page 38 AIZKRAUKLES BANKA I NOTES TO FINANCIAL STATEMENTS less (see Note 32). original maturity of three months or due to credit institutions with an bonds with an original maturity of three months or less, less balances short-term government and original maturity of three months or less balances due from the Bank of Latvia and other credit institutions with Cash and cash equivalents represent the amounts comprising v) Cash and Equivalents closed in the notes to financial statements. materially from their carrying values, such fair values are separately dis- the Management, fair values of financial assets and liabilities differ Where, in the opinion of or a liability settled on an arm’s-length basis. Fair value represents the amount at which an asset could be exchanged Liabilities u) Fair Value of Financial Assets and Bank and, therefore, they are not included in the balance sheet. behalf of its customers. These funds are not regarded as assets the Funds under trust management are funds managed by the Bank on t) Funds under Trust Management as described in Paragraph tomers, that adopted for establishing allowances on loans and advances to cus- for provisioning against off-balance-sheet instruments is consistent with upon the conclusion of respective agreements. The methodology instruments are presented in the financial statements off-balance-sheet thus they are not recorded as the Bank’s liabilities. These financial instruments do not involve outflow of the Bank’s economic benefits, financial guarantees and commercial letters of credit. Such balance-sheet financial instruments comprising loan commitments, In the ordinary course of business, Bank has been involved in off- Other Off-Balance-Sheet Instruments “Profit on trading with financial instruments”. revaluation of derivatives is recognised in the income statement as respectively. Any gain or loss resulting from under assets and liabilities, value and presented in a separate balance sheet caption “Derivatives” Derivative financial instruments are carried at their mark-to-market swaps, futures and forward foreign exchange rate contracts. In the ordinary course of business, Bank is a party to currency Derivatives Sheet Instruments s) Derivatives and Other Off-Balance- in accordance with IAS 16’s requirements for this model. accounting investment properties are measured Under the cost model, ed for using the cost model accounting investment properties. Such investments are classified as investment property and account- main purpose to earn rentals, as well gain on value appreciation. During the reporting period, Bank has acquired real estate with r) Investment Property ing period of lease contracts on a straight-line basis. Leasehold improvements are capitalised and amortised over the remain- w ,below. ), ing on a similar system for corporate customers. when taking a decision on granting loan. Currently, the Bank is work- vate entities, the Bank has developed an internal rating system applied is reviewed at least on an annual basis. For purposes of lending to pri- the client’s solvency and collateral. The financial position of borrowers cooperation with clients, the Bank performs a comprehensive review of To ensure proper evaluation of the credit risk before entering into any Bank. ty or debtor will be unable to pay the contractual obligations Credit risk is exposure to potential losses in case the Bank’s counterpar- a) Credit Risk Department on a regular basis. improvement process is controlled by the Bank’s Internal Audit the Bank’s operational and financial markets’ development; The risk management system has been constantly improving following business structural units. entity and its functions are strictly segregated from the of the potential risks. The Risk Management Division is an independent Risk management involves the identification, assessment and control of Bank’s risk management policies. and Loan administration division monitors the implementation of The Bank’s Risk Management Division operating in the respective areas. Board of the Bank and implemented by Bank’s structural units factors. The Bank’s risk management policies are approved by the arising from changes in interest rates, foreign exchange rates and other credit risk, liquidity risk and market risks most significant of them being course of operations, the Bank is exposed to various financial risks, Risk management is one of the Bank’s strategic values. During its 3. Risk Management determinable. changes in estimates will be recorded the financial statements, when gement in respect to specific events and actions. The effect of any tions are based on the most reliable information available to mana- assumptions used in arriving at the estimates to change. Such assump- disclosure of contingencies. Future events occur which cause the the reported amounts of assets, liabilities, income and expenses requires management to make estimates and assumptions that affect The preparation of financial statements in accordance with IFRS x) Use of Estimates the liability. the time value of money and, where appropriate, risks specific to cash flows at a pre-tax rate that reflects current market assessments of material, provisions are determined by discounting the expected future amount of the obligation. If effect time value money is and a reliable estimate can be made of the settle the obligation, outflow of resources embodying economic benefits will be required to (legal or constructive) as a result of past event. It is probable that an Provisions are recognised when the Company has a present obligation w) Provisions liquidity and compliance with the set limits. monitoring. The Financial Markets Division is responsible for ensuring The Risk Management Division ensures liquidity risk assessment and porating a requirement on maintaining high level of liquidity. Board of the Bank has approved a liquidity management policy incor- credit facilities. Based on the Bank’s assets and liabilities structure, turn its assets into cash with minimal loss or ensure reasonably priced legally justified claims of its creditors. This means the Bank’s ability to LVL ‘000 cash equivalents to meet the expected (everyday) or sudden (critical) Liquidity is the Bank’s ability to maintain or ensure sufficient cash and LVL ‘000 b) Liquidity Risk LVL ‘000 LVL ‘000 and off-balance sheet items LVL ‘000 Total geographical concentration of assets Off-balance sheet items LVL ‘000 Total assets Other assets Available-for-sale investments Fair value through profit and loss investments Loans and advances to customers Balances due from credit institutions deposits with central banks Cash and demand Assets Committee performs a regular analysis of assets and off-balance sheet For effective credit risk management, the Bank’s Assets Evaluation kers, is further restricted by sub-limits. ments. The exposure to any single borrower, including banks and bro- accepted in relation to one borrower and geographical or industry seg- The Bank manages its credit risk by placing limits on the amount of the guarantors of issue are located. of funds are disclosed as attributable to the country or region where The issuers incorporated in a country only for the purpose of attraction The following table provides an analysis of geographical concentrations the Bank’s assets and off-balance-sheet items. Shares and other non-fixed income securities Debt securities and other fixed income Debt securities and other fixed income 355 677 317 143 248 370 38 534 25 057 38 325 avaUAsae EDae onre Total countries OECD area states USA Latvia 2 703 2 688 – – 29 953 29 516 27 070 1 482 437 865 99 quarterly basis. year. Liquidity of other securities portfolios is estimated at least on a period not exceeding one able) interest rate or fixed rates for a requirements: high market liquidity, credit ratings, floating (vari- folio which includes the securities that comply with following To ensure liquidity, the Bank has established a securities Liquidity port- are applied. the purposes of assessment extraordinary circumstances, stress tests Certain restrictions are defined with regard to the above indicators. For following indicators: For ordinary liquidity risk-management purposes the Bank applies and balances due from credit institutions. loans and advances to customers, investments in fixed income securities The Bank believes that its exposure to credit risk arises mainly from determined. analysis, the amount of general (portfolio) and specific allowance is liabilities, i.e., their recoverability. Depending on the results of such – – – sum of term deposits one client (group related clients). • major deposits on demand ratio to liquid assets demand; • liquidity ratios for different maturity bands; • net liquidity positions by all currencies in total and each • separate currency; European ebrcutisi Other countries in member 82 297 81 609 28 080 51 578 no Other Union 688 281 130 554 986 – 12 954 19 721 19 709 5 933 793 12 21 8 – – 109 869 10 460 99 409 57 475 26 963 12 447 1 563 934 27 – 597 517 547 386 101 212 276 773 50 131 26 158 99 716 40 801 1 693 1 033

