A B . N E W SA B . I N T E R V I E W

A B . T I M E SA B . C U S T O M E R SA B . W O R L D W I D E

A B . T R A V E LA B . S U P P O R TA B . F I N A N C E

A N N U A L R E P O R T 2 0 0 6

This Issue’sTheme:

C D I N S I D E

TIMESNEWS

WORLDWSUPPORTTRAVEL

CUSTOMENTERVIEW0204

07

16

18

22

24

26

28

29

Paths of WisdomEach of us takes his own path in life. A few of the world’s greatestminds share some of the experience and knowledge they’ve pickedup along the way.

AB.NEWSSome of our friends and colleagues in the news. A compilation of our achievements.

The Big Interview: “My Way”Aizkraukles Banka’s Board Members talk about their professional andpersonal paths. Each of these high-level managers has his own expe-rience, but they all share a single goal: the development of the bank.

P.S . From the Chairman of the CouncilAleksandrs Bergmanis was the first to embark on a path togetherwith Aizkraukles Banka. He knows the secrets to our success; sees thelogical continuities; and gladly shares his thoughts.

AB.TIMESSome information about the bank and the history of its operations.

AB.CUSTOMERSNobody knows the bank better than its customers!

AB.WORLDWIDEThe bank is growing and its operations are expanding. Today,Aizkraukles Banka is represented in the glorious capital cities around the world.

AB.TRAVELAizkraukles Banka’s employees are experienced travelers, and theircameras have captured the beauty of our world.

AB.SUPPORTSome information on the projects supported by our bank.

Your Business and Finances

AB. FINANCE

Consolidated Report Our financial results: numbers that speak volumes.

contents

We Grew Up Together. Maybe we played together in the same yard once, attended the same school, or went to the same summer camp. We grew up in the same countryand each started his own business. The passing years and global changes haven’t affected our values and goals. That’s why everything’s in place for us to continue growingtogether. The bank for private business.

DDeeaarr LLaaddiieess aanndd GGeennttlleemmeenn!!

Another fiscal year has come to a close. As usual, we wish to report to you, AB.LV’s cus-tomers and partners, on the results of our mutual cooperation, as well as offer an oppor-tunity to review Aizkraukles Banka’s 2006 financial indicators and share the most signifi-cant events, news, and achievements of the past year. Being the leader in a certain fieldor situation – someone who forms new traditions or adopts unusual decisions – is notonly rewarding but also a great responsibility. Every hour of every day, we continue tomove forward, one step at a time. The direction we have chosen determines the futurecourse of events, allowing us to forge our own path and do things our own way.

On the cover of the magazine, you will find the theme of this issue, “My Way,” a phrasethat has made us reflect a bit on our way of doing things, our chosen path. The OxfordEnglish Dictionary tells us that a “path” is “[t]he way, course, or line along which a per-son or thing moves, passes, or travels” as well as “[a] course of action or procedure, lineof conduct, way of behavior.” Once in a while, it’s important to stop, sit down, and won-der, What is my path in life, my way of doing things? Did I start down this path myself?Am I going the right way?

Our bank embarked on its chosen path back in 1993, in the small Latvian town ofAizkraukle. For almost fifteen years now, this path has been taking us closer and closer toour goals. In this issue of our magazine, we share the stories of the people who haveshared a path with Aizkraukles Banka since the very beginning. Each of them is an indi-vidual with lofty ambitions, personal goals, a strong faith in life, and a specific way ofthinking. However, only together, in a united team, have they been able to help the bankachieve its current status of success.

Writer André Maurois once said, “Business is a combination of war and sport.” We, how-ever, view business more as a team sport, where each player is both an individual and aprofessional who carries the team to victory. Thanks to our shareholders, management,colleagues, customers, and partners, the team at Aizkraukle banka has made the bankwhat it is today.

The photograph in the Big Interview spread shows how we under-stand the essence and soul of a team. Of course, golf is an individ-ual game, but the sport also has its share of tournaments wherethe results of a group of players are added together to determinethe winning team. Golf is a game refined in behavior and manners– a ceremony of sorts, with carefully cultivated traditions that haveremained unchanged for centuries. Golf also means impeccablemanners; respect toward partners and competitors; and the maintain-ing of order on the course. A similar inclination is shared byAizkraukles Banka, whose employees adhere to the bestbanking traditions. In even the most complex situations, wedisplay the highest self-respect and maintain the utmostfaith in the principles of honest partnerships, tending tothe needs of the many companies and individuals whomwe have had the pleasure of knowing. This is just ourway of doing things.

Sincerely yours, AB.LV.

VViikkttoorriijjaa ÒÒaakkiißßeevvaa,,Editor of the 2006 Annual ReportHead of the Marketing Department AB.LV International Division

PPhhoottooggrraapphhss aanndd IIlllluussttrraattiioonnss::

Dmitrijs Po¬akovs

Viesturs Masteiko

Scanpix Baltics

Poliindex

Getty image

Photos from private archives of Mrs. Inna

Davidova and Aizkraukles Banka

CCrreeaattiivvee GGrroouupp::

Editor in Chief – Viktorija Òakißeva

Art Director – Ûanete Zariña

Creative Director – Andris Romanovskis

Artist – Dmitrijs Po¬akovs

Layout – Inta Eihmane

Project Manager – Lîga Saidåne

Director – Ilze Apine

TTeexxtt::

Viktorija Òakißeva

Ernests Bernis

O¬egs Fi¬s

Aleksandrs PåΩe

O¬egs Sirotins

Påvels Ínejersons

Rolands Citajevs

Aleksandrs Bergmanis

Guntis Osis

Guntars Kraméns

Aivars Apkalns

Marina Ratñikova

Gotardo Ronîtis

Dmitrijs ˆikitins

TTrraannssllaattiioonn,, PPrrooooffrreeaaddiinngg::

Roberts Lîsmanis

Rihards Kalniñß

Antra Çigure

Natella Grigorjan

IM tulki LTD

Concept:

SIA Rhino dizaina a©entüra

Project:

SIA Rhino dizaina a©entüra

All rights are protected by the Copyright Law of

the Republic of Latvia. Reproduction forbidden-

without prior permission by AB.LV and other

rights holders.

Printed in the EU

editor’s letter

Every important, permanent change begins in the imagination;only then does it become visible in reality. That’s why imagina-tion is more important than knowledge. (A. Einstein)

The beginning of a career is a gift from God; the rest is hard work. (N. Paganini)

It is in man’s power to take a superior path;but a superior man is formed by the path. (Confucius)

The most useful thing in life is one’s own experience. (W. Scott)

Do what you can, with what you have, where you are. (T. Roosevelt)

Follow your own path, and let people talk. (Dante)

If ye would go up high, use your own legs!Do not get yourself carried aloft; do not seat yourself on other people’s backs and heads! (F. Nietzsche)

All paths are the same: they lead nowhere. Does this path have a heart? If it does, then the path is good. If it doesn’t, it is of no use. (C. Castaneda)

Don’t worry about the future; form the future today. You can change everything. You can grow a cedar forest on a barren plain. But don’t spend your time designing the forest; just sow the seeds. (A. de Saint-Exupery)

Twenty years from now you will be more disappointed by the things you didn’t do than by the ones you did do. So throw off the bowlines. Sail away from the safe harbour. Catch the trade winds in your sails. Explore. Dream. Discover. (M. Twain)

You can’t cross the sea merely by standing and staring at the water. (R. Tagore)

Paths of Wisdom

Aizkraukles Banka signed an agree-ment on receipt of a syndicatedcredit in the amount of EUR 50 mil-lion. This is the largest debit transaction inthe Baltics among banks without foreign or

state capital. The loan will be utilized for

the bank’s development, which will

strengthen AB.LV’s position in conditions

of increasing market competition. Nineteen

banks from ten countries confirmed their

participation in the first Aizkraukles Banka

syndicated credit. �

AB.NEWS

Since July 1, the bank has been offeringits clients a mortgage loan of 100% of thepurchase amount for acquisition of the first home.

Since AB.LV is a special credit bank, we offered

our clients this product after thoroughly research-

ing their needs and the

market situation. In

the future, first-time

buyers who do not

have the means to

make the first pay-

ment will be able to

receive a loan of up

to 100% toward the

purchase of their first

apartment or house. For existing clients, AB.LV

offers this opportunity not only for a first home,

but also for the acquisition of a second piece of

real estate. �

On March 30, in orderto its corporate strate-gy aimed at expand-ing the spectrum ofservices offered toclients in the field ofinvestment manage-ment, Aizkraukles Bankaformed two new sub-

sidiaries: AB.LV Capital

Markets and AB.LV Asset

Management.

