A New Stage Begins at „Credo Bank“

A New Stage Begins at „Credo Bank“

The last large-scale transaction in the Georgian financial market took place about a month ago. Credo Bank acquired a 100% share in Finca Bank Georgia, as a result of which the number of commercial banks in the country reduced from 15 to 14. The purchase was supported by the French Development Finance Institution – Proparco.

As a result of the purchase, the total assets of Credo Bank increased from 1.5 billion to 1.8 billion GEL. Now the bank has other plans – digitize more banking products, offer more flexible services and the organic growth.

“Apart from providing financial resources, the experience of Proparco is important to us, especially in corporate governance. They will help us in this regard as well,” said Zaza Pirtskhelava, CEO of “Credo Bank”, which has been managing the financial institution since 2014.

Proparco will have 15% shares in Credo Bank. The remaining shares are distributed as follows: German “Access Microfinance Holding AG” – 51%, Dutch “Triodos Investment Management” – 17% and Swiss “responsAbility Investments” – 17%.

According to Pirtskhelava, Proparco will include a person with extensive experience in digitalization in the Board of Directors and will provide expert assistance to the bank in this process.

The cooperation between Credo Bank and Proparco did not start with the last transaction.  The company has a five-year fruitful partnership with the French Development Finance Institution, both in terms of loan investments and technical assistance, the total amount of which exceeds 120 million GEL. One of the last loans “Credo Bank” attracted from Proparco at the end of last year. A $ 5 million loan agreement was then signed to support micro-, small and medium-sized businesses affected by the COVID pandemic. The largest share of Credo Bank’s customer portfolio falls on this segment. The Bank’s mission is to provide sustainable financial services to micro-, small and medium-sized enterprises with the help of businesses providing agricultural and employment opportunities. In numbers, this translates as: “Credo Bank” supports more than 337,000 customers with 79 service centers. With this indicator, it is the leading bank in the country’s microfinance market.

“The main focus of Proparco as a development institute is to support micro-entrepreneurs, medium and small enterprises. They are the target customers of Credo Bank. We do not have the opportunity to go directly to this target group. That is why we work with institutions that are experienced and whose goals are in line with ours” -said Stéphane Froissardey, Proparco’s Regional Director for Turkey, Caucasus, Central Asia, Balkans and Eastern Europe.

For more than 40 years, Proparco has focused on economic, social and sustainable environmental development to improve infrastructure, renewable energy, agribusiness, financial institutions, healthcare and education, for which it provides financial and technical support to companies and financial institutions in Africa, Latin America, Asia and in the Middle East.

Attracting such investors is important for Georgia and the financial sector, but how well the market will sustain them is a quite different issue. As the director of the National Bank Koba Gvenetadze notes, when an investor enters a new market, he always looks at the situation in this country and the prospects for growth. Without it, no one makes a decision. Proparco’s multimillion-dollar investment in the Georgian Financial Institute shows that the organization has confidence in the Georgian financial system and the country’s monetary policy.  “Financial stability cannot be achieved without adequate monetary policy. Proparco had a reason to invest here, as well as, I hope, other organizations will have, which are potentially going to invest in Georgia” – says Gvenetadze.

As Stéphane Froissardey tells us, Proparco has entered Georgia for a long period of time and is ready to provide financial resources for the growth of Credo Bank, in particular, Proparco will make a significant contribution to strengthening the Bank’s position and supporting its main goal – to offer sustainable financial services to micro-, small and medium-sized businesses, especially digital and innovative products.

The newly joined FINCA team will also assist Credo Bank in this process. According to Zaza Pirtskhelava, all employees of “Finca” will be retained. “Finca has a very good team, which is a great acquisition for us. We have already hired two former employees of FINCA Bank for the leading managerial positions, and many former employees of FINCA Bank will also appear in the middle managerial sector. “At the same time, FINCA employees will be given more opportunities to achieve more success in the increased bank”, – says the CEO of Credo Bank, adding that the deal will bring positive changes for FINCA customers as well, as they will be able to use more banking products

Zaza Pirtskhelava is sure that the synergy effect of the banks will be great. According to the bank’s manager, the acquisition of FINCA is an important step, first of all, because the scale of Credo Bank has expanded: due to the consolidation in the financial sector, small banks are already finding it very difficult to compete and develop products. The main calculation was to increase profitability. “More scale means more profitability,” he said.

However, neither last year 2020 was a loss. The bank ended the year of the pandemic with a profit and, moreover, among the banks operating in Georgia, “Credo Bank” was in the third place with a net profit of 10.9 million GEL. Credo Bank CEO says there were two reasons for this: good risk management and the specifics of their portfolio.  Due to the fact that their focus is mainly on microfinance, which is mainly resistant to crises, last year, Credo Bank had fewer overdue loans. Due to this, the loan reserves were relatively small, which ultimately kept the bank profitable.

It seems that during its 24-year operation in the Georgian financial market, Credo Bank, which obtained a banking license in 2017, was able to achieve sustainability, maintain stable growth and offer reliable services to customers. With the recent dealingss, the bank has increased the scale, attracted new investments and strengthened the team.

Credo Bank’s new challenge is to increase profitability faster and digitize and improve products. At the same time, the integration process with FINCA in terms of merging clients and branches will be completed by November 1. Full integration will take several more months.

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