Page 39 AIZKRAUKLES BANKA I NOTES TO FINANCIAL STATEMENTS Page 40 AIZKRAUKLES BANKA I NOTES TO FINANCIAL STATEMENTS Net liquidity position Memorandum liabilities Total liabilities and shareholders equity Total assets 31 December 2004 Total memorandum items Capital expenditure commitments Loan commitments Undrawn credit facilities on settlement cards Unutilised credit lines Letters of credit Guarantees Memorandum items Total liabilities and shareholders’ equity Shareholders’ equity Subordinated liabilities Other liabilities Provisions for liabilities and charges Deferred income and accrued expense Derivatives Deposits from customers and central banks Balances due to credit institutions Liabilities Total assets Other assets Prepaid expense and accrued income Investment properties Tangible fixed assets Intangible fixed assets Investments in associated entities and subsidiaries Derivatives Fair value through profit and loss investments Fair value through profit and loss investments Loans and advances to customers Balances due from credit institutions with central banks Cash and demand deposits Assets balance sheet date, to the contractual maturity date. The table below analyses assets, liabilities and memorandum items of the Bank into relevant maturity bands based on remaini income securities Shares and other non-fixed other fixed income securities Debt securities and other fixed income securities Debt securities and Total liquidity position Net liquidity position vru eadmnhmnh otsyas5yasUdtdastTotal asset Undated 5 years years months months month demand Overdue V '000 LVL 337 337 172 nU o11–66–1 1 – 5 6 – 12 1 – 6 Up to 1 On – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 20472) (230 690) (260 690) (260 4 078 340 V '000 LVL 2 901 324 265 118 507 352 3 536 135 6909 86 801 40 3030 23 982 17 3836 23 719 43 114 1 454 6 020 2 499 1 197 2 155 8 418 742 258 13 27 65 – – – – – – – – – – 29737) (209 V '000 LVL 0 144 105 603 136 0 046 104 5067 95 0971 30 0953 50 351 52 342 52 1016 4847 3116 488 742 231 511 9 – – – – – – – – – – – – – – – – – – – 25233) (215 V '000 LVL 1880 41 5496) (5 1137 11 715 13 790 26 8966 58 966 58 942 55 5115 8936 1633 1938 2472 839 11 – – – – – – – – – – – – – – – – – – – – 11413) (191 V '000 LVL 2231 42 3820 23 0391 20 391 20 924 44 8707 18 269 28 868 47 662 1 713 551 474 662 892 51 6 – – – – – – – – – – – – – – – – – – – oeta Pledged More than 11153) (141 V '000 LVL 7664 67 6207 16 945 67 6518 26 354 14 236 42 260 50 7709 1478 8498 1364 1478 281 – – – – – – – – – – – – – – – – – – – – – – 1 360 113 2 793) (27 V '000 LVL 1 360 113 360 113 8982 48 982 48 – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 4 440) (49 647) (21 V '000 LVL 5863 45 5288 15 8718) (8 0309 30 591 21 6464 46 4817 24 7231 1205 719 601 343 31 – – – – – – – – – – – – – – – – – – – – – ng period, as at V '000 LVL 1 980 1 992 500 500 479 479 – – – – – – – – – – – – – – – – – – – – – – – – – – – V '000 LVL 4 499 444 499 444 4 386 547 275 480 4 386 547 212 101 773 276 3030 23 982 17 863 45 5288 15 8518 28 124 49 9716 99 801 40 197 2 333 2 555 3 731 7 020 2 499 1 655 8 231 7 205 1 114 1 693 1 033 1 601 742 343 258 719 27 determined on the basis of following criteria: The maturity profile of assets, liabilities and memorandum items is – liabilities and memorandum items are stated at the remaining – to assess the period during which debt securities of fair value – all debt securities within the Liquidity portfolio are deemed highly – ”Undated” are assets for which, according to the substance of – assets as well all debit balances on settlement cards and current – assets overdue for more than 14 days, are stated as “Overdue”; – assets invested with option to be received on demand are classi- – assets are stated at their remaining period to repayment or poten- period to their contractual settlement; such an assessment; are considered. The distribution into maturity bands is based on prices of respective securities and historical fluctuations thereof, the spreads between purchasing and selling prices, as well fined period portfolio may be disposed of without material loss, through profit and loss portfolio Investments held for unde- month”; liquid securities and presented under the caption “Up to 1 which cannot be precisely determined; the transactions, maturity is not defined or assets of the caption “On demand”; account overdrafts overdue less than 14 days are presented under fied under the category “On demand”; tial disposal; cies open position that are controlled on a daily basis. restrictions for each separate currency open position and total curren- tion and control; limits for foreign currency open positions stipulate The Bank’s Limits policy defines the major principles for limits applica- well as cash flows arising from derivatives. and includes assets liabilities denominated in foreign currencies, as The exposure to currency risk is calculated for each separate eign currency exchange rates on its financial position and cash flows. The Bank is exposed to the negative effects of fluctuations in for- c) Currency Risk requirements was 50.7% (66.7%). accordance with the Financial and Capital Market Commission’s ties. As at 31 December 2005, the Bank’s liquidity ratio calculated in tual liabilities, but no less than 30% of the Bank’s total current liabili- should maintain a sufficient amount of liquid assets to meet its contrac- The Financial and Capital Market Commission stipulates that the Bank The assets which have been impaired are stated net of allowances. – issued guarantees or commitments arising from other types of – liabilities without any defined maturity and commitments to exercise excluded. guarantees secured by deposit placement with the Bank are them on demand are presented under the caption “On demand”;

Page 41 AIZKRAUKLES BANKA I NOTES TO FINANCIAL STATEMENTS Page 42 AIZKRAUKLES BANKA I NOTES TO FINANCIAL STATEMENTS currency position Net open long/ (short) contracts, assets/ (liabilities) Off-balance sheet foreign exchange Total liabilities and shareholders’ equity Total assets 31 December 2004 Percentage of shareholders’ equity, (%) currency position Net open long/ (short) contracts, assets/ (liabilities) Off-balance sheet foreign exchange Neto long/ (short) position on balance sheet Total liabilities and shareholders’ equity Shareholders’ equity Total liabilities Other liabilities Subordinated liabilities Provisions for liabilities and charges Deferred income and accrued expense Derivatives Deposits from customers and central banks Balances due to credit institutions Liabilities LVL ‘000 Total assets LVL ‘000 Other assets Prepaid expense and accrued income LVL ‘000 Investment properties Tangible fixed assets LVL ‘000 Intangible fixed assets Investments in associated entities and subsidiaries Derivatives LVL ‘000 LVL ‘000 Fair value through profit and loss investments Fair value through profit and loss investments Loans and advances to customers Balances due from credit institutions with central banks Cash and demand deposits Assets The Bank’s currency profile of assets, liabilities, shareholders’ equity as well cash flows arising from derivatives at 3 income securities Shares and other non-fixed other fixed income securities Debt securities and other fixed income securities Debt securities and 1 621) (11 9365 19 261 74 863 45 398 28 1992 21 626 93 288 15 648 28 325 38 (1 125) (8 616) 51 769 59 260 17.0% 7744 1127 1318 2748 7231 1205 1112 601 612 283 258 719 553 V S U U urnisTotal currencies RUB EUR USD LVL 4 – – – 13009) (153 5 213 358 544 217 153 427 427 153 553 370 553 370 315 781 292 459 0979 90 214 56 314 67 (1 019) 22 303 731 7 828 3 483 1 0.9% 141 106 593 934 418 534 25 2 – – – – – – – 10621) (140 3 620 133 2 533 224 911 191 (17 476) (15.4%) 7001) (7 0913 90 913 90 8466 88 886 23 51 985 68 801 077 2 615 7 (660) 308 956 38 24 35 31 99 – – – – – – – – – (1.5%) 8593 7766 2065 4848 8625 8625 2 684 9 509 7 194 (686) (859) 173 853 369 30 2 – – – – – – – – – – – – – – – 1 December 2005: 15 455 16 785 3011 3917 3664 3034 3034 Other 1 377 1.7% (108) 775 883 216 37 47 21 2 – – – – – – – – – – – – – – – 4 386 547 523 501 275 480 386 547 212 101 773 276 444 499 444 499 5288 15 5863 45 716 99 801 40 2020 7731 1499 8655 7231 1205 1114 1693 1033 601 742 343 258 719 – nomic value that is the difference between economic of value. The term economic value means the shareholders’ equity’s eco- Interest rate risk is assessed both in terms of income and economic risk. interest rate risk – repricing risk, yield curve basis and option Assessment of interest rate risk is conducted trying to cover all parts risk within specified limits. Financial Markets Division is responsible for maintaining interest rate Division ensures interest rate risk assessment and management. The fluctuations on the Bank’s financial position. The Risk Management Interest rate risk represents the adverse effect of market interest d) Interest Rate Risk requirements of the Law on Credit Institutions. As at 31 December 2005, the Bank was in compliance with above position is not limited. Since 2005, according to an FCMC decision, the EUR currency open total foreign currency open position may not exceed 20% of the equity. eign currency may not exceed 10% of the Bank’s equity and that The Law on Credit Institutions requires that open positions in each for- site value. assets, whereas the second is a compensatory entry showing oppo- entries: the first entry describes notional value of underlying tivity to changes in interest rates. Derivatives are represented two on the Bank’s historical experience with current account balance sensi- Distribution of current account balances into maturity bands is based dum items distribution into maturity bands following such principles: The table below summarises the Bank’s assets, liabilities and memoran- derivative financial instruments are utilised to limit interest rate risk. Investments held for undefined period portfolio are fixed. Besides, able reduction in economic value and modified duration of the For the purposes of limitation interest rate risk, limits accept- dinary circumstances, stress tests are applied. assets and that of liabilities. For the purposes assessment extraor- – financial instruments with a variable interest rate are presented – financial instruments with a fixed interest rate are presented by repricing date. according to the next contractual repricing date or interest rate the earlier of repayment/settlement/maturity date;

