RIGA, Nov 11 (Reuters) - Other Latvian banks might turn to the state for help after the government rescued the country's second-largest bank, Parex, a senior banker said on Tuesday.
Latvia decided on Saturday to take over 51 percent of Parex after it suffered a run on deposits and difficulty rolling over more than 700 million euros ($892 million) of syndicated credits falling due next year.
Latvia, a country of 2.3 million people, has 26 banks, of which four of the top five, excluding Parex, are subsidiaries of Nordic groups Swedbank, SEB, Nordea and Norway's DNB NOR.
"I do not exclude that somebody could seek that (help from the state)," Inesis Feiferis, head of state-owned Mortgage and Land Bank, which is the vehicle the government is using to take over Parex Bank, told Latvian state radio.
He said a government plan to offer guarantees or other help to banks was before parliament.
After it was passed, banks might then seek help, he said.
"I think that naturally that possibility exists."
He said the process for Parex Bank to receive an initial 200 million lat ($359 million) liquidity injection would be complete on Tuesday.
The authorities have said further cash injections depend on how much money people pull out of Parex.
Standard & Poor's on Monday cut Latvia's credit rating to BBB- after the Parex rescue, one step away from junk debt.
Feiferis was scornful of the credit rating agencies, which have all recently reduced their ratings on Latvia.
"I no longer have any confidence in them," he added, noting they had given ratings to big U.S. banks which went bust and that, in his view, the whole U.S. financial system was bankrupt.
Latvia decided to take over Parex after customers began to pull out funds. The banking supervisor said 240 million lats, around 10 percent of its deposits, had been taken out since September, with strong activity seen after Oct. 20.
Latvia bought out Parex's top two shareholders, millionaire businessmen of Russian origin, for 1 lat ($1.80) each.
However, under the deal, they have the right to buy back their stakes for the same price, plus expenses the state has incurred, if the government cannot find a strategic investor within a year. (Reporting by Patrick Lannin, editing by Will Waterman)