“The need for implementation of broker

services and financial management

services was determined by the market

situation and our clients’ interests. In

meeting the

bank’s

corporate

service

standards,

we created

new service

utilization

possibilities,

thus ensur-

ing our clients high-quality individual

service,” explains Aizkraukles Banka’s

joint proprietor and Chairman of the

Board, Ernests Bernis. �

From March 23 to25, the government

of St. Petersburg and the Riga City Council organized St. Petersburg Days in Riga. Their aimwas to broaden cooperation in the fields

of trade, economic relations, culture, and

humanitarianism between companies from

the city on the Neva and Latvia, as well as

to promote tourism. St. Petersburg Days in

Riga turned into a real happening, and

Aizkraukles Banka gave its support as an

official partner of the event. Rigans were

able to become better acquainted with the

culture of St. Petersburg and its personali-

ties, while delegation participants developed

new, mutually advantageous business con-

tacts; toured Riga; and met with represen-

tatives from the business and cultural

sectors. �

In 2006, the bank started offeringits clients new savings products:Savings Accounts and Savings Account

Extra. These have the advantage of signifi-

cantly higher interest rates than usual

deposits or interest on average quarterly

balance in the current account. In the

Savings Account interest is calculated on

the daily balance. In accordance with busi-

ness needs and client plans, Savings

Accounts may be opened in lats, US dol-

lars, or euros; account opening is free. �

AB.LV is familiar with themarket situation and

expands its array ofservices according tocustomers’ needs. In

July, the bank offered its cus-

tomers in

Latvia con-

sumer credit.

The new

credit pro-

duct,

named

AB.karte,

provided clients with the opportunity to

receive a loan of up to four monthly

salaries, with a limit of LVL 6000. The

AB.karte is competitive, offers an elastic

discount system, and is particularly con-

venient for AB.LV clients. The card may be

utilized in Latvia as well as abroad. �

Seeing the potential for busi-

ness development in the

region and potential clientele,

as of October, the bank’s subsidiary AB

Konsultåcijas has begun operations in the

Azerbaijani capital of Baku. There, one may

receive information about Aizkraukles Banka and its

portfolio of services, as well as specialists’ consultations

regarding possibilities for cooperation.

On November 13, Rolands Citajevsstarted work as a Board memberat Aizkraukles Banka. The new Boardmember’s main responsibility is the deve-

lopment of the information and technolo-

gy sectors. Mr. Citajevs graduated from

the Department of Economics at the

University of Latvia and has been in

banking for over twelve years.

His experience and knowledge

in the field of information

technology, as well as

the development of bank

products and services,

will be successfully utilized

at Aizkraukles Banka. �

BAKU

ALMATY

MINSK

MOSCOW

ST. PETERSBURG

RIGA

KIEV

One of the mosteffective ways ofmaintaining goodrelations with clientsis the opening of a repre-

sentative office. The

expansion of an interna-

tional network of representative offices is

one of Aizkraukles Banka’s most important

assignments in recent years. In 2006, AB.LV

received permits from the central banks of

Belarus, Ukraine, and Kazakhstan for the

opening of AB.LV representative offices in

these countries’ capitals. The main functions

of the bank’s foreign representative offices

are the formation of mutually advantageous

contacts among foreign and Latvian busi-

ness circles and the provision of consulta-

tions on financial issues and information

regarding services and products offered by

Aizkraukles Banka. �

Aizkraukles Bankasponsored the 2ndBelarus-Latvia

Financial Investment Forum, whichtook place on October 25th in Minsk. The

2006 forum’s motto was “Belarus –

Latvia: the Dialogue Continues. New possi-

bilities for Cooperation.”

At the forum, several important issues

were discussed: the attractiveness of the

investment environment in the Republic of

Belarus during the current phase of natio-

nal development; the potential and direc-

tions for mutual relations with the

Republic of Latvia; Belarus and Latvia’s

mutual cooperation in the finance and

bank sector; and the most rational path

for optimization of the partnership in the

transit and logistics sectors. �

Rolands CitajevsBoard Member

page

4

100%

On April 1, a hockey tournamenttook place in Moscow’s Central IcePalace with teams composed of foreign diplomats. The “Little WorldHockey Championship of 2006” took place

in anticipation of the real World Hockey

Championship in Riga, and was organized

by the Embassy of Latvia in Russia, with par-

tial support from Aizkraukles Banka. Six

teams of diplomats took part in the Little

Championship, representing the US,

Canada, Finland, the Czech Republic,

Slovakia, and Latvia. Team Latvia was bol-

stered by true storm-troopers, as represen-

ted by AB.LV corporate team players O¬egs

Fi¬s (bank co-proprietor and Deputy

Chairman of the Board) and Dainis Dårziñß

(private banker in the International Division).

Both provided a significant contribution to

the team. Every puck that flew into the

opponents’ goal during the tournament

ended up there thanks to the athletic skill

and determination of O¬egs and Dainis.

Team Latvia finished in second place,

surrendering only to the Czechs. �

Today’s technologiesdemand newsolutions. Instep with the rapid

development of

technology, AB.LV

now offers its

clients payment

cards equipped

with chips (chip

cards). In order

to ensure a

higher level of

card security, data

regarding the cardholder and payments

are recorded on a special microprocessor

(chip), which protects the holder from the

fraud and counterfeiting encountered with

magnetic strip cards. The bank issues Mas-

terCard International and Visa Interna-

tional payment systems with chip cards. �

In the spring of 2006, bank employees tookpart in the photography competition “MyBeautiful Riga.” The best photographs occupy aplace of honor in a comprehensive album entitled

“Riga in Space, Time, and Emotions,” issued by

Jumava publishing house.

The author of the images in the album is artist

Janis Jaunarajs. His photographs have captured

the most beautiful buildings in Riga; one double-

page spread features Aizkraukles Banka’s cen-

tral building, on Elizabetes Street.

Three hundred copies of the album were

printed especially for the bank. On the first

nine pages following the introductory words by the

bank’s Deputy Chairman of the Board, O¬egs Fi¬s, you will find

our employees’ photos. We are convinced that these wonderful photos will

please our clients and bank partners, and offer a view of Riga as seen from the eyes

of our employees. �

In 2006, the bank offered itsclients in Latvia a new service – E-SMS, which ensures receipt of infor-mation for payment-card operations. This

innovation marked a new segment in the

development of the bank’s SMS system: a

new channel for sending of text messages

was developed: electronic

mail, from which the name

of the new service derives.

It is important to know that

the new service is very

advantageous for clients,

because they will no longer

have to pay for every mes-

sage. �

On July 29 and 30, the world champi-onship in water motor sports, 24 hoursin St. Petersburg, took place in St. Petersburg. The endurance competitiontook place without interruption over the course

of twenty-four hours. The total distance covered

by the athletes was over 1,300 km, with an ave-

rage speed of over 100 km/h.

Twenty-eight teams took part in the cham-

pionship, including several teams from Latvia.

Aizkraukles Banka provided its support to the

ELKO GROUP team’s participation in the compe-

tition, as this company’s employees are great

athletes as well as our bank’s clients. �

In December, Aizkraukles Bankafinancially supported the confer-ence “Protection of Assets 2006,”which took place in Kiev and was organ-

ized for the owners of mid-sized and large

businesses in Ukraine. At the conference,

current events in the protection of assets

and information were discussed, including

instruments for international tax planning

and various technical means for the pro-

tection of information. ��

Each year, AB.LV organizes interestinginformal events for its clients in Latviawith the aim of strengthening partnerships and

raising mutual trust. One of these events took

place on June 8 at Viesturi Country Club. The

very name of the event was promi- sing, Golf

and Grill, and very appropriate to the character

and location of the event as well as the nature

and weather conditions. Our clients had an

excellent opportunity to participate in various

competitions, savor delicacies prepared on the

grill, relax, and enjoy music performed by the

superb n[ex]t female saxophone quartet. � �

During the RecognitionCompetition, organized by theReal-Estate Association of Latvia,Aizkraukles Banka presented a check for

LVL 5,000 to the winner in the category

Best LANÈDA Agent of 2006. The pri-

mary aim of the LANÈDA Competition is

to raise the prestige of the real estate

agent’s profession; attract the public’s

attention to the high-quality standards

established for the profession; and orga-

nize a professional celebration for

people working in this complex field. �

My Way

The Big Interview

What has been the role of destinyin your life and career?E.B. I began working in banking quite by acci-dent. Although I attended the Department ofFinance at university, I never considered work-ing in a bank. In the early 1990s, I startedworking at a company that decided to partici-pate in the formation of Latvia’s commer-cial bank. The idea of becoming owner ofmy own bank came much later, when I sawan opportunity and didn’t let it pass.

O.F. To be quite frank, there was nopremise for me to head a bank. I had

joined the university’s Department of Finance,but had no clear idea of what I would do there.Today, when I am asked whether an educationat the Department is enough to lead a bank, Ireply, “If you want to become an accountant, itwill do just fine. But if you want to be a bank

manager – it’s not enough.” But it washappenstance that brought me togetherwith Ernests. Once, at the Department, Ispotted a job ad: an unknown bank wasinviting students to come work for them.My classmates didn’t react, and I was theonly one who called the number. Ernestspicked up the phone. The bank’s manage-ment had assigned him to attract newemployees for the development of the

bank. That’s how two energetic young financestudents got started.

