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Chinese Hualing Group to Invest USD 100 Million in BasisBank

Published: July 10, 2012 | 1:47 pm
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Deputy General Manager of Hualing Group: “We are planning to further expand the bank’s service network, providing financial services to the local SMEs and micro business in Kutaisi.”

China’s Xinjiang Hualing Industry&Trade (Group) Co.,LTD (The Hualing Group) has acquired 90% equity stake in JSC BasisBank. The European Bank of Reconstruction and Development (EBRD), the bank’s single institutional shareholder and Zurab Tsikhistavi, the founder of the bank, will each retain a minority equity stake in the bank. The agreement was signed on June 28.

Hualing will invest nearly USD 100 million in the bank and will operate a financing business in Tbilisi and Kutaisi, Georgia’s second-largest city, where Hualing has invested in a local industrial zone.

“The bank has already been operating on the Georgian market for 19 years and through the years it was characterized by stability, reliability and this why a huge Chinese company decided to invest in the bank. Our main priority and mission has always been to provide high quality services. Due to such strategy and efforts made by the bank, it was possible to make advances rapidly despite its initial size and capabilities,” stated Tsikhistavi, the Founder and the Chairman of BasisBank’s Supervisory Board.

According to him, the bank has been able to deal with financial difficulties even during the most severe times and has managed to cope with problems efficiently. “It was amid the global economic crisis that the EBRD become a shareholder of BasisBank, as they were confident in the bank’s strong future potential.”

Paul-Henri Forestier, EBRD Director for Caucasus, Moldova and Belarus, says to be impressed by the Hualing Group’s plans. “Hualing Group now is the new major shareholder of BasisBank and the EBRD is keen to see and foster to the maximum extent possible foreign direct investments in Georgia. We are impressed by the Hualing Group’s plans.”

In his words, the EBRD started relations with BasisBank in 2007 and became the shareholders in 2008. “I believe that EBRD has contributed significantly to improving corporate governance, management and risk management in BasisBank and we accomplished what we initially set out to do, which is to hand over to a major foreign strategic sponsor the significant share of our equity. We do intend to remain shareholders and continue assisting and contributing to the development of the bank, but we look very much forward to what the Hualing Group will do,” declared Forestier.

As Said Zhang Jun, Deputy General Manager of Hualing Group, noted, they have confidence in the local economic development and are optimistic about the growth of private enterprises along with the industrial advancements in the country. The idea of this investment is initiated by the increasingly active trade and investment activities which spur the demand for corresponding financial services. In his words, it is the right time for the bank to look ahead and strive for further development. “We are planning to further expand the bank’s service network, providing financial services to the local SMEs and micro business in Kutaisi, a western industrial city of a strategic importance, to promote development and sustainable growth of the bank itself,” he said. “With the new possibilities and shareholders we believe that BasisBank can become a better and a healthier financial institution. This transaction is the first case for the Chinese private enterprise to acquire foreign commercial bank representing a significant step for Chinese private enterprises to diversify and expand business overseas including in the financial sector.”

The COMMERCIAL TIMES interviewed David Tsaava, CEO of BasisBank to further get into the details of the transaction and the bank’s future plans.

- What are the main factors why Xinjiang Hualing Industry and Trade Group got interested in Basis Bank?

- I assume that a self-aware investor, who plans to invest in the financial sector, primarily studies and scrutinizes all the major players on the market. Hauling Group has been observing the Georgian market and they have chosen BasisBank. It is hard to name specific reasons for such a decision; it was more the stable course of development and the structure that was appealing to the Hualing Group. The bank is represented by not only Georgian shareholders but also foreign one- the EBRD. Of course, the potential which the bank has for development served as an incentive as well, along with the standards of service and by assessing these characteristics it is no surprise that BasisBank would provide a fantastic ground for their further development in Georgia.

- What are the top criteria potential buyers had to meet?

- It is hard to talk about any specific criteria, but of course it is vitally essential to be aware of the potential of the company, startegic plans, and financial capability. Hualing Group has been operating on the Georgian market since 2006; in general it is relatively acquainted with the local market. Their investments of USD 100 million in different sectors, serves as a credible sign of their potential. In addition, their statement about new investments of around USD 500 million was also considered as a positive aspect of the groups initiatives. So we hope that Hualing Group together with the EBRD along with Georgian experience and management will be a guarantee of the bank’s future success.

- In 2008 an agreement was concluded between the European Bank for Reconstruction and Development and JSC Basisbank – the EBRD acquired 15 % equity stake in Basisbank. Could you please provide concrete examples what feedback did the bank get since the entrance of the new stakeholder?

- The EBRD became a shareholder of BasisBank in the first half of 2008 when various organizations were facing severe financial complications and BasisBank was one of them. This period was surpassed with strenuous efforts of the management and employees of the bank. Thanks to the assistance provide by the EBRD we managed not only to overcome the financial problems but the financial results were practically not worse than they were before the crisis. Several new products and services were introduced as the international experience of the banking sector was fitted into the Georgian reality.

- As for corporate market, what are the major attractions about BasisBank why companies should choose partnership with your bank?

- It’s the quality of our services and products, the conditions that we offer, the reliability and trustworthiness that attracts our clients in general. BasisBank has been a popular choice among the SMEs because of the policies that we pursue and the future owners of the bank are determined to use the experience that we have while adding something of their own.

- What is the main strategy the bank will follow throughout 2012?

- Our main priority is the SME direction. It is impossible to be successful on these grounds if you do not offer new products and services. We have always been innovators and will continue to pursue this line. BasisBank will continue to invest in new and modern technologies, which will be the guarantee that our banking products will be prominent and distinguished.









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