AmEx becomes a bank to stabilise funding

Seeking shelter amid a global credit crunch and consumer spending slowdown, American Express announced last week it is becoming a bank.

The US Federal Reserve, using emergency power to act swiftly, granted approval for AmEx and American Express Travel Related Services to become bank holding companies.

The move will give AmEx the ability to grow its deposits - a more stable form of funding - and provide it greater access to federal funding and government rescue programmes.

"Given the continued volatility in the financial markets, we want to be best positioned to take advantage of the various programmes the federal government has introduced or may introduce to support US financial institutions," said Chief Executive Kenneth Chenault in a statement.

The company currently operates a small bank, American Express Centurion Bank, as well as a savings and loan, American Express Bank, which together have just over $50 billion in assets and $14.4 billion in deposits. They offer mainly credit cards, loans and certificates of deposit, the company said.

"We will continue to build a larger deposit base to broaden our funding sources," said Chenault. "With Federal Reserve oversight we should gain greater access to the capital on offer under the current and any future government-sponsored programmes."

On October 3, the bank subsidiaries were given access to the Fed funding window, giving the company an alternate financing source, according to federal filings.

AmEx also said late last month it would issue short-term debt through the Fed's Commercial Paper Funding Facility, which provides companies with financing for day-to-day operations.

It did not say whether it would seek access to capital injections from the federal government under the $700 billion financial institution rescue plan.

The shift will also subject it to increased regulation by the Fed.

As an independent specialty finance company, AmEx relied greatly on bundling its credit card loans into securities and selling them to investors. But this securitisation market has dried up in the wake of the mortgage meltdown.

Since it doesn't have bank deposits as a cushion, AmEx is too vulnerable to funding disruptions, said Howard Shapiro, analyst at Fox-Pitt Cochran Caronia.

"It's all because of funding concerns," he said. "It's become prohibitively expensive to securitise. This is a way of accessing cheaper forms of liquidity."

Laying off 7,000 employees

The surprise announcement comes less than two weeks after the credit card issuer announced it was laying off 7,000 people after reporting a 24% drop in quarterly profits. AmEx also said it would cut overhead expenses, including spending on business consultants, travel and entertainment, as well as scale back spending on business development and streamline costs associated with some rewards programmes.

Rating agencies and analysts voiced concerns about the company's ability to withstand a prolonged, deep recession. Moody's downgraded the company last month on concerns that AmEx may not be able to weather this potentially severe consumer-led economic downturn as well as previous recessions.

Though it beat expectations for the quarter, executives said last month they anticipate the global economy to continue weakening well into 2009.

AmEx also attempted to address shareholders' liquidity concerns, stressing it could fund its business for at least a year and that it has access to various programmes set up by the federal government to support businesses during these difficult times.

The Fed noted in its release that AmEx and its banks are well capitalised.

The shift, however, indicates deep problems at the company, said Red Gillen, senior analyst at Celent.

"They are clearly in trouble," he said. "I don't know if we knew how bad things actually were even two weeks ago."

AmEx is the third financial company to convert to a bank holding company since the global credit crunch heightened in mid-September. Goldman Sachs and Morgan Stanley, Wall Street's last two remaining stand-alone investment banks, converted to bank holding companies a week after Lehman Brothers filed for bankruptcy.

- CNN Money

Seylan Merchant Leasing  - 'BB+(lka)'

Fitch Ratings Lanka has affirmed Seylan Merchant Leasing PLC's (SML) National Long-term rating at 'BB+(lka)'. The Outlook is Stable.

SML's rating reflects its modest financial profile, short operating history and small asset base. The rating also factors in the implied support assumed to be available from its ultimate parent, Seylan Bank PLC (SB, 'BBB+(lka)'/ Stable), Fitch said in a statement.

In February 2007, SML obtained a license to operate as a Registered Finance Company, enabling it to raise fixed and savings deposits from the public. As a result, deposits increased to 57% of the funding base at FYE07. Funding from borrowings decreased to 19% at FYE07 from 75% at FYE06, mainly through the conversion of a majority of promissory notes - hitherto the main source of funding - to deposits. The company has satisfied the statutory liquid assets requirement on deposits since May 2007.

SML's portfolio contracted by 2.6% in FY07 as challenging economic conditions prompted the company to reduce growth. Leases dominated its portfolio at 96% at FYE07, contrary to the growth in hire purchase observed throughout industry. The company's profitability in terms of ROA decreased to 1.8% in FY07 from 2.3% in FY06, which was below the sector's 2.3%, due to higher interest costs and operating expenses.

The gross NPL ratio (NPLs are defined by Fitch Ratings as advances in arrears for more than three months) increased to 16.8% at FYE07 from 9.6% at FYE06.