A.P. I never thought that I would work at abank. Actually, I was convinced that I wouldn’t. I studied law, and jurisprudence hasalways struck me as an interesting field,enough to make me want to purse a profes-sional career in law. But in 1995, my classma-te Ernests Bernis invited me to the bank; come and have a look, he said. At the time of my first visit to the bank I was the headlawyer in a real-estate company, and even if I had considered leaving this post, it wouldonly have been to start my own business.When I first came to Aizkraukles Banka, I saw twelve people sitting in one room.Ernests showed me the bank, and I didn’t really understand why. Finally he offered

me a job. At that time, Ernests told me some-thing very important: “I don’t know manylawyers, but I trust you.” Two months later, I came to work at the bank. I see the touch offate in the very people I know, in my relationswith them. The bank is the very manifestationof these values.

O.S. I would like to believe that everythinghappening now, and everything that will hap-pen in the future, is related to professionalism,and only to a lesser extent to destiny andchance. Earlier, I definitely had my share ofchance. I chose my field of study at universityrather randomly, though in the early 1990sthere really wasn’t much choice. I knew I didn’t want to be a teacher, and law didn’tinterest me, either. I worked in a factory, evenon a conveyor belt, and understood that suchwork wasn’t for me. Since I already had a cer-tain amount of experience as an accountant, Ithought being an economist might be moreappropriate. Quite by accident, I landed myfirst job at a bank, where I headed the dealingdivision. Later, I received a job offer fromAizkraukles Banka, where I’ve been foreleven years now.

P.Í. Everything began back in 1995, when abranch of Aizkraukles Banka opened in Riga.The branch was led by two young people, thecurrent main shareholders of AB.LV. Theyneeded a professional who could provide thebank with legal services. At the time, Alek-sandrs PåΩe and I worked at the same compa-ny. Ernests approached Aleksandrs with a joboffer, and Aleksandrs, in turn, offered me theposition of bank lawyer. I had studied law, buthadn’t planned on working for a bank.I can recount an interesting experience frommy life. Before the bank, while I was stillworking at the real-estate company, I had acolleague who was also one of my classmates.During lunch breaks, we often went to thebookstore to look at new books. Once, wespotted a book that was very expensive forthose times, entitled Banking Law. I thoughtto myself, Why do I need this book, if mywork is related to real estate? There’s no point

in spending money on it. But my colleaguebought the book. The last thing I heard, thiscolleague is now the head of the legal depart-ment at Murmansk Shipping Company, so Idoubt whether this book has ever been of anyuse to him. But I sure could have used it…

R.C. I don’t think much about the role ofchance in my life, though I did receive myoffer to work at AB.LV quite by accident. Lastsummer, I happened to be on the same air-plane as O¬egs Fi¬s, and we spent the flight inan absorbing conversation. It concluded inRiga with an offer to come work at the bank.At the time, I was working in the council ofdirectors at a large bank in Moscow, butAB.LV’s shareholders won me over with theirideas and plans. I started working in the bank-ing sector while still a fifth-year student at theDepartment of Economics – no accident there.Until now, my path together with AB.LV hasbeen very short; I only joined the team in2006. The job strikes me as difficult, interest-ing, and incredibly fascinating.

Along life’s path, have you everencountered any logical continui-ties or formulated any principlesthat you firmly observe?O.F. . Lately, I’ve been sticking to a singleprinciple: never say never. I often meet people who claim they will never change, andwill never betray their principles. These days,when developments take place so dynamically,I don’t think that’s quite the correct stance.

E.B. There are many principles that I observe.On the other hand, none of them is an absolutepriority. Everything changes. Very often ourdecisions and actions arise from circum-stances.

O.S. I try to always be honest. I won’t lie orinvent things in order to achieve my goals.This applies both to work and to life in gener-al. I try to be an open person, and strive toevoke a similar openness in the people closestto me and those of interest to me.

A.P. Honesty, truthfulness, order, and love ofmankind – these are my life’s principles. Weall work on a shared task, and strive to do iteven better. Although we each have our ownidea of what it means to “do something bet-ter,” and are all very different people, we areunited by the values that I mentioned earlier.

R.C. In addition to the general human princi-ples and those logical continuities that must beobserved in the work of a professional mana-ger, I have one condition: before I demandanything of a colleague, I need to be able meetthese demands myself and must set an exam-ple. First and foremost, I am my own harshestcritic.

P.Í. I often repeat to my employees that Ibelieve in the self-organizing ability ofmatter. How it happens, no one knows,but the result is always there. For exam-ple, crystals or snowflakes form beauti-ful and unique shapes by themselves. Ifa client’s business or his moral stancecreates doubt, then, logically, there willbe problems. There is no direct relationbetween doubts and specific actions thatmanifest themselves with time; neverthe-less, a logical continuity exists. This isproven not just by negative events but bypositive ones as well. We hired a newemployee and granted her the maximumsalary for her position. Her immediate super-visor, noticing this employee’s great abilities,worried that she would not have the potentialfor growth. I replied that if an employeeworks well, everything takes care ofitself. Shortly thereafter, this competentwoman came to head a newly formeddepartment of the bank. Everything hap-pened seemingly by itself.

Has there been a particularmoment when you’ve felt like atrue leader?O.F. On my very first day at the bank Iinstalled the first internal telephone system –an attempt to increase work effectiveness.These days, an internal telephone system issomething we take for granted as a necessarymeans of communication. But in 1993, thiswas something new, and it even provoked acertain opposition from bank employees whodid not understand why they had to share theirtelephone number with other colleagues. I hadto convince them. I even installed the cablesby myself. The main thing is that the projectwas implemented, and people apparentlybelieved in me.

R.C. In kindergarten I flew a rocket ship toouter space. It wasn’t easy, and during the tripseveral extraordinary things happened: therocket’s vent and spacesuit filled with sand,

and a visitor from outer space who looked likethe teacher interrupted the flight at the mostinteresting moment… But seriously, I can’tremember a particular moment or instancewhen I’ve felt like a true leader. I’ve alwaystried to be well-organized and to exercise self-initiative, and these efforts have not goneunnoticed –at school, the university, the army,or here at the bank.

A.P. I began my employment at the bank ashead of Aizkraukles Banka’s Legal depart-ment. From day one I’ve assumed a lot of res-ponsibility, so there hasn’t been a morningwhen I suddenly “woke up famous.” Res-ponsibility for the scope of work under myauthority grew organically, and the level ofwork increased. You can’t really compare the

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Ernests BernisAB.LV Joint Proprietor,

Chairman of the Board

“Being a leader means trusting

the people with whom you work.”

O¬egs Fi¬sAB.LV Joint Proprietor, Deputy Chairman of the Board

“A leader must choose one option, out ofmany possibilities, and assume the respon-sibility for implementing it.”

The theme of our magazine is “MyWay.” How did you embark on yourpath together with the bank?

The Big Interview

page

11

page

10

scope and importance of the things I wasdoing when I started in banking with thethings and issues we handle today.

A manager finds himself betweentwo extremes – cooperation andautocracy. What is your manage-ment style?E.B. Being a manager is very difficult. Ourbank’s administrative structure is multi-tiered;a large number of employees need to be mana-ged through their direct supervisors; and Ialways need to be conscious of my responsi-bility and set a good example for my employ-ees. Speaking of style: I have my own ap-proach. People are different, and, in order toachieve results, one must find the most effec-tive approach with each person: a mandate or

a democracy; firm control or far-reaching dele-gation of authority. Being a leader means trust-ing the people with whom you work.

O.F. Even when operating with the simplestinnovations, I have always sought to unifyhuman, work, and material resources. Themain factors are conviction; recruitment of thebest people; and the unification of employeesin a single team for a common goal. I used totend goal for a professional football team.People think that the goalkeeper is half theteam, but, in fact, the goalkeeper can only stopthe ball; he can’t score any goals. I’m interes-ted in the kind of sports where team effort isequally as important as individual ability andthe readiness to assume responsibility andmake mistakes. I believe in collective leader-ship, which, in my opinion, is the main pro-moter of progress and is a prerequisite for thedevelopment of any organization. A leadermust choose one option, out of many offeredpossibilities and solutions, and take respon-sibility for implementing it. Intuition helps,too. And, if the chosen path does not fare aswell as planned, one must find a way tocomplete what was begun. Finally, one

can’t be afraid of admitting mistakes andmaintaining forward momentum.

P.Í. First of all, what I will say about mymanagement style may not match theviews of my subordinates. In my opinion,power and authority today can no longerrest on the fact that a person controlsinformation. He must be a source ofinformation for others to draw upon.

Simply put, a true leader not only organizeshis work in accordance with his position andwithin the confines of his authority, but alsoprovides advice, inspires others, and helps hiscolleagues take decisions.

A.P. I’m a democratic leader, but I don’taccept an inattentive approach to work andobvious laziness. There is no room for lazypeople on our team – which is something I’vehad to tell one or two of our employees. I’mconvinced that motivation is very importantfor a leader, and this is the example set by ourshareholders. They demonstrate, with theirlives and their attitude toward work, how others should work. If we, the Board, work forthe good of others, and working brings uspleasure and is fruitful, that becomes a guidingforce for employees.

