The PPF Group controlled by Czech billionaire Petr Kellner is looking to sell its commercial lender Air Bank and consumer loans arm Home Credit to the Prague-listed lender Moneta Money Bank. The deal would create the third-largest bank by network in the Czech Republic, and the fifth largest by assets.
Home Credit and Moneta said in a joint announcement on Monday they had entered into non-binding and preliminary agreement on the sale of Air Bank and Home Credit’s Czech and Slovak businesses to Moneta, formerly known as GE Money Bank.
Moneta will present a proposal to approve the 20 billion crown transaction at its next general shareholders’ meeting, the date of which has yet to be announced. The bank said in a statement that through the transaction it aims to increase earnings and returns for shareholders by more than 10 percent compared to the current medium-term outlook.
"Challenger banks have taken more than a million customers in the last 10 years out of the large banks," Moneta Chief Executive Tomas Spurny said, as quoted by Reuters. "Instead of fighting a competitive pricing war we want to join our capabilities."
As part of the intended transaction, Home Credit will become a significant shareholder in the new business with a stake of 24.48%. The deal is conditional upon the completion of a due diligence process and subsequent approval by relevant regulators in the banking and financial sectors.
The expanded bank would serve a customer base comprising Moneta’s roughly 1 million clients together with 637,000 clients of Air Banks and 469,000 of Home Credit. Its 237 branches would give it the third-most extensive branch network in the Czech Republic. Under the terms of the intended transaction, Moneta will acquire a 100% shareholding in both Air Bank and in the Czech and Slovak businesses of Home Credit.
For its part, Home Credit will subscribe 165.6 million of shares newly-issued by Moneta, which trades on the Prague Stock Exchange, priced at 13.0 billion crowns. In this way, Home Credit will acquire a 24.48% shareholding in the combined business and become a significant shareholder. Additionally, Moneta will pay Home Credit 6.75 billion crowns in cash.
"It is too early to assess the benefit of the transaction for existing shareholders but we consider it positive that the bank will have a major shareholder and that it will be able to compete to a bigger extent with the largest banks on the Czech market," J&T Bank said in a research note.
With the optimization of its branch network and ad spend, gradual transition to a shared IT platform, and removal of duplicate features, Monet expects at least a 10% cost and investment cost savings. Its newly formed group will focus on consumer lending and smaller businesses, with these two groups targeting 75 percent of the market. Home Credit, founded in 1997 in the Czech Republic, is a leading provider of consumer finance in Central and Eastern Europe, the Commonwealth of Independent States and Asia.