However, the ratio improved to about 13.6% at Q308 due to enhanced recovery efforts and infrastructure implemented in Q108 (13.8% for the sector at June 2008). Since 50% or more of NPLs fall into the three- to- six- months in arrears category, the ratio is more favourable at the six-month regulatory threshold. Consequently, at the six-month regulatory threshold, the gross NPL ratio stood at 7.1% at FYE07 and 9.6% at Q308 (5.1% for the sector at June 2008).

SML's capital base of LKR375m exceeded the minimum capital requirement of LKR200m; its core and total capital adequacy ratios of 20.03%, stood above the minimum 5% and 10% thresholds, respectively, at FYE07. Equity/assets decreased to 18% at FYE07 from 19.2% at FYE06, affected by a dividend payout of 65%. The company's solvency measured by net NPL/equity weakened to 67% at FYE07 from 37.6% at FYE06, but improved to about 51.6% at Q308 (54.1% for the sector at June 2008).

HSBC educates students on environmental conservation

HSBC CEO, Nick A. Nicolaou together with senior management and staff, joined students of the Thirivanaketiya Vidyalaya, Ratnapura recently in a special clean up and tree planting project as part of the bank's sponsored environment programme, conducted by Field Ornithology Group of Sri Lanka (FOGSL) at the school.

The programme was aimed at educating students on the importance of environmental conservation through planting of trees and keeping their surroundings clean, to build a sustainable future.

Plants were carefully selected with the intention of reducing erosion and surface run off, and were scientifically named to help students refer to them correctly. These plants included Sera (lemon grass), Savandara, Idda, Jasmine, Narang, Brinjals and Long Beans.

Quadruple your money in 10 years

The State Mortgage and Investment Bank has introduced a novel long term fixed deposit extending up to 10 years with a guaranteed fixed interest rate during the tenure of the deposit. The 10-year 'Dureksha' fixed deposit gives customers an interest rate of 30% per annum payable on maturity.

Dureksha guarantees depositors a constant and better return on deposits than on short term deposits and is depositor friendly and flexible.

Depending on depositor needs it can be tailor made for shorter periods, subject to changes in the interest rate,and loans of up to 90% can be obtained against the deposit. What's more Dureksha can be opened with as little as Rs. 15,000.

In an era of banks springing up at every corner, the State Mortgage and Investment Bank holds a distinctive aura second to none. As an establishment that is officially recognised with a parliament approved bill and full government authorisation and patronage, the State Mortgage and Investment Bank comes with a stamp of reassurance and security to hold an almost sacred place in the hearts of the people.

Massive growth of savings

It is this generous faith that led the State Mortgage and Investment Bank to make way to payas high as 20% for fixed deposits of one year duration, becoming the highest interest provider and the first and only bank to experience such a massive growth of savings funds within a very short period.

State Mortgage and Investment Bank has always believed in the motto of 'saving to become strong in the future' and one of its regular accounts, 'Saubhagya' with a 10% interest rate was established to instil this concept to all citizens while further encouraging their participation with swift and efficient services, to become one of the most valued financial establishments of this calibre in this era.

Speed loans

Evolving beyond narrow boundaries of personal gain to execute its duties as a responsible corporate citizen, the bank has conjured up a pathway for struggling citizens to get loans without the slightest delay with minimum documentation required by opening up the 'Speed Loan' scheme that provides easy access to secure their monetary needs with the assurances of security and trustworthiness only associated with a state bank.

'Pahan Piyasa' is yet another innovative loan scheme enabling the purchase or construction of a home of your own with flexible payment conditions. This has seen customers flocking around the bank with greater confidence and eagerness.

Novel concepts that are tailor made to the requirements of different communities are areas in which the State Mortgage Bank is specialised in.

 Loans for plantation workers

The Shrama Abhimani and Swa Shakthi are two appealing methods of loan schemes that are the best examples as they have focused on commonly neglected communities like plantation workers who are thoroughly deprived of financial facilities from elsewhere. They were empowered to obtain loans againsttheir EPF funds. The bank provides these loans in just two days.

In executing its noble and useful task of providing the means of a shelter of their own for an entire nation the State Mortgage Bank has seen decades go by as it earned the unwavering faith and gratitude of many who owe their precious homes to the generosity of the bank.

The ever-vigilant bank will go on evolving, incorporating to its portfolio further services that can better the lives of the nation via loan facilities, savings accounts and other financial means possible.

This resolution includes extending its network of branches to every district in the country and broadening its capabilities to focus on the underprivileged civilians in war torn areas with a view to uplifting their lives by supporting agricultural as well as small business ventures by providing easy payment loan schemes.