Soldier, diplomat, or merchant –which of these roles suits you best?E.B. All three, and a couple of others too. It isimportant for a leader to have the ability andwisdom to listen to others. One learns this withtime. That is one of the main problems facedby a manager.

R.C. A merchant who is capable of defendinghis caravan with weapon in hand.

O.S. If I’m convinced that I’m right in a dis-cussion that grows into an argument, and if mystance is clear, then it is very difficult to pres-sure me to change it. The arguments must bevery serious. I know how “to fight”.

A.P. A diplomat, of course, and not onlybecause I’m a lawyer. If you want to achievegoals you must seek out compromises; all ofus are different, and our styles of managementdiffer as well.

Do you sometimes need to “throwout the baby with the bathwater” –that is, discard a product or projectin which you have invested a greatdeal of resources?E.B. Of course. At moments like those I feelrelieved and happy, because one must develophis strengths first, instead of dragging alonghis weaknesses. Weak points must be severed,for the good of the end goal. Even if the inves-ted resources and efforts have been wasted,there is no use in having regrets. With regardto the resources that may still be expended,one must carefully evaluate how useful this isand take an appropriate decision.

O.F. Any businessman for whom time ismoney, and who wants to receive a correspon-ding return, is always faced with the matter ofthe correct criteria for choosing an investment.Ernests and I have drafted the following strate-gy: above all else we concentrate on our mainproject – the management and development ofthe bank. Since we have been in business,there have been many different possibilities forthe allocation of investments, and we’ve beenoffered many different business strategies. Oneof our fundamental principles is the ability toforego other projects, many of which mighthave been equally profitable, and to concen-trate on the bank’s development. If we viewthe bank as a global endeavor and the mostimportant project for us, then the question of

foregoing other possibilities and strategies nolonger exists.

R.C. I’ve been fortunate: I haven’t had to“throw out” anything. Every project or producthas its life-cycle, which must end sometime.Since the end is also planned, I consider it anormal process, even if a great deal of timeand effort has been expended. The “baby” isnot a project that has already taken place andended, but a project that is being implementedright at this moment.

O.S. Most projects have been successful, andfailures have been insignificant. Sometimes Iget caught up in a product. Everything looksperfect, and I no longer take into considerationsome aspect or another. Unfortunately, statis-tics, as we know, can’t be flattered, and theyopen one’s eyes to reality. Many products getold, but we live in a century of new, constantlyprogressing technology. We must foregosomething. Sure, I have a certain emotionalattachment to a project I am working on, but Itry to fight this. Time keeps moving and, re-gardless of the fact that banking is one of themost conservative sectors, everything aroundme changes – the average client, his demands,the market situation, the competitive environ-ment… Our task is to react to everything in atimely manner. We may not rest on our laurels.

To what extent is your professionaland humanistic developmentdirectly related to the bank, andhow much longer are you preparedto grow and develop?E.B. I continue to grow. For me, growth isrelated to my personal development. Thingsare interesting.

A.P. I have been growing together with thebank for thirteen years now. There have beenmoments in my life when I’ve felt fatigue. I’vewanted to travel somewhere for a while, butnot leave the bank. My astrological sign isCapricorn, so I am accustomed to standingwith both feet firmly on the ground and assess-ing the situation with good sense, asking, Whathave I accomplished and what can I still achie-ve for the good of my company? I’ve beenentrusted with a new responsibility; it’s like anew challenge. Opportunities for growth exist,and they are real and promising. The importan-ce of the bank’s reputation doesn’t need to bequalified. That can’t be bought for any price.

R.C. Interrupting growth means losing interestin the job and no longer working. I’m con-stantly learning and developing together withmy colleagues and the bank.

P.Í. It all depends on the person. If one wishes, one can always find possibilities forgrowth. But this does not mean that the job orposition will ensure it. The desire to grow andimprove is largely related to my own develop-ment – my own interests and the things thatattract me.

Do you consider yourself more of afinancier or a manager? What, inyour opinion, characterizes a truefinancier?O.F. Calculation and risk are the hall-marks of a financier, and banks can’toperate without people like these. Forme, the main things are conviction, dis-cussion, and contact with clients. Attimes, when analyzing a business plan,we understand that it might not be favor-able for the client. The next step – noeasy task – is to convince the client ofthis. On the one hand, the client is alwaysright. On the other, we are professionals.We have managed to discourage clientsfrom making bad moves. In situations likethese, it’s important that we not only savethe bank’s money but also our reputationas professional financial consultants.

E.B. I’m a combination of both of theseroles. Additionally, I manage the bank’sBoard and tend a portion of financialoperations relating to investments. Regardlessof the fact that I see myself more as a finan-cier, I work as a manager and respect the dif-ference between these two positions.Nevertheless, I spend most of my day manag-ing the bank. Finance is my passion. Thequalities of a true financier are as follows:good intuition; decisiveness; a cold-hearted-ness bordering on mercilessness; an awarenessof the consequences of decisions taken; areadiness to incur losses; an avoidance of thedizziness of successes; and clarity of mind. Atthe same time, these are the qualities necessaryfor a leader, so there is no conflict here.

O.S. First and foremost, I’m a manager.Without a doubt, one must be familiar withone’s field, but management methods are simi-lar in all sectors. It’s important to like the job

you do, and I like mine very much. In myopinion, being a financier means being afinancial director engaged in planning a com-pany’s financial flow, providing financial con-sultations, etc. We, the bank’s managers, areall partially financiers, but administration ofthe bank is my fundamental task.

R.C. I don’t consider myself a financier, al-though I did study economics and know how toprepare a balance sheet. In my view, a compe-tent financier knows how to work with num-bers; understands economics, politics, and thesociety in which he lives; and is capable of ana-lyzing processes, drawing the right conclusions,and taking the necessary decisions in the deve-lopment and expansion of the financial institu-tion he runs. Yet financiers aren’t the only

The Big Interview

Påvels ÍnejersonsAB.LV Board Member,

Head of Customer-Service Division

Påvels Ínejersons heads AB.LVas a specialized credit bank

“I believe in the self-organizingability of matter.”

O¬egs SirotinsAB.LV Board Member,Head of International Division

O¬egs Sirotins is responsible for working with foreign clients“Our task is to react to everything in a timelymanner. We may not rest on our laurels.”

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12The Big Interview

knows who need to take part in a bank’s ad-ministration. I’ve been assigned a specific roleat the bank, and I strive to fulfill it honorably.

If you were to abstract for amoment and imagine the bank as a human being, what, in your opinion, would AB.LV be? O.S. I associate the bank with its owners andtheir personal qualities, which are expressed intheir behavior, their attitude towards the bankand people, and towards life in general. Thisall reflects upon the bank’s image. I’m nottalking about people of a certain age, but ofthe principles of life. Openness, for example:the bank’s owners have always exhibited thisquality, and it characterizes the bank itself.

R.C. I think the bank is like a middle-agedperson – someone with remarkable intelli-gence, dynamic energy, and a great deal ofexperience, which bolsters confidence in thefuture.

A.P. A young man, a little over thirty, who isvery ambitious, professional, polite, and well-educated, and who sometimes does somethingunexpected – in a positive sense. You canalways shock the public, but you can never beproud of someone who does. On the whole,the portrait would be similar to that ofAB.LV’s managers.

In your professional work, hasthere been a period when youhave been ready to leave thebank, say, when you suddenlyfelt interested in somethingcompletely different? Also, if

you weren’t working at thebank, what would you be

doing? O.F. I can’t imagine myself anywhere else butat the bank. Keeping money and making itgrow is so very interesting. My interests are

essentially related to learning what is newand interesting, and overcoming difficul-ties. But these hobbies do not interferewith my professional work. If you likewhat you are doing, why seek somethingelse? My life is interesting from anyangle. I don’t plan on leaving the bank; Istill have many plans and tasks to fulfill.

E.B. Never.

O.S. In thinking of the future, variousideas come to mind – for example, starting myown business. But right now I wish to conti-nue what I have begun, because I enjoy what Ido very much. I don’t just go to work becauseit’s my job and I have to make money; my jobis my greatest passion in life.

R.C. No, I have never wanted to leave mywork at the bank. I like what I do. But if Iweren’t in banking, I would work at an insu-rance company.

A.P. I don’t think about that. Every morning,just like before, I can’t wait to go to work atthe bank. Even those projects that “squeeze melike a lemon,” and take a lot of strength andenergy, yield results in the end, and this gives

me a feeling of satisfaction. I know my workvery well, and that is good for both the bankand our clients.

What do you think AB.LV will belike in ten years? Will you still bewith the bank? E.B. I foresee that we have many accomplish-ments ahead of us. The market we work in ispractically unlimited. At the same time, onemust take into account that the instruments andtechniques we utilize today may be completelydifferent in ten years. Banking, first of all, is abusiness of relationships. If one invests energyin relationships now, one will still have themin the future. Ten years from now, our busi-ness will have grown larger, many times over,as will the number of employees.

