TBC Bank will acquire Societe Generale’s 93.64% stake in Bank Republic for GEL 315 million (EUR 121 million), according to the deal, which is expected to be closed before the end of this year.
70 percent of the transaction amount will be paid in cash and 30 percent in newly issued TBC Bank shares; as a result, Society General said, it would hold “a limited minority stake” in TBC Bank.
TBC Bank, which has been listed on the main market of the London Stock Exchange since June 2014, said that Societe Generale will become a 5.4% shareholder in TBC Bank with a holding period of 1 year, which can be waived by TBC at its discretion.
TBC Bank said it has already entered into preliminary negotiations to acquire the remaining 6.36% stake in Bank Republic, owned by the European Bank for Reconstruction and Development (EBRD).
Societe Generale Group, which entered the Georgian market by purchasing majority stakes in Bank Republic in 2006, said that this operation will “have a very limited impact” on its financial ratios.
TBC Bank said the transaction will make it Georgia’s largest bank, overtaking Bank of Georgia, by both loans and deposits, with its loan market share increasing by 7.3% to 35.7% and the deposit market share increasing by 5.3% to 34.5%.
Bank Republic is the third largest bank in Georgia by total loans and fourth largest by deposits.
“Acquisition of Bank Republic is a critical step in delivering on TBC Bank’s strategy and represents a major step forward in TBC Bank’s ambition to build the leading banking group in Georgia and the broader Caucasus region,” Vakhtang Butskhrikidze, CEO of TBC Bank, said on September 12.
Hualing Group, China’s largest investor in Georgia, was eyeing Bank Republic for expanding its banking arm in Georgia. Hualing Group, which among other assets also owns Basis Bank in Georgia, even announced in early July about reaching a preliminary deal for the acquisition of Bank Republic; but the deal has not been finalized.
Also on September 12, TBC Bank announced about reaching an agreement to buy “selected assets and liabilities” of small Tbilisi-based Progress Bank. The bank is affiliated to Kakha Kaladze, one of the leaders of the GDDG ruling party, who was Georgia’s deputy PM and energy minister before stepping down last week to run for Parliament.
21.71% stake in Progress Bank is held by billionaire ex-PM Bidzina Ivanishvili.
“The acquisition consists of GEL 108 million of assets and GEL 108 million of liabilities,” TBC Bank said. “The transaction is immaterial from a TBC Bank perspective as it accounts for only 1.6% of gross assets, excluding the impact of the Bank Republic acquisition.”