With novel and innovative ideas for housing loans taking centre stage and a skilful panel of professionals attending to the needs of a nation, the State Mortgage and Investment Bank hopes to widen its horizons with a futuristic five year protocol while enhancing their well earned distinction as the bank the nation can lean on without reserve.

Community credit boosts poorest families

Many impoverished tsunami-affected families are now taking advantage of a micro-finance system arranged by the Red Cross Red Crescent.

In the four years since the tsunami struck, most of the affected families along Sri Lanka's coastline have received some form of help to rebuild their homes and restore their livelihoods.

However, it is not uncommon to find that humanitarian assistance programmes have failed to bring lasting benefits to some of the poorest and most marginalised families. One of the key obstacles has been gaining access to loans and financial services via the commercial banking sector.

The International Federation of Red Cross and Red Crescent Societies (IFRC) and Sri Lanka Red Cross Society have stepped in to help some of these families via a partnership with SANASA, a respected Micro Finance Institution (MFI) cooperative, with more than 800,000 members and 25 years of experience in Sri Lanka.

Poorest

A four-year pilot project is beginning in the southern district of Matara where 750 of the poorest families in the district will be provided with access to SANASA's micro-finance services. Backed by the Swedish and Belgian Red Cross societies, the project aims to strengthen, diversify and protect livelihoods in a way that is sustainable over the long term.

As well as improving the socio-economic and political status of these households within their communities, the project will also serve to build social unity between the host communities and families that have been resettled.

Most of the selected households are currently over-reliant on very unpredictable sources of income such as seasonal agriculture, fishing and daily labour. Rising costs of basic commodities and soaring inflation have meant their economic security has become increasingly precarious.

"These families have fragile coping mechanisms and need better financial security. By reducing the barriers that prevent them accessing credit and financial services we are helping to reduce the risks they face in the future," explains Chairman, International Red Cross and Red Crescent Movement Task Force, Tissa Abeywickrama.

Repayments

Micro-finance institutions traditionally specialise in group-lending. When a group in the community takes out a loan, peer pressure between the members serves as encouragement to ensure that individual repayments are made on schedule. Quite often the poorest families are excluded as they are considered to be too high risk.

The Red Cross Red Crescent negotiated a broad risk reduction package with SANASA. Social mobilisers will help each household to gain a better understanding of what SANASA membership means and what services are available. General awareness raising and training on basic finances such as savings, debt, and household cash flow will also be given.

The project will provide six months' compulsory savings to each family, the purchase of SANASA shares and any admission fees.

According to Kumari Madurangi, manager at a local branch of the SANASA community bank, people's attitudes towards bank savings accounts are changing.

Account

"Earlier villagers who wouldn't even deposit Rs.100  into an account are now saving money with the bank. If people are paid in cash there is always the temptation to spend everything but if payment is made into a bank account, they will always leave a little bit behind when they withdraw funds."

Each household will be supported with training from the SANASA Education Campus that is intended to strengthen either the main or a secondary income to the household and SANASA Development Bank loans will be offered with lower rates of interest (eight per cent per annum fixed for the first three years compared to average interest rates of around 20 per cent).

Another safeguard against future disasters is the provision of a SANASA insurance bundle for a five year period that provides cover for loss or damage to household or livelihoods equipment, funeral expenses, accidental death and illness including medical costs relating to the head of the household.

Motivation

Each household has to prove their own motivation and commitment to the scheme by meeting the membership requirements of the cooperative. This means attending monthly meetings and maintaining compulsory savings. Only then can they access further services.

"Teaming up on a project of this scope with an established micro finance institute is a new departure for the Red Cross Red Crescent. The project offers a truly holistic package that includes everything from training to credit and insurance," explains Emma Delo, IFRC livelihoods coordinator.

"By subsidising the micro-finance services for the first few years, each of the households in the project will become stronger and more able to access other financial services under their own right."

- Patrick Fuller, IFRC

Supreme Current Account - A tribute from Sampath Bank

Sampath Bank has introduced the Sampath Supreme Current Account to their long standing customers who have been maintaining an unblemished financial record during the past decade of banking with Sampath Bank.

This product offers a host of special benefits and customised cheque books for the customers who are eligible under this scheme. Nearly 6000 customers from all over the island have been identified for the initial offering by the bank.

The product will act as a value addition to the customer's financial standing and proven track record in financial transactions and serve as a recommendation from the bank on the customer's personal financial credibility.

Two new coins for EPF 50th anniversary

The Central Bank of Sri Lanka will issue two commemorative coins in the denominations of Rs.1000 and Rs. 2 to mark the 50th anniversary of the Employees Provident Fund (EPF). The EPF was established under Act No. 15 of 1958 and is in operation with effect from June 1958. The EPF completed 50 years of operation in June, 2008.