Page 43 AIZKRAUKLES BANKA I NOTES TO FINANCIAL STATEMENTS Page 44 AIZKRAUKLES BANKA I NOTES TO FINANCIAL STATEMENTS Division are one of the measures taken to prevent potential loss. Bank’s structural units and the control exercised by Risk Management not exceeding a reasonable level of expense. Internal control within the effort to maintain the lowest possible risk level, meanwhile striving at insufficient internal control and procedures, etc. The Bank makes every instance, clerical errors or fraud, break-downs in information systems, risks with exposure to sudden loss. The cause of such may be, for During the course of its operations, Bank encounters non-financial e) Operational Risks maturity gaps Interest rate repricing Futures, sold Total liabilities an shareholders’ equity Total assets 31 December 2004 repricing maturity gaps Interest rate Futures, sold liabilities and shareholders’ equity Total Shareholders’ equity Subordinated liabilities Other liabilities Deposits from customers and central banks Balances due to credit institutions Liabilities LVL ‘000 Total assets LVL ‘000 Other assets LVL ‘000 LVL ‘000 Investment properties LVL ‘000 Tangible fixed assets LVL ‘000 Intangible fixed assets LVL ‘000 LVL ‘000 Fair value through profit and loss investments Fair value through profit and loss investments Loans and advances to customers Balances due from credit institutions Cash and demand deposits with central banks Assets income securities Shares and other non-fixed other fixed income securities Debt securities and other fixed income securities Debt securities and 1 693 118 046 110 360 154 ot otsmnh otsyas5yasbaigTotal bearing 5 years years months months months 1 month 238 779 297 396 5667 35 506 21 734 88 130 37 58 617 8647 6990 pt 21 – 5 6 – 12 3 – 6 1 – 3 Up to – – – – – – – – – – – 19927) (189 (241 759) 6 135 261 135 261 269 336 8413 38 2795 32 214 16 660 10 16 292 11 285 921 5 – – – – – – – – – – – 9 757 197 191 235 444 230 7434 37 434 37 21 641 26 976 1738 3009 mitigation of operational risks. accounting and control procedures the Bank specifies measures for the automated transaction control system. When developing An important part of operational risk management is the upgrading 5 335 – – – – – – – – – – – – – 0391 20 391 20 153 23 251 20 14 677 18 433 2762 2428 3 756 474 – – – – – – – – – – – – – 4 873) (41 2 363) (20 (13 802) 5739 55 030 48 229 34 862 26 49 474 35 672 6599 7709 487 281 – – – – – – – – – More than 1 177) (18 (16 287) 2983 12 1160 31 535 30 26 282 9 995 527 98 – – – – – – – – – – – – – Non-interest 1 496) (17 (18 605) 6498 36 288 15 3994 53 863 45 47 060 28 455 862 4 239 3 434 2 231 7 205 1 693 1 929 1 731 1 297 1 671 3 22 19 8 – – 4 386 547 8 275 480 386 547 212 101 773 276 444 499 444 499 5863 45 288 15 9716 99 801 40 731 7 862 4 655 8 434 2 231 7 205 1 693 1 033 1 (127) x 5 x Margin on investments, % Net interest rate margin, % Total liabilities and shareholders' equity Shareholders' equity Total liabilities Other liabilities Subordinated liabilities Deposits from customers Balances due to credit institutions and central banks Liabilities Total assets Other assets, net Debt securities Loans and advances to customers, net Balances due from credit institutions, net Cash and demand deposits with the Bank of Latvia Assets Average annual interest rates of interest-bearing assets and liabilities: Total interest expense Interest expense Total interest income Interest income 4. Interest Income and Expense term deposits demand deposits on subordinated liabilities on deposits from customers on balances due from credit institutions and central banks other interest expense other interest income on debt securities and other fixed income on loans and advances to customers on balances due from credit institutions on balances due from the Bank of Latvia Average monthly LVL ‘000 499 623 463 222 333 587 431 824 499 623 102 291 202 994 139 776 balance 36 401 15 487 98 237 32 698 21 864 7 323 8 588 LVL '000 expense income/ Interest 2005 24 371 13 945 5 210 5 210 3 355 1 310 4 665 6 203 3 837 463 386 82 – – Average interest 3.84 3.76 1.04 1.12 6.32 3.42 0.39 1.08 0.95 4.88 6.06 6.87 2.75 1.77 rate – – – ru/akGroup/Bank Group/Bank V 00LV ‘000 LVL ‘000 Average monthly LVL ‘000 338 128 312 202 234 258 291 664 338 128 105 739 101 477 balance 24 383 13 945 25 926 13 353 57 406 21 284 95 546 14 082 6 091 4 665 6 203 3 837 052004 2005 2 040 5 145 881 463 386 82 12 LVL '000 expense income/ Interest 2004 14 677 5 426 7 554 1 625 2 182 2 182 1 424 1 985 123 561 72 74 – – – Average interest 14 677 2 760 1 985 5 426 7 554 1 625 3.69 3.64 0.65 0.70 6.03 2.48 0.24 0.68 1.44 4.34 5.13 7.44 1.70 0.51 rate 587 123 74 72 – – – –

