Under the terms of agreement, LPA will sell its 75% holding the state-owned bank, while the European Bank for Reconstruction and Development (EBRD) will retain its 25% share.
Upon completion of transaction, Ripplewood would own 22.4% of the shares, while the remaining 52.6% stake would be held by the co-investors.
According to the terms of the deal, the investors and the EBRD have committed to increase the capital of the bank by €10m.
Latvian Prime Minister Laimdota Straujuma said: "Signing the contract with Ripplewood Advisors and an influential group of international investors will enable Citadele Bank to transform into an industry leader in Latvia.
"It will increase competition in the Latvian financial markets and in addition will elevate overall quality of financial services in the country."
LPA board chairman Vladimirs Loginovs said: "The proposal submitted by the consortium organized by Ripplewood met our criteria including financial stability, reputation and a growth-oriented business strategy.
"The State may discontinue its aid being assured that Citadele will continue to be one of the leading banks in Latvia."
Ripplewood founder Tim Collins said: "We are confident that we can assist Citadele to become one of the leading financial institutions in Latvia and across the Baltic region by delivering unrivalled service quality and product offerings to customers."
Subject to approvals by concerned financial, capital market and banking supervisors, the deal is expected to be closed during the first quarter of 2015.
Image:The Latvian privatization agency signed an agreement with Ripplewood to sell its stake in Citadele Bank for €74m. Photo: stockimages/©2014 FreeDigitalPhotos.net.