The Rs 1000 coin was issued to the public on November 14 at the Central Bank Currency Museum at Sri Jayawardhanapura Mawatha, Rajagiriya, at  the Central Bank Money Museum located at Stage 1, New Town, Anuradhapura, Central Bank regional offices at Anagarika Dharmapala Mawatha, Matara and Vidyala Place, Matale.

The Rs 2 coin is a circulation standard coin and will be issued in to circulation in due course, the Central Bank said in a press release.

The Rs 1000 coin has been minted in Nickel Plated Steel (Brilliant Uncirculated type) and will be issued in a transparent plastic capsule. The coin is round in shape with a diameter of 28.5 mm and 7 grams in weight.

The obverse image of the coin illustrates the security and protection offered by the EPF for its members, symbolised by two upholding palms, the Central Bank said. A tea plucker, a garment factory employee and an office employee, depict three industrial sectors in the economy viz Agriculture, Industry and Services. 50 in large numerals appear on the top centre symbolising the Golden Jubilee of the EPF. The words 'EMPLOYEES' PROVIDENT FUND' in Sinhala, Tamil and English appear on the periphery and the years 1958 - 2008 appear at the bottom centre of the coin.

The reverse depicts the face value of the coin '1000' in large numerals while the word 'RUPEES' in Sinhala, Tamil and English appear just below the face value. The words 'Sri Lanka' in Sinhala appear at the top centre and in Tamil and English languages at the periphery of the coin. The year 2008 is depicted at the bottom centre. 

A limited issue of 1,200 coins will be issued in to circulation and a coin will be sold at a price of Rs. 1,200 each.

Rupees 2 coin

The coin has been minted in nickel plated steel with a diameter of 28.5 mm and 7 grams in weight. It is identical in size and shape to the existing Rs. 2 coin, and will be circulated along with the existing Rs. 2 coin.

The obverse of the coin is the same as in the Rs. 1000 Nickel Plated Steel Brilliant Uncirculated type coin.

The reverse depicts the legal tender value of the coin, Rs.2, in large numerals and in words in Sinhala, Tamil and English appear just below the face value. The words Sri Lanka appear at the top centre and in Tamil and English on the periphery of the coin. The year 2008 is depicted at the bottom centre.

Message of the Honorary Consul General of the Republic of Latvia

Latvia's light is its people

Dear Friends of Latvia,

I greet you on this most significant day for Latvia, because it was the 18th November, 1918 when the newly independent state was born on the coast of the Baltic Sea in the very heart of Europe.

Latvia marks today 90 years of independence, which was interrupted from 1940 for 50 years during the occupation.

A special people's campaign has been launched on this occasion under the topic "Bridges of Light." Latvia's light is its people - those who are in Latvia as well as those abroad and all the friends of our country. The people of Latvia gathered on bridges and lit a light for themselves and their Latvia - a light, which began at the lighthouse on the Baltic Sea coast and travelled through the country, uniting the people of all counties and their positive thoughts.

Unity is one of the priorities of our country as people from diverse ethnic and religious backgrounds live in harmony in Latvia. This is a major accomplishment of the Republic and a reflection of the democratic values that is its basis.

The 'Bridges of Light' are also built to link up with other countries and it was the generous donations of the Latvian people which helped to reconstruct pre-schools in tsunami affected areas of Sri Lanka. A further sign of the link between Sri Lanka and Latvia is shown by the establishment of an inter parliamentary cooperation group on 11th September this year. This group is planning to visit Sri Lanka in 2009 together with a high level business delegation.

Please join me on this day in wishing both Sri Lanka and Latvia a bright, peaceful, prosperous and happy future.

The President of Latvia

Born in Riga, Latvia, on March 22, 1955, President Valdis Zatlers went to Riga Secondary School in Latvia, and studied Specialty of Physician at Riga University of Medicine. University Studies at Yale and Syracuse University in USA in 1991 followed. He served as a Medical Service Officer in 1996 and worked as a traumatologist - orthopaedist Riga Hospital and was the director and board chairman, Hospital of Traumatology & Orthopaedics from 1998 to 2004. 

From then onward he was a coordinator from the Latvian side in a Swiss Confederation Assistance Project. His international professional activities include lectures on knee joint end prosthetics and bone tissue transplantation in Finland, Estonia, Lithuania, Poland, Slovakia, Hungary and Russia from 2004 to 2007. Zatlers was a participant of the international research on knee joint end prosthetics in 2002 and member of the International  Society of Arthroscopy, knee surgery and orthopedic sports medicine (ISACOS) from 1993 to date.