Page 45 AIZKRAUKLES BANKA I NOTES TO FINANCIAL STATEMENTS Page 46 AIZKRAUKLES BANKA I NOTES TO FINANCIAL STATEMENTS Total other operating income Other operating income Income from sale of foreclosed collaterals Income from rent of premises Income from penalties 7. Other Operating Income Total profit on trading with financial instruments Total Profit/ (loss) from revaluation of other financial instruments Profit/ (loss) from trading with other financial instruments Total Profit from revaluation of trading portfolio Profit/ (loss) from sale of trading portfolio securities Profit from sale of available-for-sale securities Total (Loss) from revaluation of foreign currency positions Profit from foreign currency exchange 6. Profit on Trading with Financial Instruments Total commission and fee expense Commission and fee expense Total commission and fee income Commission and fee income 5. Commission and Fee Income Expense commission on transactions with settlement cards correspondent bank service charges commission on cash operations service fees commission on transactions with settlement cards commission on payment transfers behalf of customers other commission and fee expense other commission and fee income LVL '000 Group 2005 110 271 413 32 – Group/Bank Group/Bank LVL '000 LVL '000 LVL '000 9 334 3 113 3 030 5 891 6 642 6 944 4 590 1 164 Bank 2005 2005 2005 (128) (751) 108 271 330 458 411 452 649 496 238 849 771 11 72 32 63 – Group/Bank Group/Bank Group/Bank LVL '000 LVL '000 LVL '000 (1 131) (1 136) 3 473 1 771 2 815 3 005 1 789 5 345 3 621 1,068 2004 2004 2004 (190) 474 135 128 183 466 556 276 211 499 738 (37) 28 55 46 5 Intermediary services Total other operating expense Other operating expense 9. Other Operating Expense Total Other personnel The following table specifies employees of the Bank by personnel categories: In 2005, the Bank employed an average of 466 persons. Total administrative expense Other administrative expense Investment property maintenance costs Training expense Inter-bank and other communication expense Equipment maintenance expense and stationary Donations Advertising and marketing expense Rent of premises, repairs and maintenance costs Social insurance contributions and similar costs Remuneration to personnel Remuneration to the Council and Board 8. Administrative Expense Heads of divisions and departments Management LVL '000 11 608 Group 1 089 1 063 1 214 5 099 2005 164 177 467 507 745 813 270 LVL '000 11 606 5 098 1 088 1 063 1 214 Bank 2005 164 177 467 507 745 813 270 ru/akGroup/Bank Group/Bank 11/0531/12/2004 31/12/2005 V 00LVL ‘000 LVL ‘000 052004 2005 1 216 312 8 250 389 457 388 474 391 734 77 562 75 87 LVL '000 Group 8 922 3 883 2004 757 129 151 512 437 322 735 913 951 132 LVL '000 8 921 3 882 Bank 2004 757 129 151 512 437 322 735 913 951 132

Page 47 AIZKRAUKLES BANKA I NOTES TO FINANCIAL STATEMENTS Page 48 AIZKRAUKLES BANKA I NOTES TO FINANCIAL STATEMENTS dutet opirya oprt noetx (9 13 1 402 9 345 – 1 234 (29) 1 221 3 089 20 590 7 2 590 2 619 1 – Total corporate income tax expense for the reporting period 910 Adjustments to prior year corporate income tax Actual corporate income tax expense for the reporting period – Tax rebate Permanent differences Theoretical corporate income tax Profit before corporate income tax 429 026 11. Taxation Total 876 Other assets The structure of the allowances established by Bank is as follows: Total allowances at the end of period General (portfolio) allowance at the end of period Specific allowances at the end of period Total change in allowances for the period Reversal of specific allowances due to write-offs Decrease in allowance due to currency fluctuations Asset write-off expenses Total allowance expense, net Total release of previously established allowances Recovery of written-off assets Release of previously established general (portfolio) allowance Release of previously established specific allowances Total allowances charged to income statement Asset write-off expenses General (portfolio) allowance charged to income statement Specific allowances charged to income statement Total allowances at the beginning of period General (portfolio) allowance at the beginning of period Specific allowances at the beginning of period 10. Allowances for Possible Credit Losses cre noe––9– 9 – 1 026 – 226 668 – – 429 – 876 Accrued income Debt securities and other fixed income Loans and advances to customers loacsalwne loacsallowances allowances allowances allowances V 00LL‘0 V 00LVL ‘000 LVL ‘000 LVL ‘000 LVL ‘000 pcfcPrfloSeii Portfolio Specific Portfolio Specific Group/Bank 11/0531/12/2004 31/12/2005 ru/akGroup/Bank Group/Bank V 00LVL ‘000 LVL ‘000 052004 2005 69 (267) (619) Group/Bank 4 86 149 LVL '000 1 305 1 936 1 026 (631) (397) (817) 2005 (315) (597) (207) 429 876 420 414 910 (13) 74 6 7 – Group/Bank LVL '000 1 936 1 026 1 985 1 216 (414) 2004 (367) (105) (302) (49) 351 910 765 362 394 769 (31) (2) (7) 9 lance as at 31 December 2005. Deposits with the Bank of Latvia comprise correspondent account ba- Deferred corporate income tax calculation: Cash 97 600 141 458 Increase charged to income statement during the period Deferred corporate income tax at the beginning of period vracutn ercain2981%23715% 1 848 2 397 (1 273) 15% 1 861 2 948 (710) General (portfolio) allowance and other accrued liabilities Fair value revaluation reserve over accounting depreciation Accumulated excess of tax depreciation eoiswt h ako ava3 3 15 096 18 870 37 130 40 801 Total cash and demand deposits with central banks Deposits with the Bank of Latvia 12. Cash and Demand Deposits with Central Banks 458 as at 31/12/2005 (Payable)/overpaid Paid/ (refunded) (239) Prior year adjustments 80 Calculated 458 as at 31/12/2004 601 Overpaid/ (payable) Paid Prior year adjustments 2 3 052 Calculated Payable as at 01/01/2004 601 The movements in tax accounts can be specified as follows: (89) Deferred corporate income tax at the end of period Increase/ (decrease) related to fair value revaluation reserve under equity 4 010 Deferred corporate income tax liability Revaluation of assets, net oprt esnlSauoyVleReal Value Statutory Personal Corporate V 00LL‘0 V 00LL‘0 LVL ‘000 LVL ‘000 LVL ‘000 LVL ‘000 LVL ‘000 (1 038) noeicm oili srneaddestate added social income insurance (2 477) (1 124) 1 186 1 883 (522) 224 (13) a a otiuin a tax tax contributions tax tax 29 ujc otmn a ujc otmn Tax subject to timing Tax subject to timing ifrne aedfeecsrate differences differences rate mut Amounts Amounts LVL ‘000 (1 059) 1 059 (881) 881 11/0531/12/2004 31/12/2005 – – – – – requirement. As at 31 December 2005, the Bank was in compliance with this compulsory reserve requirement set at 8% (4%) of attracted deposits. calculated based on the Bank of Latvia’s instructions should exceed The average correspondent account balance with the Bank of Latvia (1 465) (1 282) 1 526 1 220 (136) (75) (74) – – ru/akGroup/Bank Group/Bank 11/0531/12/2004 31/12/2005 V 00LVL’000 LVL ‘000 LVL ‘000 LVL ‘000 7 3 774 3 671 052004 2005 (301) (125) 262 390 (39) (3) 14 92 – (113) 114 (51) 51 (1) – – – –