O.F. We will be a larger and mightier struc-ture. We will also operate beyond Latvia’sborders, in other regions and other countries.We will be working with an internationalteam, resolving psychological and humanisticissues. Work in a more global organizationwill lead to a change in management style, andthe more offices and colleagues there are out-side of our direct control, the more complexthe administration of the bank will become.But we will think of a way to accomplisheverything. There will be lots to do.

A.P. I’d like to still be with AB.LV. And, ofcourse, I would like my work to contribute tomaking the bank what it will be in ten years.

P.Í. This is not any easy question to answer.We are currently looking at various alterna-tives; the only question is which will wechoose? What will I be like? Will I be with thebank? If someone had asked me this questionten years ago, my answer wouldn’t have beenclose to the actual situation today. However, I tend not to think so far ahead; it’s not pro-ductive. What can we really know about thefuture?

R.C. I am convinced that in ten years our bankwill be like a fine wine: it will have matured,with an exquisite bouquet. And with each subsequent year, the bank, just like a finewine, will become more savory and valuable. I will experience these accomplishments withpleasure.

O.S. A very difficult question, and one that is

practically impossible to answer. What we willbe like will depend upon the decisions wemake today; the direction in which we work isthe direction in which we will develop. Ourbank – whether by coincidence or as a resultof a goal-oriented personnel policy – has atruly unique group of employees, top-notchmanagers, and a unique view of things. Wealso have a great deal of possibilities open tous, and our opportunities are practically limit-less. Our bank can either establish a large net-work, with international capital, or we canremain a small private bank, and concentrateon something else. In any event, I can safelysay that in ten years, our bank will be a suc-cessful business and financial institution.

These days, when most peoplecomplain about a lack of time, weall seek to optimize our work, so asto accomplish as much as possible.Do you have any personal methodsfor using time more efficiently?O.F. I plan my time with the help of a specia-lized computer program. Since the head of anorganization is someone who oversees every-thing as a whole but nothing in detail, at somepoint one must begin to trust one’s colleaguesmore and listen to their professional recom-mendations, and then stick to assumingresponsibility – choosing one or anothercourse of action. Each person has limits –mental, physical, and so on. I tend to delegateauthority. Time is also an issue; that’s why theselection of personnel is crucial. The bankneeds goal-oriented employees who worktogether for the good of the result.

E.B. Time is short and you can’t have more ofit. I know that I have a set amount of time thatI must utilize efficiently. But things don’talways work out the way I would like.

O.S. I try to plan out my time. The days willnever be longer than they are, and there is lotsof work to be done, so I try to utilize everyminute as best I can. Tasks are organized inthe order of priority, and I spend the most timeon the most important ones. Unfortunately, Idon’t always get to leaf through the newspa-per; mostly I read work e-mails. I try to arriveat the bank on time and leave on time. Thereare, of course, times when I stay until the “bit-ter end,” but under normal circumstances, andwith careful planning, everything should getdone before the end of the workday. If an

employee stays at work until late in theevening, then either he is overworked or doesnot know how to work well.

A.P. Who has enough time these days? Mytactic is precise planning and the setting of priorities. In banking, you need to react tochanges with elasticity. Earlier, I had a hardtime foregoing my planned schedule. At thebank, I learned to adjust quickly and efficient-ly. Planning plus elasticity – that’s my formulain the battle against the lack of time.

R.C. I can’t live without my daily planner,which must be accessible twenty-fourhours a day. I try to resolve urgent issuesimmediately, without putting them off.Since a significant amount of time mustbe spent on communications and orga-nizational issues, I’ve tried to create asystem of procedures and a controlmechanism whereby each element in thesystem moves in the necessary direction.

In your opinion, what is the idealteam? How are several leadersable to work together on oneteam –the bank’s Board, forexample?E.B. It’s not easy. We have differingviews on life, different tastes and hobbies.But the fact that various people arearound permits each individual to viewhimself from a different angle. There hasnever been a situation where we haven’tbeen able to find a solution, where wehaven’t taken a decision that satisfiedeverybody. This is one of the strengths ofour bank’s management team. Youshould see what goes on at our Board meetings…!

R.C. An ideal team is composed of a balancedgroup of professionals – a necessity for anymanagement team. Each sector is led by a trueexpert and leader. There are no arguments ordisputes. Collaboration comes about as a resultof a specific procedure, where each workerknows his role and the tasks entrusted to him.

A. P. Our company is composed of very dif-ferent people, who have combined to form ateam of highly qualified professionals. It isprecisely these differences that function posi-tively for the common good. Individuals havebeen delegated various fields of responsibility,

which require appropriate personal and profes-sional characteristics. In my view, the profes-sionalism of an ideal team is expressed in itsdetermination and responsibility. This can’texist without order. The bank can’t afford toloose its moral standing; dishonest peopleshould not be permitted anywhere near a bank.This applies not only to one’s approach to mo-ney, but also to one’s attitude toward people.Our team – both the management team and theexecutive team – accomplishes this perfectly.It’s difficult for managers to be in gear withone another, but we pull it off. True, we don’talways agree, but we are prepared to argue.We have differing opinions, but this is part ofthe working process. And we always come to adecision that is for the good of the bank. �

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Rolands CitajevsAB.LV Board Member

Rolands Citajevs is responsible for the development of information and bank technology“It is not possible to automate chaos. Only a system can be automated.”

Aleksandrs PåΩeAB.LV Board Member

For many years, he has been responsiblefor attracting and selecting bank personnel.

He currently handles client-policy issuesand tends to the bank’s reputation

in the international business environment“Dishonest people should

not be permitted anywhere near a bank.”

I see the bank’s development moving in the right direction.

The bank is growing and getting better. I am pleased to see that

good people are coming to the bank; that means that they, too,

see the value of the bank. It is time to look for new challenges,

and I often dream of taking part in the construction of a new

bank building.

In the Beginning...I suppose my path at this bank has been thelongest. In truth it may only be understood inthe context of the formation of the State. Weare the last functioning bank formed after theprivatization of the regional branches of theBank of Latvia. And that started in 1993,when the government declared that regionalbranches of the Bank of Latvia are subject toprivatization.

I had just left the position of regional chairmanof the council, and back then, people whowanted to accomplish something such as pri-vatizing a branch sought out an impressivelobby. What was needed was someone toassemble the shareholders and obtain moneyto buy out the Bank of Latvia branch. At thattime, 250,000 lats was a tremendous amountof money. Under no circumstances could oneperson do it alone. I agreed to undertake thistask; we convinced over 200 shareholders androunded up the money. Then I was offered tohead the bank. I started off with a clean slate,because I had never even taken out a loan. Ittook me a half a year to get my bearings.

In life, if you are in the right place at the righttime, everything works out. This applies bothto work as well as to people. Around this timeI met Ernests Bernis, who very much wantedto manage a bank. What is interesting is thatErnests did not even request the balance sheet;he accepted my word. He only asked when hecould start work, and what kind of figurewould be necessary in order to get things moving. We made an agreement and shook onit. And then we started working. Soon after-wards, O¬egs joined us, and the nucleus was inplace. That’s how things got started. Historyshows that we did everything right, because no

one else is here. We are the only bank with100 % Latvian capital.

My PrinciplesMy first principle is not to do to others as Iwould not want done to myself. I have experi-enced such competition in Latvia, mostly dirtyand dishonourable. This sort of competition is unacceptable to me, because sooner or laterit all comes back to you. My second principle is diplomacy. I don’t fitthe stereotype of today’s manager; I am toomuch of a diplomat. It seems that many do notwish to hear the views of their team mates,and subordinates are afraid to say somethingsmarter or better than their bosses. It is possib-le to get one’s way without throwing punches.I prefer to talk to the person and try to con-vince him. Sometimes I think that I might notbe right, so I reconsider, and that’s why diplo-macy is necessary. I have often had to serve asa kind of buffer between board members, thebank, and regulatory institutions. But hats off,we have always agreed!My third principle is punctuality. I believe thatwe lose a great deal of time if the other partneris not punctual. If a time has been set, thenbetter to arrive early than to make the otherperson wait.

Being and TimeParadoxically, I have enough time for every-thing. First of all, it is because I have the privi-ledge of working with this fantastic group ofcolleagues. I try not to do things that I don’tunderstand; this I delegate to others. Don’tstick your nose where you don’t need to. Ifresources permit, assign that task to someonesmarter than you who will achieve resultsmore quickly. Second: it is necessary toalways prepare for meetings. If you do not

P.S. From the Chairman of the Council

prepare issues well enough and do not reviewmaterials thoroughly, then problems arise,because you are not prepared. Third: we canspeak for hours on end regarding issues thatwe understand; but those that we don’t under-stand we run through quickly. How much timeyou have depends on how you prepare andhow much you respect others.

The Ideal ManagerThe ideal manager is a person twenty-fiveto thirty-five years old with a very goodeducation; the ability to analyse and listento others and their thoughts; and the abilityto position himself correctly and presentrecommendations to senior managementwithout fear. In addition, the ideal manageris a person who in the near future willbecome the most knowledgeable specialistin his field, and sees this as a challenge. �

Aleksandrs BergmanisChairman of the Council of AB.LV

One of a manager’s functions isthe taking of decisions. Does this come easily for you?