He was elected President of the Republic of Latvia in July 2007, and a board member of the Latvian Popular Front. He received the Award for Three-Star Order and Fourth Class  and from International Arthroscopy Association (IAA) for the largest contribution into the development of arthroscopy in emerging countries.

Latvia in the driving seat of Europe

Latvia marks its 90th anniversary on November 18, but the many activities and events devoted to this banner birthday year have been going on around the country since May. Cities, regions and communities in all parts of Latvia have been organizing special festivals, concerts, exhibits and conferences. New art, films, music and books have been produced to honour Latvia's 90th anniversary.

The unifying element in all the 90th anniversary events is light. The slogan of the jubilee - 'Lights on for Latvia' - means to get fired up about the things one cares about.

Reforms implemented in Latvia and integration in the EU have left a positive impact on economic development of the country. Latvia has shown the highest economic growth rates in the EU. Since 2001 the average annual growth of Gross Domestic Product in Latvia was 8.1%, in 2005 GDP increased even faster by 10.2%. The rapid economic growth of Latvia continues todate. The high growth rates are achieved due to stable dynamics of domestic demand and increase in exports.

The biggest contribution to the growth in recent years has been made by service sectors. Increase in domestic demand especially promotes development of trade, hotels and restaurants, which in total has grown by 12% on average every year since 2001. Financial intermediation and real estate transactions, rent, computer services and other commercial services have also grown rapidly.

The dynamics of domestic demand is steady and ensured by the growth of income, stability of the financial system, expansion of credit opportunities, accession to NATO and EU, and formation of positive future expectations. It is expected that increased household income and spread of consumer loans will foster further growth of domestic trade (especially non-food consumer goods) and other market services. Big opportunities for growth lie ahead for the tourism sector that has developed fast in the recent years.

Manufacturing also contributes substantially to the growth. In the period since 2001 output of manufacturing has grown by 7% on average every year, which is almost at the same level as the average growth of national economy. The biggest contribution to industrial growth was made by wood industry, machine building and metalwork production.

Growth rates have been high in production of textile articles, chemical industry, and production of electrical machines and appliances. The rapid growth of these sectors was mainly due to expansion of export opportunities.

Latvia's accession to the EU ensures more equal competition opportunities for farmers on the EU internal market, while the support from EU funds facilitates modernisation of agriculture and diversification of agricultural activities.

Rapid rise of investment has a favourable influence on development of construction. In the period of 2001-2005, output in construction has grown by 11.9% on average every year. The output grew by 15.5% in 2005 and by over 14% in 2006. Construction of streets and roads, residential and commercial buildings, hotels, industrial and other projects has increased dramatically. The construction sector is expected to maintain high development rates due to development of mortgage lending, increased economic activity and investment as well as implementation of projects financed from EU funds.

Transit services are important for the Latvian national economy and constitute approximately 15% of the revenues from Latvian exports of goods and services or about 5% of GDP. Although transit services grow by volume, their share in the national economy in general and in the transport and communications sector decreases.

Latvia helping to shape 21st century

Today's Latvia is positioned to help the new Europe realise one of the most promising periods in its history.

Moving into its second decade of renewed independence, Latvia looks forward to an increasingly prominent role in the new Europe. By working together with the EU and NATO, Latvia is helping shape the 21st century.

Latvia today is renewing the old, creating the new and proudly displaying a revitalised national presence on the European scene. The rest of the world is rediscovering Latvia as well. It is discovering a country that has been a sovereign state since 1918, but a national state of mind for centuries. A country that survived two World Wars and 50 years behind the Iron Curtain, and is now even more committed to the principles of freedom, democracy and international cooperation.

A country with a language, culture and attitude all its own, yet with a national identity shaped by the surrounding dynamic Northern European region and woven through with diverse historical influences. Latvia is a Baltic country, a Baltic Sea country, a European country. In 2004 it became a NATO and EU country and is actively developing its prominent new role in a rapidly globalising world community.

Latvia is a keystone of Northern Europe's Baltic Sea region. A country of 2.3 million people who are experiencing once again what it means to live, work and raise their families in a natural environment they can shape themselves. It is a place where the emerging generation of national, economic, social and cultural leaders has real reasons to be optimistic about its future. A future where Latvia is free to preserve, enhance and protect its very special place in the world.

Through out its history Latvia has enjoyed the economic advantages of its strategic baltic sea location on major trading routes between north and south, east and west.

With the restoration of independence in the early '90s Latvian governments moved quickly to restore a free market economy, encourage privatisation, stabilise the currency and diversify import and export flow. As a result, Latvia rapidly emerged as one of the economic success stories of the post Cold War period. Today, as a full member both of NATO and the European Union, Latvia has one of the most dynamic and fastest-growing economies in all of Europe.