Page 49 AIZKRAUKLES BANKA I NOTES TO FINANCIAL STATEMENTS Page 50 AIZKRAUKLES BANKA I NOTES TO FINANCIAL STATEMENTS u rmcei ntttosrgsee nohrcutis1 9 9 715 148 991 78 637 18 391 Due from credit institutions registered in other countries Due from credit institutions registered in OECD area Security deposits Overnight deposits Correspondent account balances aacsoe V 50000 ubrnumber number Total up to LVL 5 000 164 390 5 684 from LVL 5 000 up to 15 Balances over LVL 15 000 99 716 Concentration of balances due from credit institutions by geographical area: 2 688 institutions Total balances due from credit Term deposits Total balances due from credit institutions Due from credit institutions registered in Latvia 13. Balances due from Credit Institutions tionships with 23 (24) credit institutions registered in the OECD area, As at 31 December 2005, the Bank had established correspondent rela- u rmcei ntttosrgsee nOC ra2 24 23 13 23 26 27 7 19 26 6 due from credit institutions registered in OECD area due from credit institutions registered in other countries due from credit institutions registered in other countries due from credit institutions registered in OECD area due from credit institutions registered in OECD area u rmcei ntttosrgsee nLti 8 8 6 6 – 4 1 1 due from credit institutions registered in Latvia due from credit institutions registered in Latvia due from credit institutions registered in other countries due from credit institutions registered in OECD area V 00LL‘0 V 00LL‘0 LVL ‘000 LVL ‘000 LVL ‘000 LVL ‘000 LVL ‘000 78 637 10 387 46 604 21 646 EDOhrTtlTotal Total Other OECD raLti onre 11/0531/12/2004 31/12/2005 countries Latvia area – 2 688 879 605 745 459 Balances due from credit institutions tions incorporated in other non-OECD countries. (8) credit institutions registered in Latvia and 28 (26) financial institu- 5 17 457 18 391 934 – – ru/akGroup/Bank Group/Bank 11/0531/12/2004 31/12/2005 31/12/2004 31/12/2005 V 00LVL’000 LVL ‘000 99 716 12 200 47 349 39 562 605 164 390 66 433 48 432 49 236 289 The following table provides the distribution of outstanding loans and advances to customers by their interest accrual basis: parties may not exceed 15% of equity. of a credit institution’s equity. The total exposure to all related related entity or a group of non-related entities may not exceed 25% Latvian banking legislation requires that any credit exposure to a non- esalwnefrpsil rdtlse ( 0)(1 694) 138 146 139 840 (1 305) 276 773 278 078 Total loans and advances to customers, net Less allowance for possible credit losses Total loans and advances to customers Non-accrual basis Accrual basis Interest accrual basis Total loans and advances to customers, net Less allowance for possible credit losses LVL ‘000 Total loans and advances to customers Other private individuals Municipal enterprises Non-profit institutions serving private individuals Bank’s employees Privately held companies LVL ‘000 Customer profile Breakdown of loans and advances by customer profile: Total loans and advances to customers, net Less allowance for possible credit losses Total loans and advances to customers Other loans and advances to customers Security deposits Overdrafts on payment cards Finance leases Overdrafts on current accounts Other mortgage loans Utilised credit lines Mortgage loans for housing to private individuals Loans and advances to customers 14. Loans and Advances to Customers non-related entities. requirements for non-zero risk credit exposures to related parties and As at 31 December 2005, the Bank was in compliance with above ru/akGroup/Bank Group/Bank Bank Group/Bank Group/Bank Group/Bank 11/0531/12/2004 31/12/2005 31/12/2004 31/12/2005 31/12/2004 31/12/2005 V 00LVL ‘000 LVL ‘000 LVL ‘000 LVL ‘000 276 773 278 078 181 251 276 773 278 078 152 687 7 2 139 124 277 223 92 453 48 995 35 295 37 713 (1 305) (1 305) 4 232 2 078 142 128 495 687 5 716 855 – 138 146 139 840 138 146 139 840 87 431 49 139 36 095 13 812 17 095 70 537 (1 694) (1 694) 2 766 191 313 113 653 971 564

Page 51 AIZKRAUKLES BANKA I NOTES TO FINANCIAL STATEMENTS Page 52 AIZKRAUKLES BANKA I NOTES TO FINANCIAL STATEMENTS Finance lease receivables: oa iac es eevbe,nt67971 (3) 1 041 687 (6) LVL ‘000 743 LVL ’000 All assets financed by the Bank under finance lease arrangements consist of transport vehicles. The above table is prepared based on contractual dates of the lease agreements. Total finance lease receivables, net Less allowance for possible credit losses Finance lease receivables, gross Less unearned interest income Total gross investment in finance lease Gross investment in finance lease the loan has been issued). while for loans with initial maturity exceeding 1 year it is based on the purpose of loan granted (by industry * The industry profile of loans with initial maturity up to 1 year is determined by the Bank based on where Gross loans and advances to corporate customers Other industries Other service industries Agriculture and forestry Transport and communication Manufacturing Financial intermediaries Construction Real estate management Trade Industry profile* The industry analysis of loans and advances granted to corporate customers is provided below: from 1 to 5 years ru/akGroup/Bank Group/Bank Group/Bank Group/Bank 11/0531/12/2004 31/12/2005 31/12/2004 31/12/2005 V 00LVL ‘000 LVL ‘000 92 595 15 599 24 138 31 616 1 914 1 834 3 553 3 783 9 285 873 9 974 693 4 1 041 743 5)(67) (50) development of which borrower operates, 49 330 14 200 16 805 2 376 1 355 4 097 2 625 2 062 5 607 203 Bank fixed income debt security breakdown by investment type: Total debt securities and other fixed income securities, net Total debt securities and other fixed Less allowance for possible credit losses income securities Debt securities issued in other countries Debt securities issued in OECD area Latvian credit institution debt securities 15. Debt Securities and Other Fixed Income Latvian government debt securities Issued by privately held companies Issued by privately held companies Issued by state-owned companies Issued by financial institutions Issued by credit institutions Issued by municipalities Government and central bank debt securities Issued by credit institutions Government debt securities vial-o-aepoi n os vial-o-aeprofit and loss Available-for-sale profit and loss Available-for-sale 101 212 101 212 otoi otoi portfolio portfolio portfolio V 00LL‘0 V 00LVL ‘000 LVL ‘000 LVL ‘000 LVL ‘000 20 865 23 975 39 418 2 539 1 860 8 015 1 031 2 089 805 615 ru/akGroup/Bank Group/Bank 11/0531/12/2004 31/12/2005 – – arvleFair value Fair value through 1 033 1 033 623 247 64 99 – – – – – – – – 98 005 98 240 22 930 12 629 32 718 3 483 1 113 1 616 7 799 6 748 8 296 (235) 387 521 2 168 2 168 726 107 973 251 55 56 – – – – – –

Page 53 AIZKRAUKLES BANKA I NOTES TO FINANCIAL STATEMENTS Page 54 AIZKRAUKLES BANKA I NOTES TO FINANCIAL STATEMENTS qiysae nfrincroaeette 6 17131 731 31 1 662 income securities Total shares and other non-fixed Equity shares in foreign corporate entities As at 31 December 2005 and 2004 all of the Bank’s investments in shares are classified as available-for-sale investments. 16. Shares and Other Non-fixed Income Securities As at 31 December 2005, all debt securities and other fixed income collateral for repo transactions. debt securities with a carrying amount of LVL 479 (1,962) thousand as As at 31 December 2005, the Bank had pledged Latvian government income securities, net Total debt securities and other fixed Less allowance for possible credit losses income securities Debt securities issued in other countries Debt securities issued in OECD area Latvian credit institution debt securities The Bank’s available-for-sale securities are classified as follows: Total debt securities and other fixed Latvian government debt securities Issued by state-owned companies Issued by financial institutions Issued by credit institutions Issued by municipalities Government and central bank debt securities Issued by credit institutions Government debt securities Issued by privately held companies Issued by privately held companies itdo tc o itdo tc Lse nsokNot listed on stock Listed on stock Not listed on stock Listed on stock xhneecag xhneexchange exchange exchange exchange V 00LL‘0 V 00LVL ‘000 LVL ‘000 LVL ‘000 LVL ‘000 1

