China’s Hualing Group seeks to create third largest bank in Georgia

Chinese conglomerate Hualing Group is strengthening its banking arm and business portfolio in Georgia by creating "a universal bank” that is projected to be the third largest player in the Georgian market.

Hualing Group announced it had already entered into a preliminary agreement with the Societe Generale Group and the European Bank for Reconstruction and Development (EBRD), for the acquisition of Societe Generale’s majority stake in Bank Republic, its Georgian subsidiary.

According to the key transaction terms, Hualing Group would merge Bank Republic with its banking entity Basis Bank to create a universal bank that would expect to be firmly anchored as the number three player in the Georgian market,” read the press release published by Hualing Group.

After the merger, Hualing Group would own the controlling stakes in the new combined bank and have the majority on the Supervisory Board.

Societe Generale Group would own approximately eight percent of the shares in the new combined entity and remain a member of the Supervisory Board.

EBRD would also hold a minority stake of approximately 3.9 percent shares in the new combined entity and also remain a member of the Supervisory Board, as well as a committed financing partner for the Georgian banking market.

The transaction, which was conceived in the backdrop of China’s ‘One Belt, One Road’ strategic initiative, will not only strengthen Hualing Group’s banking operations and promote a more balanced competitive structure in Georgia’s banking sector, but also benefit the bilateral economic and trade relationship between China and Georgia,” read the press release.

[The deal will also] provide full range of quality financial services to inbound Chinese companies as well as local corporate and individual customers,” said Hualing Group.

Hualing Group was considered the largest foreign investor in Georgia. The company mainly operated in the fields of building, managing and renting of trade centers and wholesale markets, as well as real estate, logistics, hotel construction and management, livestock husbandry and meat processing.

The Chinese conglomerate also owned a banking subsidiary in Georgia, JSC Basis Bank and other financial assets in China.

There are 19 commercial banks in Georgia including 17 foreign-controlled banks and one branch of non-resident banks, said the National Bank of Georgia (NBG).