Latvia's highly successful price and trade liberalisation, small and large-scale privatisation and financial sector reforms have resulted in an economy that has grown by an average of 6.4% yearly since 1995. This has come about through a liberal approach toward economic policy under a rigorous macroeconomic framework.

 Market mechanisms were used to obtain the best possible allocation of resources, new laws were written to promote economic development, and new institutions were created to assure a transparent system of civil justice.

From its inception the Latvian currency, the lat, has been one of the most stable currencies in Europe. In 2005, after joining the EU and developing a strategy to join the European Monetary Union, the lat was pegged to the euro.

Integration into the EU has been just one step in the process of an economic transformation that has been driven by two underlying forces: structural reforms and the removal of barriers to trade and the movement of capital. Upon joining the EU, Latvia's internal market skyrocketed from 2.3 million to 450 million. This rapid expansion of the internal market has enabled the government to create a level playing field for all companies, boosting competitiveness in all sectors of the economy.

Latvia's financial system has been built on sound macroeconomic fundamentals, a highly successful monetary policy and a firm commitment to fiscal conservatism. This has enabled Latvia to meet EU standards and ensure all the modern financial instruments necessary to operate in a global economy. More importantly, it has made Latvia extremely competitive at all levels of international business.

A tradition of democracy

The Republic of Latvia was established as a parliamentary democracy in 1918, and elected four Saeimas (parliaments) before the onset of the Second World War. It was a member of the League of Nations and a visible part of Europe's political and cultural life. By the 1930s it too was affected by pre-war Europe's political and social turmoil, yet achieved a strong economy and a prosperous standard of living comparable to its Baltic Sea neighbours, Finland and Denmark.

Because of its key position in the important Baltic Sea region, the Soviet Union occupied Latvia, and its strategic capital of RŒga in 1940. It was illegally annexed to the USSR, where it remained a captive nation and de facto Soviet republic for 50 years.

On 4 May 1990 - 50 years after the Soviet seizure of Latvia - the new Supreme Council voted to begin the political process of removing Soviet rule and restoring full independence to Latvia. The Soviet government in Moscow refused to recognise this declaration, and in 1991 tried to suppress the pro-independence government with armed force. Among the casualties were some of Latvia's best-known journalists and filmmakers.

In response, the people of Latvia initiated a massive campaign of passive resistance and organized even-larger peaceful demonstrations, demanding an end to the Soviet occupation and full restoration of national independence. During the 'Days of the Barricades' in early 1991, tens of thousands of farmers, workers and patriots from around the country came to RŒga to build barricades around state buildings and to defend the Government and Parliament from further Soviet attacks.

On 3 March 3 1991, 87% of all residents of Latvia (ethnic Latvians, Russians, Ukrainians, Belarusians and others) participated in a referendum on independence, and 73%voted in favour. Since ethnic Latvians represented just 53% of the total population at the time, the high vote among all residents indicated that a large proportion of other ethnic groups had voted with a majority of Latvians to restore national independence.

On 21 August 1991, following the collapse of Soviet Union, the Latvian Supreme Council adopted a resolution for the full restoration of Latvian independence. In late 1992 the Soviet-era Supreme Council effectively abolished itself by proclaiming new elections for the first post-independence Latvian parliament, to be held on 5-6 June 1993. The elections led to the convening of the 5th Saeima, continuing a link with the parliamentary bodies of pre-war Latvia. The 5th Saeima elected Guntis Ulmanis as President of the Republic of Latvia in 1993.

Subsequent parliamentary elections were held in 1995, 1998 and 2002. President Guntis Ulmanis was re-elected to a second term in 1996; Dr. Vaira VŒ¡e-Freiberga was elected President by the 7th Saeima in 1999 and re-elected by the 8th Saeima in 2003. Since 1999, parliamentary and presidential elections are held every four years.

In Latvia's parliamentary democracy, the president appoints a prime minister (who must be approved by the Saeima) and signs laws into power. The president can send legislation back for revision and amendment. Although President Ulmanis and VŒ¡e-Freiberga have used this power, both have primarily used their offices to promote Latvia's foreign policy objectives and have been active and influential in international diplomacy, particularly in achieving Latvia's membership in NATO and the EU.

An ancient culture in a dynamic European setting

The contemporary Latvian poet Imants Ziedonis has described culture as something 'which is, lives, wants to live and flourish.' In Latvia, this spiritual desire to live and flourish developed a distinctive national identity over a period of 3,000 years.

Like other cultures, Latvians developed traditions, customs, decorative designs and a world view that were uniquely their own, closely tied to the Northern European land that they depended on for survival. Ironically, the period when the Latvian language and culture began to coalesec was also the period when it faced its greatest threat, for the 13th century marked the beginning of a series of foreign invasions and occupations.