6 6 otoi neie eidprfloundefined period portfolio undefined period portfolio iudt netet edfrLqiiyInvestments held for Liquidity Investments held for Liquidity V 00LL‘0 V 00LVL ‘000 LVL ‘000 LVL ‘000 LVL ‘000 2 37 969 37 969 37 354 615 ru/akGroup/Bank Group/Bank 11/0531/12/2004 31/12/2005 – – – – – – – – – – ru/akGroup/Bank Group/Bank 11/0531/12/2004 31/12/2005 exchanges. company in the amount of LVL 1,589 thousand, were listed on stock held by the Bank, except debt securities issued one privately December 2004 all debt securities and other fixed income securities held by the Bank were listed on stock exchanges. As at 31 63 243 63 243 20 865 23 975 2 539 1 860 8 015 1 031 2 064 2 089 3 1 805 – – – 38 963 38 963 32 718 5 228 7 3 521 496 1 – – – – – – – – 59 042 59 277 22 930 12 629 1 520 7 800 3 483 1 113 1 616 7 799 (235) 387 3 – – 1 including a loan convertible into share capital, at the moment of subsidiary’s share capital is LVL 130 thousand, whereas its equity, pany. The total acquisition price amounted to LVL 702.6 thousand. of the acquisition was purchase a land plot owned by com- Hanzas 16a, which is engaged in the real estate business. The objective On 8 March 2004, the Bank acquired 100% shares of company SIA The result of foreign exchange spots is included in the balance sheet captions “Other assets” and liabilities”. fair values. The notional value of foreign currency exchange contracts is exchange contracts and other derivative financial instruments their The table below presents the notional amounts of foreign currency oeg urnyLL‘0 V 00LL‘0 V 00LL‘0 LVL ‘000 LVL ‘000 LVL ‘000 LVL ‘000 LVL ‘000 LVL ‘000 Foreign currency soitdcmais1 12 (%) 12 LVL ‘000 (%) 34 34 LVL ‘000 130 130 – 39 1 274 3 39 19. Investments in Subsidiaries 615 2 2 associated companies A/s 18 Investments in asociated entities 237 16 292 53 16 292 1 165 38 413 The following table presents the Bank’s investments in associated entities at end of reporting year: 38 413 18. Investments in Associated Entities 7 941 36 781 rate derivatives 161 915 5 969 Total interest Futures sold Interest rate derivatives exchange contracts Derivatives Spots exchange contracts 17. Derivatives Total foreign currency Total investments in owrs10659352523 2 205 5 5 943 1 056 Forwards wp 5 9 2871171 1 1 271 610 14 1 107 22 897 154 890 Swaps AB Konsultåcijas 11/053/220 11/053/220 11/0531/12/2004 31/12/2005 31/12/2004 31/12/2005 31/12/2004 31/12/2005 ru/Gop ru/Gop ru/Group/ Group/ Group/ Group/ Group/ Group/ akBn akBn akBank Bank Bank Bank Bank Bank oinlvleFair value Notional value oslig1 0 230% 12 30% 12 Consulting uiesCs qiyCs Equity Cost Equity Cost Business rfl au hr % au share (%) value share (%) value profile is Elizabetes Street 23, Riga. the remaining unpaid shares. The registered address of SIA Hanzas 16a the Bank invested an additional LVL 5 thousand through payment for over the equity is attributed to value of land plot. In April 2004, acquisition was LVL 125 thousand. The excess of the price instruments is the value of underlying assets these instruments. the amount receivable. The notional value of other derivative financial sesLiabilities Assets 11/0531/12/2004 31/12/2005

Page 55 AIZKRAUKLES BANKA I NOTES TO FINANCIAL STATEMENTS Page 56 AIZKRAUKLES BANKA I NOTES TO FINANCIAL STATEMENTS Intangible fixed assets (straight-line method) Depreciation rate As at 31 December 2005 As at 1 January 2005 As at 31 December 2005 Reversal of depreciation Depreciation charge As at 1 January 2005 As at 31 December 2005 Disposals and reclassifications Additions As at 1 January 2005 The movements in the Group’s and Bank’s intangible tangible fixed assets, except for investment properties, are as follows: Total net book value of fixed assets Total tangible fixed assets Prepayments for tangible fixed assets Office equipment: Transport vehicles Leasehold improvements Buildings and property improvements Land Total intangible fixed assets Prepayments for intangible fixed assets 20. Intangible and Tangible Fixed Assets Other tangible fixed assets EDP equipment nagbeBidnsadfixed assets Buildings and Intangible V 00LL‘0 V 00LL‘0 V 00LL‘0 LVL ‘000 LVL ‘000 LVL ‘000 LVL ‘000 LVL ‘000 LVL ‘000 LVL ‘000 sesLand assets 1 668 ie rpryLaeodTasotOfc excluding Transport Office Leasehold property fixed 20% 784 887 993 423 675 214 464 (3) (3) 131 131 131 131 – – – – – – – mrvmnsimprovements improvements 4 070 4 258 4 569 4 555 5.5% 499 202 297 14 – – 10-25% 544 564 212 116 168 756 732 (72) (73) 97 ru/akGroup/Bank Group/Bank 11/0531/12/2004 31/12/2005 eilseupetprepayments equipment vehicles V 00LVL ‘000 LVL ‘000 20% 8 436 7 231 1 395 4 070 1 205 368 276 252 193 620 197 469 (35) (46) 94 680 368 544 131 212 993 43 10-33% 2 075 2 651 3 091 2 259 5 166 4 910 908 347 (76) (91) 12 910 11 684 8 725 7 936 1 752 4 258 8 181 8 303 4 729 1 534 3 381 1 439 Total (186) (213) 899 276 564 131 789 366 423 56 laigblne eae ocei ad 9 288 194 Result of foreign exchange spots Reposessed property for sale, net Clearing balances related to credit cards Prepaid expense oa rpi xes n cre noe2878 258 Other assets, net Other current assets, net 23. Other Assets Total prepaid expense and accrued income Other accrued income 22. Prepaid Expense and Accrued Income presented by several independent valuators. The selling value of the value of investment properties was identified based on the evaluations The Management of the Bank believe that most credible market thousand. the Group’s investment properties amounted to LVL 52,372 (46,581) 2005 was LVL 50,758 (44,967) thousand, whereas the market value of The market value of all Bank’s investment properties as at 31 December (straight-line basis) Depreciation rate Net carrying amount as at 31 December 2005 Net carrying amount as at 1 January 2005 Accumulated depreciation as at 31 December 2005 Depreciation charge Accumulated depreciation as at 1 January 2005 Acquisition value as at 31 December 2005 Additions Acquisition value as at 1 January 2005 The movement in the Group’s and Bank’s investment properties is as follows: 21. Investment Properties V 00LL‘0 V 00LL‘0 V 00LVL ‘000 LVL ‘000 LVL ‘000 LVL ‘000 LVL ‘000 LVL ‘000 14 073 10 070 14 073 10 070 4 003 adBidnsTtlLn ulig Total Buildings Land Total Buildings Land – – – Group Bank 26 thousand. ment property that did not generate rental income amounting to LVL 164 thousand, including direct operating expenses arising from invest- thousand, whereas the related property maintenance expense was LVL Rentals from investment properties in 2005 amounted to LVL 108 defined, as the market of such properties is not sufficiently developed. Bank’s investment properties may differ from the market value as 1 915 1 974 2 186 2 136 271 109 162 5% 50 15 988 12 044 16 259 12 206 4 053 271 109 162 ru/akGroup/Bank Group/Bank Group/Bank Group/Bank 11/0531/12/2004 31/12/2005 31/12/2004 31/12/2005 V 00LVL ‘000 LVL ‘000 LVL ‘000 LVL ‘000 13 373 13 373 9 370 4 003 9 370 4 78 245 4 810 343 318 23 53 35 1481 61 – 13 – – – 1 915 1 974 2 186 2 136 271 109 162 5% 50 15 288 11 344 15 559 11 506 4 053 271 109 162

