By Mark Dovich
Armenia’s monetary authorities have greenlit the sale of HSBC’s local subsidiary to the country’s biggest bank, putting an end to the London-based financial giant’s nearly three-decade presence in Armenia.
The Central Bank confirmed its “preliminary approval” to Ardshinbank’s purchase of HSBC Armenia in a short statement Tuesday.
Neither Ardshinbank, Armenia’s leading lender, nor HSBC, Europe’s biggest bank, have disclosed the terms of the deal. It leaves Armenia without any commercial lenders controlled by major Western banking groups.
What’s the context?
Ardshinbank’s acquisition of HSBC Armenia comes at a time of rapid change in Armenia’s financial sector and record profitability for the country’s banks.
Russian citizens have moved at least $7.5 billion to Armenia since their country’s full-scale invasion of Ukraine in February 2022, official figures show. Together, Armenia’s banks have together posted more than $1.2 billion in profit since the war began, according to the country’s Union of Banks.
Citing continued “immigration and capital inflows from Russia,” the ratings agency Fitch said in February it expects “Armenian banks’ credit metrics to remain better than historical averages for at least 2024-2025.”
The HSBC sale marks Armenia’s second major bank deal so far this year.
In April, the Bank of Georgia Group, a holding company incorporated in the United Kingdom and listed on the London Stock Exchange’s FTSE 250 Index, purchased Ameriabank, Armenia’s second largest lender, for $303.6 million. Under the terms of the agreement, Ameriabank continues to “operate as a standalone entity” within the Bank of Georgia Group, retaining its own brand name and corporate leadership.
What’s the background?
HSBC first announced its intention to sell off its Armenian subsidiary in February as part of its effort “to redeploy capital from less strategic or low-connectivity businesses into higher-growth opportunities.” The bank had previously indicated it was considering pulling out of as many as a dozen countries in an effort to pivot to Asia.
Prior to the sale, HSBC served some 30,000 customers in Armenia, while Ardshinbank counts more than 375,000 clients. HSBC Armenia reported about $29 million in earnings last year, against Ardshinbank’s roughly $162 million.
In its approval note, the Central Bank did not say why it took months to endorse Ardshinbank’s purchase of HSBC Armenia, even after it agreed to Ameriabank’s sale earlier this year in record time.
Under Armenian law, the Central Bank must sign off on major changes of ownership in commercial banks, as does the Competition Protection Commission, a state-run anti-monopoly watchdog. The Competition Protection Commission approved the sale earlier in June.
In a separate press release, Ardshinbank said Tuesday it expects any outstanding issues to be resolved “in the coming months” and hailed what it called “a significant milestone” toward going public overseas.
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