Påvels Ínejersons: This is not an easyquestion to answer. Perhaps I should tell aparable. A chap visits a psychotherapist andcomplains that he has a nerve-wracking job,that he finds himself in a constant state ofstress. The psychotherapist asks, “Well,what do you do?” He replies, “I work at acompany that sorts oranges.” To which thedoctor replies, “What is it about the job thatmakes you so nervous?” The patientanswers, “What make me nervous?! Thelarger oranges go into one box, while thesmaller ones go into another!” The doctor:“And?” The patient: “I have to constantlymake decisions!” So some decisions areeasier to make; others are more difficult. �

How do you feel about internalcompetition? Does it help growthor hinder it?

Aleksandrs PåΩe: If a company consists ofdifferent characters and ambitions, this willnaturally result in competition. In onesense, this improves returns and results; onthe other, it can harm the working environ-ment. However, without competition, thereis no growth. We all strive for the samegoal; in the process, we grow both as people and as professionals. The competi-tive spirit exists at our bank as well – inreasonable proportions, of course. I like tosee fire in people’s eyes, and I like to seepeople enjoying what they do. I see peoplelike this around me on our team, and at ourbank. �

What does it mean to be thepublic face of the bank?

O¬egs Fi¬s: Since I became the bank’s pub-lic face, I’ve had increasing respect for tel-evision journalists. At first it seems thatthese people are simply sitting in front ofthe camera and chatting. Having taken partin these talks a couple of times, I’ve real-ized that the journalist’s professiondeserves the utmost respect. Now, when Ihave to express myself in front of the cam-era, I don’t feel afraid; it comes easily. Imust say that watching a recording of your-self on television, seeing yourself at a dis-tance, is a very interesting way of getting toknow what you are like. �

To err is human. How do you feelabout mistakes that occur in themanagement process?

Ernests Bernis: A manager is someone whotakes responsibility for both accomplish-ments and failures. For me, the complexitylies in the fact that rarely is anyone boldenough to criticize me and point out my mis-takes, though I am convinced that I canclearly evaluate my own miscalculations. If you wish to do something well, you alsohave to be ready to do something wrong.Like a shop that sells mobile telephones: fivemodels are in high demand, five only some-what, but nobody wants the other thirty models. But all the phones have to be forsale. Of course, things are different at thebank: we believe that everything we give tothe client is absolutely necessary. Though not everything that we offer “does the trick.”This must be understood. �

A Special Question forEach Person

The Big Interview

What motivates people to workmore effectively?

Rolands Citajevs: To my mind, motivation isformed by a whole set of factors, whichinclude an interesting job, awards, recognitionof your importance, results, and new goals.It’s important to do something you really like.It’s important that an employee receives anappropriate wage for his or her work. Seeingthe results of one’s efforts and setting newgoals are serious emotional stimuli. But it’spossible to see results and set new goals inone’s daily routine as well. I once had to com-pile various records – for instance, the numberof processed transactions– and I posted theresults in a place visible to employees. It isvery important to present good results notonly to the outside but also to the companyitself, so that employees can understand theimportance of their efforts and their meaningin the scheme of things. This is part of internalmarketing, which promotes the unity of theteam and helps colleagues feel satisfied withtheir work. At the bank, we try to motivateemployees by using all the above-mentionedmotivational elements; that’s why the entiresystem operates so successfully. �

In evaluating the path taken bythe bank, what do you think –should you have chosen a differ-ent turn in the road somewhere?

O¬egs Sirotins: What do you mean by “turn”?In my opinion, we’ve stuck to a straight pathfrom the very beginning. Turns, forks – thoseare problems, obstacles that we have success-fully overcome. But we haven’t changed thedirection of our path. Perhaps, in some situa-tion or another, we should have been moreaggressive. However, everything we havedone has been the correct choice, and is theresult of correct decisions. The path we havechosen has been the correct one. �

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AB.TIMES1993After privatisation of theAizkraukle regional branch of the Bank ofLatvia, an independent bank is formed,which is named Aizkraukles Banka.

2005 In 2005, important struc-tural changes were made to the bank’smanagement and administration. The implemented decentralisation processfostered improvement in the planning andeffectiveness of finances and operations.In June, another representative office wasopened, in St. Petersburg. The bank alsoplans to develop its network of foreign representatives in coming years.At the end of the year, the Latvian-American Financial Forum, an open-socie-ty organisation, was founded. Its aim is toadvance the development of Latvia’s inter-national competitiveness as a financial cen-tre. Aizkraukles Banka was one of the ini-tiators of the organisation’s formation. Itsmembers advance economic cooperationbetween Latvia and the USA, opening newpossibilities for US companies andinvestors in Latvia and ensuring newadvantages for Latvia’s capital in the USA.

2004 The greatest achievementfor Aizkraukles Banka in 2004 was theopening of the restored central office build-ing at 23 Elizabetes Street. The site accom-modates business-service offices, as well asthe bank’s International Division, whichpermits domestic and foreign clients toreceive service of the highest quality in a comfortable, contemporary atmosphere.The bank opens six new service centres inRiga and Jurmala, ensuring the highest cor-porate quality standards in its services and a complete assortment of services, begin-ning with loan services.On August 1, the first Aizkraukles Bankarepresentative office was opened abroad, in Russia. This provided a foundation forstrengthening our bank’s position in theinternational market.

2003 On September 17,Aizkraukles Banka marked its ten-yearanniversary. The bank also adopted a newdevelopment strategy, to be implementedby 2007. Latvia’s clients are offered a series of newcredit products, including a constructionloan and first-home purchase loan. Newcustomer service centres, Vairogs andDomina, are opened.

2002 The bank implements anew corporate style, based on the bank’skey values: – dynamic growth, an individu-alised approach, and modern technology.The new AB.LV logo is introduced. A comprehensive advertising and public-relations campaign fostered recognition ofthe new logo both locally and in the inter-national market.2002 saw many innovations: a new internetbanking system – Internetbank AB.LV; a Eurocard/MasterCard virtual paymentcard; as well as a new web page. In 2002,we began offering clients financial opera-tions with securities.A contemporary, central client serviceoffice with state-of-the-art technology isopened in Riga, at 21a Elizabetes Street. A new customer service centre is alsoopened in Purvciems. Comprehensivereconstruction of our main office,at 23 Elizabetes Street, continues.

2000 Growing number of clientsand widening service offering drivesdemand for structural optimization. As partof the reorganisation of the bank’s internalstructure, three basic sectors are estab-lished: client service (Front Office); riskmanagement (Middle Office); and theensuring of the bank’s operations (BackOffice).The bank’s central office is moved to Riga,and the payment centres Imanta andMotors are opened in economically activesections of the city. Aizkraukles Bankainstalls its first five cash machines andenters into agreements regarding utilisationof other banks’ ATMs.

1999 The bank’s strategicefforts are concentrated in the developmentof loans to individuals in the local market.New loan products for construction andrenovation are offered to wide audience inRiga and its surroundings. Development ofthe mortgage credit programme begins. Amortgage loan centre is opened in Riga,specialising in the servicing of individuals.These initiatives bear fruit: in a year’stime, the number of loans issued triples.

2001 Intense development andan increase in the number of personnel dic-tated new decisions. Reconstruction andexpansion of the bank’s main office inRiga, on Elizabetes Street, begins.The Ratslaukums Client Service Centre isopened in the centre of Old Riga.

1995 In order to expand itsscope of operations and increase competi-tiveness Aizkraukles Banka opens its firstbranch in Riga. A modern banking soft-ware system is implemented, providingAizkraukles Banka’s clients remote accessto their accounts via modem.

1994 The bank’s growth beginswith an orientation on regional develop-ment. An Aizkraukles Banka branch isopened in Jekabpils.

1998 Owing to timely and well-planned diversification, Aizkraukles Bankasuccessfully weathers the consequences ofRussia’s economic and financial crisis.Balanced policy and proper bank manage-ment fostered timely fulfilment of all obli-gations to clients and the formation of thenecessary reserves to cover losses incurredby the crisis.

1997Aizkraukles Bankabecomes one of the first banks in Latviato offer its clients the possibility of makingpayments over the internet, utilising theInternet Banking Programme Package.The Bank of Latvia issues a bankinglicence with the right to handle investmentsfrom individuals, thus confirming thebank’s hopes of stability in the financialmarket in Latvia.In 1997, Aizkraukles Banka became a fully fledged Europay member, with the right to issue and serviceEurocard/MasterCard and Maestro international payment cards.

1996 This year saw the rapidgrowth of the bank’s primary indicatorsand assets. A connection to the S.W.I.F.T.System is also formed.

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AB. CUSTOMERS

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Guntis OsisSIA Büvniecîbas Dizaina GrupaBoard MemberA loyal customer since 04.11.2005.

My path in business began under rather heavycircumstances. I got tired of living off mymother-in-law’s pension, so I decided to startmy own thing. But seriously: I used to be aprofessional athlete, a bobsledder. When I finished my career in sports, I had to find ajob. There was no point in just sitting at home,so I left for Germany to make some money.My earlier athletic conditioning left me in verygood physical shape, so I did constructionwork, making a lot of money for those times –1000 marks a week! With this money I wasable to afford a good life in Latvia. For twoyears I traveled back-and-forth to Germany,bought a car (a big deal in those times) and acomputer, and saved up some money.