German, Swedish and Polish warriors and traders brought European culture to Latvia, at times threatening the existence of Latvian culture, at times strengthening it through adversity, and eventually co-existing alongside it.

Latvian culture was both preserved and manifested in folklore that displayed the collective wisdom and beliefs of the Latvians' ancient tribal ancestors. A  uniquely Latvian cultural phenomenon, dainas or folk songs, date back well over one thousand years. Rich with tradition, literature and symbolism, the dainas serve as an oral record of Latvian culture.

Their subjects encompass the entire course of human life, from childbirth, youth, marriage and work, to old age and death. By the 19th century, more than 1.2 million texts and 30,000 melodies had been identified. In the 21st century, these songs continue to live as an essential part of Latvian contemporary holiday celebrations and social life.

This powerful tradition of song played a central role in Latvia's National Awakening in the second half of the 19th century and led to the first Latvian Song Festival in 1873. The Song Festival, involving massed choirs of tens of thousands of participants was a central focus of national identity during Latvia's years of independence from 1918 until 1940, survived through the Soviet occupation, and spearheaded Latvia's 'singing revolution' in the late 1980s.

Latvian traditions still play a central role in Latvian identity today. This uniquely 'Latvian' culture is woven through literature, music, theatre and the visual arts. Yet the legacy of foreign rule has also given Latvia a second, European culture. As a distinctive Latvian identity emerged during the National Awakening in the 19th century, so did an appreciation for the achievements of other cultures.

Latvians enthusiastically embraced all the classical arts: literature, painting, theatre, symphonic music, architecture, opera, ballet and film. Latvia's National Opera - the 'White House' of RŒga - was one of the first buildings to be renovated after the restoration of independence in 1991 and is the centrepiece of a flourishing cultural life.

The rapid renovation of the centre of RŒga has revealed hundreds of examples of distinctive Jugendstil architecture, making RŒga the Jugendstil capital of the world. Interestingly enough, over 60% of the buildings displaying this very European Art Nouveau style of the turn-of-the-century, were designed by Latvian architects. In the 1920s and 30s Latvian painters, known as the RŒga Group also established an international following.

One hundred years ago RŒga was known as the 'Paris of the North.' As it moves into the 21st century, RŒga is blossoming as a creative centre for the arts once again.

Local and visiting art exhibits and the opera, theatre and ballet compete with nightclubs and discos that rock with jazz, blues and the latest electronic fusions of hip hop and dance music. After ten years of independence, RŒga is now called 'The Second City that Never Sleeps' and 'The Hottest City in the North.'

The vibrancy of cultural life in Latvia is a product of talented artists, performers and writers who honed and developed their skills in cities and regions throughout Latvia. Many continue to live and work in their hometowns or rural settings, blending the influences of traditional roots with the modern, cosmopolitan influences of the nation's capital.

Riga - the heart of Europe

Riga - the capital of the Republic of Latvia - is an ancient and beautiful European city. The site on which Riga stands was first mentioned in writing in 1198 A.D., in the chronicle compiled by the Latvian Indrikis.

In the 11th and 12th centuries Liv and ancient Latvian tribesmen camped in the area, but in the early 13th century, development of a medieval city began. The site on which Riga was easily accessible from the sea. It lays at the site where the Riga River emptied into the Daugava River, thus creating a natural harbour. It was a very appropriate place for German tradesmen seeking new markets in the East.

The site also attracted western European crusaders in search of new lands to conquer. Over the years Riga became an important port city, a center for trade and manufacturing. As a fort, Riga had great military importance. The governance of the city has changed numerous times over the years. From the 13th to the 16th century it was the most important city in Livonia. From the late 16th through the 17th century it belonged first to Poland, then to Sweden. In the 18th century it fell under the control of the Russian empire. Today Riga is the capital of the independent Republic of Latvia.

LATVIA AT A GLANCE

The coat of arms combines symbols of Latvian national statehood (three stars, the sea and the sun) as well as ancient historical districts: Kurzeme and Zemgale are depicted by a lion, Vidzeme and Latgale are depicted by the legendary winged silver creature with an eagle's head, a griffin.

Written records of the red-white-red Latvian flag have existed since the second half of the 13th century. Therefore Latvian flag is among the oldest flags of the world.. The red colour of the Latvian flag is a particular dark red tone that is referred to as "Latvian red" in the rest of the world.

