The Bank of Georgia Group to acquire Armenian Ameriabank for $300mn

The Bank of Georgia Group to acquire Armenian Ameriabank for $300mn
The Bank of Georgia Group says it will buy Armenia's second biggest bank Ameriabank that belongs to billionaire Ruben Vardanyan, who is currently languishing in jail in Baku. / bne IntelliNews
By bne IntelliNews February 20, 2024

The Bank of Georgia Group has announced a preliminary agreement to acquire 100% of Ameriabank, the largest Armenian financial institution, for $303.6mn.

"This transaction is a significant milestone for the Group and a new chapter in our strategic development,” the BOGG chairman, Mel Carvill, was quoted as saying. “Ameriabank has a well-regarded and experienced management team, and I am delighted that they will stay on after the transaction is closed.”

Ameriabank is one of country’s largest banks with total assets of $3.4bn, compared to the Bank of Georgia, one of Georgia’s biggest banks with assets of $11.7bn.

According to the agreement, 90% of the shares will be purchased immediately, while the European Bank for Reconstruction and Development (EBRD) will retain a 10% shareholding in Ameriabank.

The transaction is contingent upon approval from the shareholders and regulatory bodies, including the Central Bank of Armenia. Once all approvals are obtained and the transaction is finalised, Ameriabank will continue to operate as an independent entity within the group.

Bank of Georgia is a leading financial organisation in Georgia, with its shares listed on the London Stock Exchange.

Media reports indicate that as of January 1, 2024, the shareholders of Ameriabank include the European Bank for Reconstruction and Development (EBRD), the Asian Development Bank (ADB), ESPS Holding, and the Afeyan Foundation for Armenia Inc. Imast Group (formerly Ameria Group), owned by Ruben Vardanyan, holds 49% of the shares via a trust fund.

Ruben Vardanyan is a billionaire businessman who made his fortune in Russia where he set up Troika Dialog, a leading investment bank that he eventually sold to the state-owned Sberbank.

Russian billionaire Ruben Vardanyan made his fortune in banking before moving to Armenia where he combined philanthropy and business. He was state minister for Nagorno-Karabakh and arrested by the Azerbaijani authorities during the exodus last September.

An ethnic Armenian, Vardanyan has been actively investing in Armenia and became the state minister of the self-proclaimed republic of Nagorno-Karabakh in late 2022 and early 2023. He was arrested last autumn by Azerbaijani security services last September during the mass exodus of the region’s ethnic Armenian population and is currently imprisoned in Baku.

Some have speculated that the deal is related to Vardanyan’s imprisonment.

“Ruben Vardanyan has nothing to do with the possible sale of the bank,” Mesrop Arakelian, an Armenian opposition figure linked to him, wrote on Facebook.

The sale of Ameriabank is the second deal to be announced in as many weeks. Europe’s biggest bank HSBC announced last week it will sell its Armenian subsidiary to Ardshinbank, the largest bank in Armenia, RFE/RL reports.

HSBC said the deal is waiting on regulatory approvals and is due to its “strategy to redeploy capital from less strategic or low-connectivity businesses into higher-growth opportunities globally.”

Reuters reported last May that the British bank is considering a leaving a dozen countries and has also said it will sell up subsidiaries in France, Canada, Russia and Greece as well.

Armenia has a total of 18 banks that nearly tripled their combined profits, to a record AMD253bn ($626mn), in 2022 driven by a surge in cash inflows driven by a huge influx of Russians fleeing the country after the start of the war in Ukraine. The figure reportedly fell by 9% in 2023.