The FINANCIAL — TBC Bank has acquired Societe Generale’s 93.64% stake in Bank Republic for GEL 315 million (EUR 121 million). The new deal has put TBC Bank in first place on the Georgian market in terms of its deposit and credit portfolio. The new leader of the Georgian banking sector believes that its expansion will increase its efficiency as it continues offering better conditions to its customers, which already number 2 million.
“We have been working on this transaction for over a year and a half. The segment and the structure of Bank Republic has always been close to that of TBC Bank. Bank Republic employs a high level of professionals. After the merger they will further strengthen the team of TBC Bank. In Georgia, where the population is less than 4 million, it is critical to be a big financial institution and attain large scale operations. So, the deal allows us to increase our efficiency and offer new services, new technologies and better conditions to our customers,” said Vakhtang Butskhrikidze, CEO of TBC Bank.
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%.
70 percent of the transaction amount will be paid in cash and 30 percent in newly-issued TBC Bank shares. As a result, Societe General will own a stake in TBC Bank.
“SocGen is becoming one of the largest shareholders of TBC Bank. Their share will exceed 5%. Due to our agreement with the French side, they consider TBC Bank to be their local partner. Accordingly, all their products will be distributed among Georgian customers via TBC Bank,” said Butskhrikidze.
The transaction is expected to be completed by the end of 2016.
J.P. Morgan is acting as exclusive financial adviser to TBC Bank, and Baker & McKenzie LLP as international legal adviser throughout the acquisition process.
“The TBC Bank management team has extensive integration experience and expertise and we will ensure the smooth integration of the two businesses while remaining committed to delivering the highest level of service to the customers of both institutions,” said Antoine Gabizon, Chief Executive Officer of Bank Republic.
“We are very much looking forward to welcoming Bank Republic employees into TBC Bank and helping to successfully operate and serve the clients of the largest bank in Georgia. We share similar ambitions and together we are excited by the opportunity to grow and develop the combined entity,” said Gabizon.
TBC Bank, which has been listed on the main market of the London Stock Exchange since June 2014, also reached an agreement to buy “selected assets and liabilities” of small Tbilisi-based Progress Bank.
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).
TBC Bank is represented by over 130 branches. Bank Republic has 41. According to Butskhrikidze, the number of branches and, accordingly, number of employees at Bank Republic will not be limited significantly. “Our ambitious plans include further expansion of the branches,” said Butskhrikidze.
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