PRESS RELEASE 8 JUNE 1998

ON THE VOLUNTARY LIQUIDATION OF EESTI MAAPANK

Today, the Board of Eesti Maapank has informed Eesti Pank of its decision to initiate its voluntary liquidation. Eesti Pank is convinced that the decision made by the Board of Eesti Maapank and its new management has a positive impact on the overall situation of the banking system in Estonia as a whole.

Proceeding from the need to guarantee thorough protection of the interests of the creditors and depositors of Eesti Maapank, Eesti Pank decided to suspend all transactions permitted by Article 5 of the Law on Credit Institutions up to the moment the liquidation decision becomes in force. The respective Eesti Pank President's Decree has been transmitted to Eesti Maapank. In addition, Eesti Pank will establish special supervisory regime to Eesti Maapank.

According to the Law on Credit Institutions, the final decision on voluntary liquidation will be made by the shareholders general meeting of Eesti Maapank on 18 June 1998. This decision will be confirmed by Eesti Pank on the condition that the assets of the bank are adequate for meeting all the legitimate claims of the creditors.

The Government of the Republic and Eesti Pank proceed from the protection of lawful interests of the depositors and creditors in case of each possible scenario. If needed, by the proposal of Eesti Pank to the Government of the Republic, principles of the Deposits Insurance Fund Act adopted by the Parliament could be partially implemented.

Today, Eesti Maapank in cooperation with Price Waterhouse will start auditing the bank in order to fix all claims and liabilities of the bank. Based on that further decisions will be made.

Securities risks taken last year and inappropriate corporate governance became unsolvable for Eesti Maapank. Eesti Pank regards the commencement with the voluntary liquidation by the Board and the new management of Eesti Maapank a decisive and adequate step in solving the problems arisen as a result of the events of last year.

Up to the beginning of June, the central bank had every reason to believe that the owners and the executive management of Eesti Maapank could recapitalize the bank. The central bank also imposed the respective instructions to Eesti Maapank which requirements were to be met by 5 June 1998. Since the necessary funds for meeting the requirements of the law were not found and considering the report of the recently elected management on the financial situation of the bank, the Board of Eesti Maapank decided to proceed from the voluntary liquidation stated in Article 77 Clause 1 of the Law on Credit Institutions.

At the same time, Eesti Pank is convinced that the overall situation in the Estonian banking sector has become much stronger with the elucidation of the situation in Eesti Maapank.

The central bank is positive that the explicit formulation and decisive solution by Eesti Pank and the commercial banks of the problems caused by the rapid development, over-optimistic attitudes and certain management mistakes will create the needed confidence in the future. The commercial banks have become considerably more conservative in their economic activities and are efficiently engaged in the strengthening of corporate governance. The steps taken have no impact on the Estonian monetary system which is based on the currency board principle.

Eesti Pank is convinced that the recent decisions made on the regulation of the banking system have a positive influence also on the attitude of international financial institutions towards the Estonian financial system.