Sovcombank and Home Bank (formerly known as Housing Credit Bank) have reached an agreement to combine businesses on the Sovcombank platform. Sovcombank’s press service reports this.
It was noted that the transaction will be completed by the end of 2024 after all necessary regulatory approvals are obtained.
“This transaction creates additional value for Sovcombank shareholders both through the proceeds from the profitable acquisition of Home Bank in 2024 and through the long-term impact thanks to the synergy and scaling of Home Bank’s expertise in POS lending across the 79 regions where Sovcombank is present ” said. in a company message.
As a result of the transaction, Sovcombank’s number of active individual customers will increase by 50 percent to 9 million, and its retail and deposit portfolios will increase by 25 percent and 20 percent, respectively, to 915 billion and 945 billion rubles.
The financial institution stated that the first stage of the transaction will be the acquisition of 51% of Home Bank’s shares through the issuance of new shares in the amount of 5% of Sovcombank’s authorized capital. In the second phase – by the end of 2024 – Sovcombank plans to acquire the remaining 49% shares of Home Bank, which will be paid in cash in installments in 2024-2025.
The expected positive impact of the integration of Home Bank on the capital and profit of the merged bank will make it possible to pay 49% of shares without compromising the volume of dividend payments to Sovcombank shareholders in 2024-2025.
Home Bank’s valuation for transaction purposes was 80% of the bank’s capital (excluding perpetual bonds and dividends for 2023).
This structure of the transaction will allow Sovcombank to consolidate Home Bank’s results in its financial statements as early as 2024, once it receives regulatory approval for the transaction.
“We are pleased to announce to our shareholders a transaction that meets our main criterion for business efficiency – a 30% return on investment,” said Dmitry Gusev, Chairman of the Board of Directors of Sovcombank.
He emphasized that the main purpose of the merger of the banks is to grow the business while maintaining high service standards for customers.
“As a result of the transaction, we will achieve cost savings in attracting customers, issuing a loan portfolio and attracting a deposit portfolio, which will have a positive impact on the overall results of Sovcombank,” Gusev said.