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The competition to take over one of the largest banks in Malta is heating up. Bank of Georgia, which rebranded as Lion Finance in February to distance itself from its home country, has entered the fray. The renamed Georgian lender is now confirmed as the mystery suitor in the protracted sale process, bne IntelliNews can reveal.
The auction has become a subject of intense speculation across Malta. According to a person familiar with the matter, “everyone in Malta is very keen to know their identity,” after months of silence from the auction’s organisers and participants.
HSBC Malta has been on the block for a year, after the parent company decided to quit the market. Amongst the other bidders Ardshinbank has already acquired HSBC’s Armenian branch in November last year.
The other bidders were Hungary’s OTP Bank, Malta’s own APS Bank and a business consortium of local investors, including the Azzopardi Group, Alf Mizzi and Virtu Holdings, alongside Lombard Bank CEO Joe Said local press reports—though all these have since withdrawn, according to bne IntelliNews sources close to the deal. Notably, no Western European institution has submitted a bid.
HSBC first announced its intention to explore a sale of HSBC Malta when it announced a strategic review of its Malta operations in September 2024, noting that its parent, HSBC Holdings, indirectly holding 70.03 % of the Maltese subsidiary, was weighing possible divestment options.
Ardshinbank confident of closing the deal
Ardshinbank confirmed it was bidding for HSBC Malta on July 24, describing itself as “quite confident” about its chances of acquiring the bank, in an interview with The Times of Malta.
“We are currently one of the bidders for the 70% stake in HSBC Malta,” the bank’s deputy chair David Sargsyan told the paper. “We have submitted our offer to them.”
Sargsyan said the bank had been eyeing Malta for some time, seizing the opportunity once HSBC Malta announced its plans to exit the country. The acquisition would be the bank’s first venture outside of Armenia and an entrance into the lucrative EU market.
Karen Safaryan, a billionaire who made his money in Russia in the 1990s, owns 98% of Ardshinbank’s shares. He insists that he has since divested all business assets in Russia already in the early noughties, The Times of Malta reports.
Hungarian bank OTP also declined to submit a bid after meeting similar reputational concerns. Unlike Ardshinbank, OTP has not pulled out of Russia, making it one of the few Western banks still on the market, where it continues to operate a large subsidiary. As reported by S&P Global Market Intelligence, the Russian operations are projected to account for nearly 20% of OTP Group’s profits in 2025, up from 8.2% in 2021, Reuters reported in March. OTP’s Russian business profit surged by 40% in 2024, reaching HUF137 bn ($400mn), with retail loans increasing 80% and deposits rising 70% in Russia.
APS pulled out due to the lack of institutional support, according to reports.
Georgian backsliding
The Bank of Georgia has been an emerging market star, after it was the first Georgian bank to list on the London Stock Exchange (LSE) in 2007, quickly becoming an investor’s darling. In April 2012, the bank, operating under a UK-incorporated holding entity—Bank of Georgia Holdings PLC—completed a premium listing on the Main Market of the London Stock Exchange and entered the FTSE 250 Index
Bank of Georgia rose to prominence during the era of Mikheil Saakashvili’s presidency from January 2004 to November 2013, when Georgia emerged as a poster child for post-Soviet liberal reform, winning plaudits from investors around the world who flocked to Tbilisi.
But things have gone south since then. Saakashvili was succeeded by Georgian Dream, which is de facto controlled by oligarch Bidzina Ivanishvili, a billionaire who also made his money in Russia in the 1990s. Since then the country has drifted back into Russia’s orbit, although it is not thought to be a Russian client state, and the country has been wracked by protests following a controversial general election last November, won by Georgian Dream. Ivanishvili has become increasingly unbalanced, blaming Georgia’s woes on a western “Party of War” last year followed by the decision to pass a Russian-style “foreign agents” law sparking mass protests that are still ongoing.
Lion Finance continues to operate in this decaying climate and is now trying to expand to Malta. As bne IntelliNews reported, the Georgian parent company followed many other banks into Belarus in 2008 during a brief lightening of the repression of the Lukashenko-regime. It launched retail operations in Minsk after taking over the Belarusky Narodny Bank, but that business has soured as well after Belarus supported Russia’s invasion of Ukraine in 2022 and is now under heavy sanctions. Bank of Georgia also owns a subsidiary in Armenia.
Bank of Georgia’s continued ownership of Belarusky Narodny Bank in sanctioned Minsk may cause problems for its bid for the EU-based HSBC Malta and is raising eyebrows within Brussels, particularly given Georgia’s increasingly strained relationship with the European Union. While it has not acted yet, the EU has threatened to impose sanctions on Georgia, unless it repeals the foreign agents law.
The European Parliament has refused to recognise the Georgian government’s legitimacy, calling instead for new elections under international monitoring. Georgia’s EU accession bid has been temporarily suspended in the meantime.
While EU-wide sanctions are still under consideration, some member states have already unilaterally imposed targeted sanctions on Georgian politicians linked to human rights abuses and pro-Russian policies. EU foreign policy chief and former Estonian Prime Minister Kaja Kallas has also threatened to use her “nuclear option” of cancelling Georgia’s Schengen visa-free regime by the end of August if democratic backsliding continues.
“The EU has frozen accession negotiations and placed €120mn in development aid on hold,” the EU Commission said in a recent statement. “These funds are now being redirected to support Georgian civil society and independent media.”
Bank system problems
Compounding Brussels’ unease is the long-standing political interference in Georgia’s banking system. In 2015, the ruling Georgian Dream attempted to strip the central bank of its supervisory powers, a move condemned by the International Monetary Fund (IMF), World Bank, and European Bank for Reconstruction and Development (EBRD) for threatening the independence of financial oversight.
The small Georgian banking sector remains highly concentrated in the hands of just two players. The country’s two largest banks—Bank of Georgia and TBC, another London-listed investors’ darling —hold more than 75% of all loans and nearly 80% of deposits. Critics such as former MP Irakli Kovzanadze argue that such concentration “stifles competition, slows real sector growth, and ultimately harms consumers with high interest rates.”
But the further development of a successful banking business is constrained by Georgia’s small size; it is home to a mere 3.9mn people, hence the interest of its leading banks of opening offices elsewhere to grow their businesses. TBC has also very successfully launched in the much more populous Uzbekistan, where it is growing by leaps and bounds.
For now, the European Commission has made no official comment on Lion Finance’s bid. But should the transaction proceed, it will likely face close scrutiny in both Brussels and Valletta, especially given that the EU remains committed to stricter oversight of foreign investment in critical sectors.
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