Page 57 AIZKRAUKLES BANKA I NOTES TO FINANCIAL STATEMENTS Page 58 AIZKRAUKLES BANKA I NOTES TO FINANCIAL STATEMENTS aacsdet rdtisiuin noprtdi ava6062 404 2 427 6 016 2 139 Repo Balances repayable on demand Balances due to the Bank of Latvia Balances due to credit institutions incorporated in other countries Balances due to credit institutions incorporated in Latvia eiet 9134 9 68826 824 356 043 26 818 356 043 382 867 49 190 382 861 431 085 LVL ‘000 49 183 480 275 431 085 LVL ‘000 LVL ‘000 480 268 LVL ‘000 LVL ‘000 LVL ‘000 Total deposits from customers LVL ‘000 Non-residents Residents Geographical profile of customers’ residence LVL ‘000 8 194 Total deposits from customers Non-profit institutions serving private individuals Financial institutions 8 655 Municipalities Central governments State-owned enterprises Private individuals 8 194 1 381 Privately held companies Sector profile 25. Deposits from Customers 8 655 – Total balances due to credit institutions and central banks Overnight deposits The following table provides an analysis of balances due to credit institutions and central banks by their maturity: Total balances due to credit institutions and central banks Balances due to credit institutions incorporated in OECD countries The following table provides an analysis of balances due to credit institutions and central banks by their place incorporati 24. Balances due to Credit Institutions and Central Banks transaction 11/053/220 11/0431/12/2004 31/12/2004 31/12/2005 31/12/2005 31/12/2004 31/12/2004 31/12/2005 31/12/2005 427 836 480 268 46 980 ru akGopBank Group Bank Bank Group Group Bank Group 1 100 3 652 191 509 – 427 843 480 275 46 980 1 100 3 652 191 509 – ru/akGroup/Bank Group/Bank Group/Bank Group/Bank 11/0531/12/2004 31/12/2005 31/12/2004 31/12/2005 V 00LVL ‘000 LVL ‘000 LVL ‘000 LVL ‘000 0 – 2 200 5 6 212 5 955 0 1 982 500 0 1 982 500 348 568 382 861 28 577 1 001 1 073 2 965 152 525 on: 348 574 382 867 28 577 1 073 2 965 1001 152 525 Dividends payable Cash in transit Other tax liabilities Suspense amounts Accrual for employee vacation pay Total contingent liabilities and financial commitments Total financial commitments Contractual commitments on reconstruction of the building Contractual commitments on purchase of intangible assets Undrawn credit facilities on settlement cards Unutilised credit lines Loan commitments Financial commitments Total contingent liabilities Letters of credit Outstanding guarantees 695 Contingent liabilities 28. Memorandum Items amounted to LVL 13,468 thousand), which in accordance with the 1 499 include incoming money transfers (which as at 31 December 2004 “Suspense amounts” caption as at 31 December 2005 no longer Total other liabilities Other liabilities 27. Other Liabilities Total deferred income and accrued expense Other accrued expense 26. Deferred Income and Accrued Expense thousand represent loans issued from the funds specifically assigned by Funds under trust management in the amount of LVL 4,099 (6,685) decision of the court amount has been transferred further. investigations as to the origin of these payments. According money transfer supervision procedure of the Bank required additional fully with the customer who provided these funds to Bank. customers to the Bank. The related credit risk and all other risks remain ru/akGroup/Bank Group/Bank Group/Bank Group/Bank Group/Bank Group/Bank 11/0531/12/2004 31/12/2005 31/12/2004 31/12/2005 31/12/2004 31/12/2005 V 00LVL ‘000 LVL ‘000 LVL ‘000 LVL ‘000 V 00LVL ‘000 LVL ‘000 50 131 43 236 17 982 23 030 2 197 6 895 2 333 4 562 1 448 1 218 1 136 14 192 117 282 247 281 0 70 14 399 982 505 27 7– 77 – 11 29 687 24 577 12 658 1 963 9 709 5 110 1 813 3 297 218 29

Page 59 AIZKRAUKLES BANKA I NOTES TO FINANCIAL STATEMENTS 29. Subordinated Liabilities 31. Related Parties

In 2004, the Bank received subordinated loans in a total amount of ted loan agreements, the lenders have no right to demand anticipatory Related parties are defined as shareholders who have significant influ- have a controlling interest, as well as subsidiaries and associated entities USD 13 million. Subordinated loans are included in the second tier of repayment of the loans and capitalize the subordinated loans into the ence over the Group, members of the Council and the Board, key man- of the Group. equity calculation. In accordance with the provisions of the subordina- Bank’s share capital. agement personnel, their close relatives and companies in which they

% of the total Date 31/12/2005 31/12/2004 Sum of Accumulated subordinated Interest of the Date of Amount Terms Amount Terms the loan interest capital rate Currency agreement maturity Loans issued to related parties LVL ‘000 LVL ‘000 Lender LVL ‘000 Management 600 3%-10% 605 4%-10% Multicross LLC 2 965 2 38.46 6.30 USD 24/08/2004 27/08/2009 Related legal entities 1 946 6%-18% 1 377 4%-9% Euro swiss LLC 2 965 13 38.46 5.50 USD 02/11/2004 01/12/2009 Other related private individuals 518 3%-24% 465 4%-13% Major lenders in total 5 930 15 76.92 USD Total loans issued to related parties 3 064 2 447 Loan commitments 310 3%-24% 92 4%-10% Other lenders Less provisions for potential credit losses (187) (171) residents 385 2 5.00 7.50 USD 09/08/2004 10/08/2009 Net loans and non-residents 1 394 5 18.08 7.50 USD 02/08/2004 10/08/2009 loan commitments 3 187 2 368 Other lenders in total 1 779 7 23.08 USD Percentage of equity, % (see Note 34) 6.99 7.47 Total 7 709 22 100 USD As at 31 December 2005, the deposits of related parties with the Bank The Bank has also issued guarantees to related parties totalling LVL 12 The proportionate share of other lenders (for each individual lender) does amounted to LVL 1,488 (629) thousand. All related party deposits bear (10) thousand for American Express credit cards. not exceed 10% of the total amount of the subordinated capital. standard interest rates offered by the Bank.

Interest income and expense from transactions with related parties: 30. Paid-in Share Capital 2005 2004 As at 31 December 2005, the issued and registered share capital of the The members of the Board directly hold 92.13% (90.99%) of the share LVL ‘000 LVL ‘000 Bank amounted to LVL 15 million (15 million). The share capital consists capital, while the members of the Council hold 4.35% (4.35%) of the of ordinary shares with voting rights only. All shares have a par value of share capital. Interest income 135 85 LVL 150 (150) each. Interest expense 23 11

As at 31 December 2005, the Bank had 119 (146) shareholders, includ- ing 22 (28) legal entities and 97 (118) private individuals holding a total 32. Cash and Cash Equivalents of 100,000 shares. Group/Bank Group/Bank 31/12/2005 31/12/2004 The major shareholders of the Bank and the groups of related shareholders are as follows: LVL ‘000 LVL ‘000 Cash and deposits with the Bank of Latvia 40 801 18 870 31/12/2005 31/12/2004 Balances due from credit institutions 95 822 148 027 Paid-in % of the total paid-in Paid-in % of the total paid-in Balances due from credit institutions and central banks (8 655) (8 194) share capital share capital share capital share capital Total cash and cash equivalents 127 968 158 703 LVL ‘000 LVL ‘000 LVL ‘000 LVL ‘000 O¬egs Fi¬s 6 967 46.45 6 881 45.88 33. Contingent Tax Liabilities Group of related shareholders Ernests Bernis 6 813 45.42 6 727 44.85 In 2004, the Republic of Latvia State Revenue Service (SRS) performed a On 6 July 2005, the Administrative Regional Court considered the Nika Berne 154 1.03 154 1.03 tax audit of the Bank for the years ended 31 December 2002 and appeal filed by Aizkraukles banka against the decision of the SRS 2001. On 2 July 2004, the Bank received an SRS decision where it sug- Director General on calculation of additional corporate income tax and Total group of related shareholders 6 967 46.45 6 881 45.88 gested making adjustments to the tax calculations for those previous penalties payable by the above credit institution. The Court upheld the years, and, as a result, additional taxes and penalties in the amount of appeal filed by the Bank on the merits and annulled all the SRS deci- LVL 597 thousand were charged. sions whereby additional corporate income tax and penalties totalling LVL 530 thousand were charged without reason. The above Court rul- The Bank did not agree with the additional tax calculation and penalties ing has come into effect. and appealed the SRS decision under the procedure stated by the law. I NOTES TO FINANCIAL STATEMENTS TO FINANCIAL I NOTES I NOTES TO FINANCIAL STATEMENTS AA AA KK KK NN NN AA AA BB BB

