HSBC Armenia sale passes key regulatory hurdle

By Mark Dovich

Armenia’s antimonopoly watchdog Wednesday greenlit the sale of HSBC’s local subsidiary to the country’s largest lender, moving the deal forward. If approved, it will leave Armenia with no Western commercial banks.

Ardshinbank’s acquisition of HSBC Armenia “does not lead to the restriction of competition or damage the interests of consumers,” the Competition Protection Commission said in a press release.

All eyes now turn to Armenia’s Central Bank, which must also give its approval before the sale can be finalized. A timeline for that was not made immediately available.

What’s the background?

HSBC announced in February it would exit Armenia, marking the end to the London-based financial giant’s almost three-decade presence in the country.

In a statement, HSBC Armenia said the sale, the terms of which remain undisclosed, aligns with its parent company’s “strategy to redeploy capital from less strategic or low-connectivity businesses into higher-growth opportunities globally.” Reuters reported exclusively last year that HSBC, one of the world’s largest lenders, was considering pulling out of as many as a dozen countries in an effort to pivot to Asia.

For its part, Ardshinbank said in a separate statement it “looks forward” to welcoming HSBC’s “affluent retail customers and blue-chip Armenian corporates.”

Following the news, Fitch, a New York-based rating agency, affirmed Ardshinbank’s ‘BB-’ credit rating and said it saw “no immediate rating implications for Ardshinbank from its announced acquisition of HSBC Armenia,” citing the latter’s “small size and higher capital ratios.” Still, “the acquisition will strengthen Ardshinbank’s already sizable lending and funding franchise,” Fitch added.

HSBC serves some 30,000 customers in Armenia, while Ardshinbank works with more than 375,000 clients in a country of fewer than 3 million people. HSBC Armenia reported about $27 million in earnings last year, against Ardshinbank’s roughly $156 million.

What’s the context?

Just weeks after HSBC’s announcement, the Bank of Georgia Group, also based in London, revealed a nearly $304 million deal to acquire Ameriabank, Armenia’s second-largest lender.

Armenia’s antitrust and regulatory authorities moved with what observers say was unusual speed to approve that deal, greenlighting it in fewer than two months. The Central Bank has not indicated publicly why it is taking longer to consider the HSBC sale.

In the last two years, banks in Armenia have posted record earnings amid unprecedented inflows of cash, mainly from Russia. At least $7.5 billion has poured into Armenia from Russia since its full-scale invasion of Ukraine, official figures show. Together, Armenia’s banks have posted more than $1.2 billion in profit in that period, according to the country’s Union of Banks.

Fitch said in February it expects “Armenian banks’ credit metrics to remain better than historical averages for at least 2024-2025,” citing continued “immigration and capital inflows from Russia.”

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