SovComBank (SCB) will acquire the Home Credit Finance Bank (HCF Bank) in a largely non-cash deal, as 90% of the acquisition will be financed by the additional share issue of SCB, Kommersant daily reports.

As followed by bne IntelliNews, previously only 51% of the deal were planned to be financed by SCB's share issue.

“The change of conditions [to a non-cash deal] will allow for a more effective use of the capital and net profit of both banks for fast growth of Sovcombank group”, SCB representatives told Kommersant. HCF Bank could receive up to RUB33bn in SCB’s newly issued shares (about 1.9bn shares at RUB17.44 per share), valuing the bank at about RUB37bn.

SovComBank was one of the first banks to come under full blocking sanctions upon Russia’s full-scale military invasion of Ukraine. But the bank was also the first to recently extract sanctioned assets under a regulatory loophole provided by the Central Bank of Russia (CBR). 

SovComBank was one of the first banks to come under full blocking sanctions upon Russia’s full-scale military invasion of Ukraine. But the bank was also the first to recently extract sanctioned assets under a regulatory loophole provided by the Central Bank of Russia (CBR). 

In 2023 Sovcombank held an IPO that was not only the first IPO of a Russian bank under full blocking sanctions, but also the first banking IPO since 2015. As followed by bne IntelliNews, an IPO of the bank has been on the agenda since 2012, but has been constantly delayed by takeover deals, the 2014 Crimea annexation crisis and the 2020 pandemic. 

As for the HCF deal, Renaissance Capital analysts commented back in April that “Sovcombank has a track record of efficient and rapid integration of acquired businesses," estimating that "....the merger is expected to allow Sovcombank to additionally increase its retail loan portfolio by 25% and deposits by 20% in 2024, and potentially expand its retail customer base by 1.5 times (by 3mn people).”

The analysts estimated that the deal could add more than RUB10bn to Sovcombank's net profit for 2024, maintaining it at RUB87bn (return on equity of 25%), and view the merger as a positive factor for Sovcombank's share price.