An acquaintance of mine recommendedAizkraukles Banka. But before that I visitedseveral banks with my project. I had thorough-ly conceived and nurtured the project, andeverything had been carefully planned out.The project was construction of a small logis-tics centre. In order to begin construction, wewere looking for a partner who would be will-ing to finance part of the project. Five or sixbanks rejected us, saying the project was toorisky. When I came to Aizkraukles Banka, I

From left to right: Guntars Kraméns, Guntis Osis, Marina Ratñikova, Aivars Apkalns, Gotardo Ronîtis, Dmitrijs ˆikitins

partnership; with this, all the conditions forproper work are in place.

Guntars KraménsSIA Vecozolu namiCo-ownerA loyal customer since 12.01.2005.

I began my professional work in real estate, asan agent’s assistant. I went through variousphases, even working as a “street agent.” ThenI worked in a construction firm, where I headed the real-estate division. Around 2000, I founded my own company, Averts, whichtoday is no longer a newcomer to the real-estate market. In seven years time, we haveoperated in almost all the sectors of the real-estate market, including denationalization mat-ters and land-reform issues.

Aizkraukles Banka was our first large partnerbank, and it entrusted to us, beginner entrepre-neurs, a sizeable amount of money. Our firstloan was for USD 80,000. Before I came toAB.LV, I had visited several other banks. Ofcourse, at any given time, a bank’s marketingpolicy and positioning in the market creates acertain image. Aizkraukles Banka was and stillis a bank interested in the development of newprojects. That was certainly the case backwhen we first obtained a loan from AB.LV.

I will try to describe the bank as a person. Aswe know, people are often judged by how

Speaking personally with a client is part of our business. Our success

depends on whether we are able to find a common language with our

customers. In the following section, a few of our clients answer some

questions, talk about how they started their business, and discuss the

path they have traveled together with Aizkraukles Banka.

� How did you start out in business?

� How did you find yourself at Aizkraukles Banka? Did someone recommend our bank to you,

did our advertisement address you, or did you just “stumble upon us”?

� Over the years, surely you have developed a specific attitude toward our bank.

If you were to describe the bank as a person, what would AB.LV be like?

� What are the qualities and values that, in your opinion, distinguish a good bank from an average bank?

Which of these qualities does AB.LV possess?

� How do you envision banking services in ten years? Will there still be a need for a physical bank,

or will you handle all of your financial issues over the internet?

� Are you loyal to AB.LV? Could you perhaps tell us why?

was already on edge, tired of the situation andthe armies of analysts who seemed to do nothing but try to find shortcomings in myproject. We had already lost half a year, struggling to find money and prove somethingto the banks. At AB.LV, our story had a happyending.

The bank’s personality? It’s difficult to say;a bank is a bank. My impression of the bankwas formed by the people with whom I cameinto contact there. You know, we have ourproblems and the bank has its problems. Themain thing is that our bank understands us. We are satisfied with the people we cooperatewith at the bank and their attitude towards thecustomer. We visit the bank and resolve ourneeds. We never have to explain why we’rethere and what we want. We’re put in directcontact with someone, and have never beenforced to talk to five other employees in orderto get the necessary answer.There is a certain level of trust in the bank’sattitude towards us, and we feel it.

What will the bank be like in ten years? I ama very conservative person. I like live, humancontact. I don’t foresee that the computer willtake decisions in my place. What will peopledo then?

My loyalty towards AB.LV has been formedprimarily by your attitude towards thecustomer. Above all, I value a hopeful

A Few Topics for Discussion:

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they’re dressed. The same holds true forbanks, which we tend to assess by how theiroffices look. One can’t fail to note the seriousfinancial investment in the interiors of theElizabetes iela offices and the bank’s othercustomer-service centers. One feels a certainattitude toward things, a refinement. Anotherfactor that one can’t miss is the bank’s desireto stay in the market, tenaciously and for thelong-term. Of course, the people managing thebank are also of great importance. They toostarted their path in business from nothing, and know very well what it means to under-take responsibility and risk. It is preciselythese qualities that I respect most inAizkraukles Banka. Of course, the people you work with and their attitude – their abilityto engage interest and maintain contact withclients – is of the utmost importance. Overall, I would compare the bank with an intellec-tually gifted being of the female gender…

I doubt we will live to see a time when theonly contact with a bank is virtual. Presence is important to any business. I don’t agree withthose who claim that the “live bank” will dieout in the future. Of course, regular paymentsand daily bank operations can and must beconducted via the internet. But resolution ofserious matters requires personal contact, relationships.

As I said, my loyalty to AB.LV is based onthe employees’ attitude toward customers andtheir projects. Taking into account the rapidlygrowing mortgage market, loan repayment is no longer a problem. One must understandthat sooner or later the market will stabilizeand the amount of profit will no longer be as impressive as it is today. But cooperationbetween bank and customer will need tobecome even stronger. For this reason, ifAB.LV continues to develop in the direction it is currently developing, everything will befine. You know, the history of relationshipscan’t be rewritten. You are the first bank thatresponded to me, the first to trust me and my company.

Aivars ApkalnsSIA Karlo MotorsChairman of the BoardA loyal customer since 2002

I will tell you quite honestly: there is no elabo-rate story to my start in business. We started

our business, selling automobiles, in 1995. A group of young men got together andformed a company that sold used cars, mostlyfrom Germany – Audis, BMWs VWs,Mercedeses. The business gradually developedand grew, until, in 2001, we had the opportu-nity, together with one of our new partners(who is now the owner of the business) to takepart in a tender in Prague, organized by Íkoda.After numerous talks and meetings, both inRiga and at the Íkoda factory in Prague, wewon the tender. As a result, we formed a new company, KarloMotors, which entered into a contract withÍkoda’s automobile factory regarding the saleof new automobiles. At first, our firm did notmeet all the necessary requirements for thesale of new cars – for example, we did nothave our own showroom or service facility.We advertised actively and participated in various sporting events, but it was not enough.At the same time, we thought about construct-ing a showroom. We prepared project sketchesand were ready to build.

Of course, we did not have enough funds forthe construction of the showroom or for thedevelopment of such a serious business, andthere were many problems. We needed helpfrom a bank. We came directly to AizkrauklesBanka. One of our company’s co-owners, whoalready had experience in cooperating withyour bank, gave it a good recommendation. In2001, we entered into our first agreement withthe bank, and continue to work together to thisday. To be honest, we do not change coopera-tion partners often, even though a marketeconomy is a market economy, and we con-sider and analyze at length offers from otherbanks. But your bank has always been respon-sive, cooperation has been great, and both par-ties have been able to make a profit. Wealways find a reasonable compromise. I canonly say the best things about AizkrauklesBanka.

In a way, the bank is, in fact, a person. We areall people. The same is true for electronics:there are people behind all of those computers;otherwise, how would it all work? I considerthe bank to be a living person, with whom it ispossible to meet, share thoughts, and resolveissues and problems. I am at the bank at leastonce a week. I handle my affairs both by tele-phone as well as at Elizabetes iela. Your bankis truly attentive towards its customers. Allwork issues are resolved successfully, and I

aviation and heads the company Konkors. My business path, however, stems from ourfamily life. At first, we had hoped to establisha private club for pilots, but it didn’t reallywork out. Then we got the idea of opening a restaurant. Later, we decided to add a sportscomplex (our family is keen on tennis), a gym,a rehabilitation sauna, and an infrared booth.In the end, we had an entire recreational, entertainment, and sports complex, topped off by a hotel. This was the basic idea, but it was still a long way off. The Pilots’ Club is our baby. However, we did not have enoughfunds for the entire project, and we wanted to obtain a loan from a bank.

I came to Aizkraukles Banka upon my hus-band’s suggestion. At the time, our projectconsisted of a hotel under construction, as well as the restaurant and sports complex,which we had then constructed on our own. In May, 2006, we started our cooperation with AB.LV.

I associate your bank with a man at the peakof his strength. He is a serious person, toughand uncompromising, but flexible at the sametime. That is my assessment of AB.LV

What distinguishes a good bank from an average bank? First of all, certainty in con-tracts and decisions and flexibility in thereview of issues prepared in a timely manner.In my case, when, due to unfinished hotel con-struction, I had to ask for an extension onrepayment of the principal payment, it wasreviewed shortly after I submitted it. I likedthat. The bank shows an understandingtowards its clients, which is very important

I hope that personal contact is still practiced in ten years. Of course, the internet is veryconvenient for quick settlement of accountsand payments, but no machine will everreplace direct contact between people.Especially if we remember that electrical net-works are sometimes overburdened, asoccurred recently in America… I highly valueAizkraukles Banka’s emphasis on human contact. After all, it is possible to performmany tasks without putting your heart and soul into it. Unfortunately, without emotionalinvolvement, you will never experience thefeeling of fulfillment. This also holds true forcontact with the bank. We look to each other,we like each other, and an affinity has formed– this is already half-way to a solution.

