Businessman Dermot Desmond has bought one third of a Latvian bank, Reitumu Bank, with assets of €1 billion.

The bank is Latvia's fourth biggest and at the end of June - the first half of its financial year - had assets of 726 million Latvian lats (€1.05 billion). The total amount on deposit at that time was the equivalent of about €900 million.

Rietumu claims to be one of the most profitable banks in the Baltic region and expects pretax earnings to top €28 million this year. Its pretax profit last year was €23.5 million. Total income - the cash it generated from interest, fees and other sources - was just over €45 million.

Mr Desmond bought shares from a number of its existing stockholders, including one of its founders, US financier and former Citigroup executive Tony Levin.

Neither Mr Desmond nor the bank would disclose the price he paid for the stake yesterday. Its vice president, Aleksandrs Kalinovskis, claimed that it was probably the biggest investment in banking in the Baltic region so far this year. Analysts said yesterday Mr Desmond could have invested up to €300 million given the value of the bank's assets and the strength of its returns.

The bank is a private company, but publishes yearly and half-yearly accounts. The figures show that Rietumu has delivered healthy returns for investors over the last four years.

Since 2001, after-tax returns on the cash invested by shareholders have varied between 30 per cent and 43 per cent.

Last year, it generated a return of 38.5 per cent. Earnings per share last year were €1.01, a 75 per cent increase on 2003.

In a statement Mr Desmond indicated that he was offered the opportunity to invest in the bank by its chairman, Michael J Bourke, who he described as a former colleague.

"I like what he has done with the bank," he said. "I am impressed by Latvia's rapid pace of development as a financial centre for the region."

Mr Desmond is one this country's most active investors, and has shares in a range of businesses, including Scottish soccer club Celtic FC, betting exchange Betdaq and health insurer Vivas.

He will join Reitumu's supervisory board, which is being expanded from three members to six. He does not have any immediate plans to increase his stake in the bank.

Reitumu is active mainly at the business and investment banking market and has branches throughout Latvia, the Baltic states and parts of the Commonwealth of Independent States (CIS), including Russia and Belarus. It has offices in Moscow, Prague and St Petersburg.

Mr Levin, who was then working for Diners' Club and Citigroup, founded the bank after being involved in a study of the Baltic region's financial markets.

It was build along the lines of a western corporate bank (Reitumu means "western"), and operates on those principals.

By 1995, it had expanded to be Latvia's fifth-largest financial institution. Mr Bourke took over as president in 1997. He had spent the previous five years working as a consultant to the Bank of Latvia.

It passed a major milestone in 2000 when it took over a smaller rival, Suales Bank, which gave it a developed network of payments cards and ATM systems across the Baltic region.

It has been accepting deposits in euros as well as the local currency since 1999 and has partnerships with a number of western institutions.

In 2002, it collaborated with the European Bank of Reconstruction and Development in offering €5 million worth of special loans to local small and medium-sized businesses.