SS SS EE EE LL LL KK KK UU UU AA AA RR RR KK KK ZZ ZZ II II AA AA Page 61 Page 60 Page Page 62 AIZKRAUKLES BANKA I NOTES TO FINANCIAL STATEMENTS 35. Litigation and Claims Minimum capital adequacy ratio (%) Capital adequacy ratio (%) Total capital charge (8%) Total capital charge for market risks on trading book Capital charge for credit risk on banking book Total equity Total tier 2 Tier 2 Total tier 1 Tier 1 The capital adequacy ratio of the Bank is calculated in accordance with Financial and Capital Market Commission’s requireme 34. Capital Adequacy maintain collaterals, and specific transactions. The Management of the number of legal proceedings to recover outstanding credit balances, In the ordinary course of business, Bank has been involved in a capital charge for counterparty risk capital charge for position risk capital charge for foreign currency risk revaluation reserve of available-for-sale investments (55%) subordinated capital (80%) current year’s audited profit (not subject to distribution of dividends) intangible fixed assets retained earnings reserve capital share premium paid-in share capital 2005 will not result in material losses for the Group. Bank believe that any legal proceedings pending as at 31 December 11/0531/12/2004 31/12/2005 V 00LVL ‘000 LVL ‘000 30 779 28 854 45 573 40 078 15 000 15 000 (1 202) 1 925 1 154 5 495 4 625 9 525 1 500 11.85 8.00 755 870 255 16 nts. 20 026 19 189 31 721 25 491 15 000 6 230 5 366 6 112 3 413 1 500 12.67 (789) 8.00 837 767 864 255 10 60 Riga, 20 February 2006 Certificate No. 124 Latvian Sworn Auditor Personal ID code: 250873-12964 Diåna Krißjåne License No. 17 Ernst & Young Baltic SIA with International Financial Reporting Standards issued by the Accounting Board. Bank as at 31 December 2005, and of the results their operations cash flows for year then ended in accordance In our opinion, the financial statements referred to above give a true and fair view of position Group sonable basis for our opinion. made by management, as well evaluating the overall financial statement presentation. We believe that our audit provides a re and disclosures in the financial statements. An audit also includes assessing accounting principles used significant es cial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amount Accountants. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether finan- We conducted our audit in accordance with International Standards on Auditing issued by the Federation of to express an opinion on these financial statements based our audit. cash flows, and the related notes. These financial statements are responsibility of Bank’s management. Our responsibili out on pages 31 through 62, which comprise the balance sheet, statements of income, changes in shareholders’ equity and the accompanying financial statements of AS Aizkraukles banka (hereinafter – Bank) for year ended 31 December 2005, set We have audited the accompanying financial statements of AS Aizkraukles banka and its subsidiary (hereinafter – Group) To the Shareholders of AS Aizkraukles Banka Auditors’ Report 11. novembra krastmala 23 Ernst & Young Baltic SIA Phone: +371 7043801 Fax: +371 7043802 Riga, LV-1050 timates the ty is Latvia s a-

Page 63 AIZKRAUKLES BANKA I AUDITORS’ REPORT Astrology.Occupations and Financial Profile Aries Taurus Gemini Financially speaking, Financially, you are no gam- Your talent is social. although you can't be bler. You prefer a more con- Anything that involves lots bothered with most servative approach to money, of human contact is up details, money is an exception. which includes stable, long-term in- your alley, be it sales, promotion, or buy- This is due to your strong need to be vestments and a steady, reliable income. ing. Your way with words is an asset as independent – if you're in debt, you're Security is what's important to you. The an account executive, salesperson, or in a sort of financial prison, and will only negative in this picture is your marketing rep. This might get you a pro- therefore feel confined and depressed famous obstinance. Without an open motion, but you're likely to get bored sit- until you're back in the black; then you mind, you might not see a good opportu- ting behind a desk and long for the day- can dash around with the best of nity when it comes along. It's healthy to to-day human contact again. them.Money fuels your sense of be practical – that instinct will always pro- freedom, so try to be responsible tect you, but sometimes your bull-head- with it. edness can get in the way of greatness.

Cancer Leo Virgo You expound on existing Surprisingly, you sometimes Your lone weakness, financially, ideas, so it's not advisable to have a problem settling into is a tendency to gamble. It's as pursue your own business. a career. This is because you if, knowing you're so stable, You're better working within a know you were born to you need the excitement of the big given system, improving methods lead, and therefore you have little patience kill to add spice to your financial life. and earning the respect of your cowor- kers. You are a natural worrier and saver, working your way up the ladder. You will Indeed, some Virgos have been known to so you've no doubt already planned for have to bide your time for awhile, at least, succeed as professional gamblers, but the worst. If you're an extreme case, you until your talents and popularity become only when they apply themselves using might even amass a fortune just because obvious to those in charge. If you simply the same analytical faculties and work you're so concerned about not having do not have the patience to be an under- ethic that are usually saved for more tra- enough to feed your family. Your anxious ling for a while, try employing yourself. ditional vocations. It's okay to have fun temperament will always protect you Leos are entertainers; many have success- with it here and there, but don't make it financially , but to truly enjoy life, you fully created their own businesses. a habit unless you're a dedicated pro. need to stop worrying about it so much. Libra Scorpio Sagittarius You have a tendency to You are well-suited towards Financially, you're be frivolous with money, rising to the top because of the eternal optimist. even to take little inte- your unique need to control. You're a bit too spend- rest in it, except to use it socially – Your path is a combination of thrifty when it comes to shopping and you do like your nightlife. But you must hard work, keen maneuvering, and your gambling. You think, "Oh, I'll get rich try to be more disciplined with money, to subtle power magic. Your investigative soon," so you justify losing money at the respect it more, to build a savings abilities will tip you off to opportunities race track or charging impulse buys on a account; otherwise your social spending and strategies before everyone else, your credit card this way. A little prudence will continually consume your prospects suspicious nature will help you ward off goes a long way here. of a sound financial future. the competition, your powers of manipu- lation will get you in the right doors at the right times, and in between all this you'll work ceaselessly to prove you're the controller, not the controllee. Capricorn Aquarius Pisces You're quite good with You are blessed with a logical, sci- Poets, writers, painters, financial data, so a large entific mind, and this alone suits musicians, actors, and bank, insurance or invest- you to innumerable careers in the dancers dominate the list of ment company is a smart high-tech industries. Since these jobs famous Pisceans. But what of those who direction for you. As an earth sign and a are generally secure and pay well, and are not so famous? There are several hard worker, you appreciate buildings as since you love this kind of logic-based other avenues that suit you well. First, well, so real estate and the construction work, you'll enjoy success on all levels anything to do with fish. Second, you are industry are also recommended. Finally, here. You want to make a difference in inclined toward jobs with creative or Capricorn's connection to the bones and the world, not get rich. In fact, no one social use of alcohol, such as bartending teeth can lead you to a successful career irks you more than the person who sim- or brewing. Third, and similarly, you are as a dentist or orthopedic surgeon. ply chooses a career for the money. well-suited towards the pharmaceutical Aizkraukles Banka industry – drugs are very Piscean. 23 Elizabetes St., Riga, LV-1010, Latvia Client line: +371 777 5555 Tel.: +371 777 5222; fax: +371 777 5200 www.ab.lv e-mail: [email protected] * Get it right the very first time (First home loan from AB.LV)