Full name: Republic of Latvia, abbreviated: Latvia (Latvian: Latvija, German: Lettland, French: Lettonie). The name "Latvia" originates from an ancient Baltic (Indo-European) tribe - the Latgalians (in Latvian: latgali)

Sovereignty: The Republic of Latvia was founded on November18, 1918. It has been continuously recognized as a state by other countries since 1920, despite occupations by the Soviet Union (1940-1941, 1945-1991) and Nazi Germany (1941-1945).

Type of government: democratic, parliamentary republic. Legislative power is in the hands of a single chamber parliament - the Saeima (100 deputies; elections once in 4 years).

Ethnic composition: Population 2,4 million of which 57.6% Latvian, 29.6% Russian, 4.1% Byelorussian, 2.7% Ukrainian, 2.5% Polish. The ethnic mix of population is the result of massive post-war immigration.

Latvian Symbols

National Bird

The Latvian national bird is the balta cielava or white wagtail (Motacilla alba). This slender and graceful bird is often found in Latvia from April till October. The white wagtail can usually be seen running briskly along the ground, wagging its tail up and down.

This bird usually nests in the rafters and eaves of buildings, woodpiles, stone piles, and birdhouses. During the winter it migrates to Southern Europe and North Africa. The white wagtail was affirmed the national bird of Latvia in 1960 by the International Bird Protection Council.

National Insect

The Latvian national insect is the two-spot ladybird (Adalia bipunctata). The two-spot ladybird is familiar as a useful insect that protects plants from parasites. Although rather slow by nature, it can defend itself well. Due to its appearance and behaviour it is widely known and liked throughout Latvia. The insect's Latvian name - marite - is a synonym for the ancient Latvian goddess Mara, who embodies the power of the earth. The two-spot ladybird was designated the national insect of Latvia by the Entomological Society of Latvia.

National Flower

The Latvian national flower is theÿ pipene or daisy (Leucanthemum vulgare) earlier also known as (Chrysanthemum leucanthemum), which also grows here in the wild. In Latvian conditions the common or wild daisy blossoms from June till September. Daisies are a very popular flower and are often used in flower arrangements or given as gifts.

National Tree

The linden, or lime tree (Tilia cordata) Latvian: (liepa) and the oak (Quercus robur) Latvian: (ozols) are considered the national trees of Latvia. The oak and the linden tree are characteristic elements of the Latvian landscape. Both trees are still widely used for medicinal purposes.ÿ Medicinal infusions are made of linden blossoms as well as oak bark. Latvian dainas (folk songs) often reflect ethical and moral concepts of earlier times. Amongst other trees, these folk songs most often mention the oak and linden tree.

National Precious Stone

Amber has long been viewed as a precious stone associated with the eastern shores of the Baltic Sea. Latvians themselves have occasionally referred to the Baltic Sea as the Amber Sea (Dzintarjura), reinforcing the symbolic importance of Amber (dzintars) in Latvian culture and history.

Unlike other precious and semi-precious stones which are formed through inorganic chemical processes, Baltic Amber (Succinite) is formed from organic elements - fossilised pine resin. For this reason, amber absorbs body heat and is easy to shape.

In ancient times Latvian territory was known as a source for amber. Amber from the Baltic Sea coast was valued as component for jewellery and was used for barter in Ancient Egypt, Assyria, Greece and the Roman Empire.

At times it was considered even more valuable than gold. Just as in the past, amber today is most commonly used in jewellery. Amber has traditionally been used to create amulets, pendants, broaches, buttons, necklaces and intricate pieces of decorative jewellery. Amber has also been used for pharmaceutical purposes, since it contains succinic acid, which is considered to have unique medicinal properties.  

 National River

The Daugava River is considered the Latvian national river. The Daugava is the largest river that flows through Latvia (total length 1005 km, of these 352 km flow through Latvian territory). Known as the "river of fate" or "mother of rivers", the Daugava has served as an ancient trade route linking the Baltic Sea to the Black Sea, profoundly influencing the flow of Latvian history.

For centuries the Daugava has served as an essential transport artery, means of livelihood, and source of energy. (Latvia's hydroelectric stations are located along the Daugava). Today, as in the past, the Daugava serves as a borderline between distinct Latvian cultural and historical regions, separating Kurzeme and Zemgale from Vidzeme and Latgale.

Freedom Monument

The Freedom monument, or Brivibas piemineklis, in the capital city Riga has become an undisputed symbol of independence. It was built from 1931 until 1935 from donated funds.

The monument is designed by Latvian sculptor Karlis Zale.         At the base of the monument sculptural reliefs illustrate different significant moments in Latvia's history, while the very top displays the symbol of freedom - a woman who embodies the idea of Latvia's sovereignty.

At the foot of the freedom monument there is never a lack of flowers, which are placed here with deep respect for those, who have formed this nation and who have sacrificed their lives in the fight for independence for the good of the nation and its people.