My loyalty to Aizkraukles Banka may beexplained quite simply: I like the bank’s styleof business; their order and precision; and,most importantly, the people.

Gotardo RonîtisSIA PLAZAChairman of the Board

Dmitrijs ˆikitinsSIA PLAZABoard MemberA loyal customer since 10.03.1997.

In the early 1990s, when business sponta-neously began in Latvia, everyone was shut-tling over to Poland. That’s where we got theidea to import goods to Latvia not availablehere. A shop gave us a small order for lamps,and we transported the lamps from Poland bytrain, simply packing them in a suitcase. Wesoon understood that this business had poten-tial, and we transported the next order by car.Then we got a trailer. At first we made ourpurchases in shops. Then we located a factorythat produced lighting fixtures. Next came ourfirst loan, with an interest rate of 60 % a year;we used it to buy a van. Everything happenedgradually; there wasn’t a single stroke withwhich we quickly made a lot of money.

We took out our first loan at a commercialbank for a very high interest rate, and it wasnecessary to look for other financial possibili-ties. At that time, we were already cooperatingwith serious Russian producers of lighting fix-tures. We no longer had enough funds, but weneeded additional finances for the growth ofour business. A mutual acquaintance helpedout by bringing us to Aizkraukles Banka. Wetook out a loan, bought the goods, and pledgedthe goods to the bank with letters of credit.This operation served as a serious push for thefuture development of our business. At thattime, few banks accepted goods or a businessplan as collateral toward a loan. We managedto come to an agreement with AizkrauklesBanka and start our business, which we’vebeen running successfully for ten years now.

The bank as a person… A difficult and inter-esting question. I guess it would be a youngperson, self-confident but not aggressive. Onthe whole, a person who can be relied upon.

have never encountered a situation whensomething didn’t move forward. In my opinion, figuratively speaking, the bank ismore like a woman – good, responsive, and atrue business partner.

Aizkraukles Banka is highly regarded both inLatvia and abroad. The bank cooperates suc-cessfully with clients and partners, resolvesproblems, and offers good interest rates (espe-cially to us, as we are long-time cooperationpartners). The bank is always responsive toour needs. When visiting the bank, I feel afavorable aura, a special attitude towardsclients. I get the lasting impression that I amwelcome here. There have even been situa-tions when I have arrived before the workdaybegins, and one of the Board members alwayslets me in.

I am convinced that in ten years the bank willcontinue to be “live.” Of course, some of thebank’s services will be provided over the inter-net, in order to facilitate cooperation. But wewill continue to meet at the bank in order tosuccessfully resolve problems and situations.

We are truly loyal to AB.LV. We have anopen credit line for a considerable amount ofmoney, thanks to which we have acquired anew plot of land for the construction of another showroom. We have also proven tothe bank that our employees know how towork and strive to move forward. And if weprosper and make a profit, then the bank willalso earn, and that will be good for all of us.Since we have developed such a mutuallyfavorable relationship with AB.LV, the idea of changing banks has never come to mind.

Marina RatñikovaSIA Pilots clubBoard MemberA loyal customer since 26.05.2006.

I am a native of Leningrad and a graduate of the Voznyesensk Leningrad Institute of Finance Economics. I worked in finance for three years after graduation, but I havealways dreamt of flying. For seven years, I worked as an Aeroflot stewardess, and thiswas a marvelous time in my life. My col-leagues were a wonderful, friendly, and sincere group of people who helped each otherout. That’s also where I met my husband, an aviation engineer who is closely tied to

customers

First of all, a good bank is different in itsunderstanding of a customer’s needs, andshows good responsiveness, a quick reactionto market events, and flexibility toward thecustomer and the situation. In my opinion, onecan’t choose a bank just because it offers alow interest rate; what is important is the total-ity of factors. We have received many offersfrom other banks, but we are loyal to AB.LV.We are bound by close ties, almost ones offriendship, with the management as well asmany employees. In other words, we under-stand each other, the bank supports us, and wedon’t forget about the bank, either.

It is possible that in ten years we will commu-nicate more from a distance, but we can’t dowithout personal contact. We would like forthis personal relationship to continue to exist,this opportunity to come and talk. One can paya bill over the internet, but when one speaks ofbusiness, this usually entails relationshipsamong people. Talks, the seeking of solutions,options, and compromises – these just aren’tpossible with a computer.

My wish for the bank – to continue to prosper;to move forward; to always be vigilant, elastic,and responsive; and to understand customers’needs. Not to turn into a giant monster, wherepeople simply become numbers in reports. Toalways be a bank that cares for the customerand recognizes him or her personally. We likeAizkraukles Banka! �

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AB.WORLDWIhttp//www.ab.lv/about/abroad/

In 2006, AB.LV’s representative offices in Kiev, Minsk, and Almaty, as well as

our subsidiary AB Konsultåcijas, which represents the bank in Baku, expanded

our network of foreign offices, joining our existing branches in St. Petersburg

and Moscow.These beautiful, historical, and culturally rich cities are home to

our clients. We are pleased to be closer to them, and hope that this will

strenghten our cooperation.

This ancient, enchanting city offers a chaotic carousel of life, combining the tradi-tional and the modern, East and West, and Europe and Asia. Before Islam, a cult

of fire worship proclaimed by the prophet Zoroastra found its home in Azerbaijan. Today,Azerbaijanis have preserved a respectful attitude towards fire, and often refer to their countryas the “land of fire.” The temple of fire worshipremains one of Baku’s symbols. Due to historicaldevelopments, Baku is one of the most interna-tional cities in the world. Here, people represent-ing 72 different nationalities have lived togetherand continue to do so to this day.The narrow old-city streets, surrounded byfortress walls (“Icseri Sheker”), make for a calm,unhurried atmosphere characteristic of Easterncities. Mosques, bathhouses, market squares, thecastle of the 12th-Century-ruler Shirvanshah, and,of course, the Virgin Tower, rising high above theCaspian Sea and looking down indifferently uponthe newly-constructed glass and cement structures, are all witnesses tothe new oil boom. After a long walk and a snack of tea with fig or quincejam, nuts, and raisins, this is the place to experience the atmosphere ofthe ancient city of Baku. It is here, where reborn Eastern market traditionsmeet the most refined nuances of global capitalism, that our bank is nowrepresented.

If you’re in the old city, stop by our new office, at 16 Golla Street.

Baku

The city’s name stems from the Kazakh word alma,meaning “apple.” It is no coincidence that this beautifulcity at the foot of the emerald-green Tien ShanMountains is called an “urban garden.” In the spring,when the southern edges are drowning in a sea ofblooming apple trees, apricots, and cherries, the cityis like a fairy tale. The green leaves and majesticmountain panorama imparts upon Almaty a uniquecharm, not to be savored in any other city. Gardens,groves, boulevards, and flower gardens occupymore than 8,000 hectares of the city. Almaty is

enveloped by the Ala-Tau mountains, which, translatedfrom the Kazakh language, means “colorful Mountains.” 120world records have been set at the Medeo Mountain skatingrink, at the foot of these mountains. One of the city’s symbols isthe Independence Monument. This truly unique and impressivememorial, which graces the Republic Square, was a gift to thecity’s inhabitants from a group of artists led by ChokanValikhanov. The monument depicts a majestic, captivating “gold-en” individual, reigning over a winged snow leopard, while allaround him, reflected in the sculptures, the entire history of the

ancient Kazakh people unfurls before the viewer’s eyes.In November, 2006, AB.LV opened a representative office in Almaty. Our office is locatedin the city’s business district, in the Kulan business center (188 Dostik prosp.). Thisbeautiful modern building is situated in the upper part of the city, offering a fantasticview of the Ala-Tau Mountains.

Come over and enjoy the view!

Cities are like people: some are born rich and influential,while others need to summon their strength and authorityover the course of centuries. Minsk belongs to the llattergroup. Founded as the border fortress of the Grand Duchyof Polotsk, Minsk has managed, in the nearly 1,000 yearhistory of its existence, to be not only the centre of theGrand Duchy and Voyevod administrative territories, butalso the capital of its own country, with 10 millioninhabitants. During the course of its history, Minsk has

been destroyed several times, but she has always been reborn, becom-ing even more beautiful. After being freed in 1944, the government seri-ously considered moving the capital to Mogilev, or beginning construc-tion of a completely new city on an empty field, leaving the ruinsuntouched. However, this time, too, the city was born anew, and thenoisy streets and shaded squares came back to life. In Minsk, the ancientcoexists with the new and modern – for example, the oldest structure inthe city, the Petropavlovsk Fortress, constructed from 1611-1613, andthe new symbol of modern Minsk, the National Library. This enormous

building, impossible to miss when arriving in Minsk, has already become the architectural symbol ofthe city. The impressive, monumental structure, roughly in the shape of a diamond, fits in ideallywith the surrounding area, and is without a doubt one of the most noteworthy examples of themodern style.

Our representative office, on Independence prospect 11/2 (Prospekt Nezavisimosti 11/2), Office 306,is always open to our