Armenias Ardshinbank Enters Race to Acquire HSBC Malta, Stirring Debate Over Ownership and Reputational Risks

July 13 2025 07:47:28 by PCLMedia

Ardshinbank, one of Armenia’s largest commercial banks, has formally submitted a bid to acquire HSBC Malta, positioning itself as a potential successor to the global bank’s longstanding presence on the island. The move is seen as part of HSBC Group’s ongoing strategy to retreat from smaller markets and streamline its global operations.

The bid places Ardshinbank among at least two Eastern European banks reportedly interested in the Maltese operations. The identity of the second bidder has not yet been disclosed.

This would mark Ardshinbank’s second major acquisition from HSBC within a year, following its successful takeover of HSBC Armenia in late 2024 — an exit that concluded nearly three decades of HSBC presence in the Armenian market.

HSBC Malta: A Strategic Exit in a Consolidating Market

Founded in 1999 following HSBC’s acquisition of Mid-Med Bank, HSBC Bank Malta plc has long been one of the country’s largest and most internationally recognized banking institutions. It holds a full local banking license and provides a wide range of retail, commercial, and wealth management services. Its parent company, HSBC Holdings plc, has steadily been scaling back its footprint in smaller European markets in recent years, citing a strategic pivot toward Asia.

As of 2024, HSBC Malta employed over 900 staff and managed assets exceeding €5 billion. Despite this, the bank had been facing increasing pressure on profitability amid rising compliance costs and EU regulatory demands. In 2023, the bank announced that it would consider divesting its operations in Malta entirely, triggering interest from a number of local and regional players.

Industry insiders have suggested that HSBC Malta's strategic location within the Eurozone, along with its well-established digital infrastructure and corporate client base, make it a highly attractive acquisition for banks looking to expand their European footprint.

Ardshinbank’s Expanding Footprint and Bid Strategy

Ardshinbank is Armenia’s second-largest bank, commanding approximately 20% of the country’s banking market share. The bank serves over 400,000 clients through 71 branches and reported profits of \$338 million in 2024, according to its latest investor briefing. It is majority-owned by Karen Safaryan, a low-profile Armenian entrepreneur who founded the bank in 2003.

Ardshinbank has received stable credit ratings from major rating agencies and was previously praised for a smooth acquisition and integration of HSBC’s Armenian operations in 2024.

Given the precedent set by that transaction, Ardshinbank’s offer for HSBC Malta may encounter minimal resistance from HSBC Group itself. However, final approval will still require sign-off from the European Central Bank (ECB), the Malta Financial Services Authority (MFSA), and other EU-level regulators—whose scrutiny may extend beyond financial metrics to reputational concerns.

Concerns Over Ownership and Political Connections

Despite Ardshinbank’s solid financial profile, the bid has raised red flags among insiders and regulators due to Safaryan’s past business links to Russia.

Safaryan, a former aerospace executive who spent years building a portfolio of businesses in Russia during the 1990s and early 2000s, is said to have divested his Russian interests by 2019. However, some media reports have continued to associate him with opaque deals and politically exposed persons.

He is believed to have close ties with Armenia’s Deputy Prime Minister Mher Grigoryan, who formerly served as chair of Ardshinbank’s board. Safaryan also reportedly maintained a relationship with former Armenian Prime Minister Karen Karapetyan, who once held a minority stake in the bank.

Concerns over these relationships, as well as past business affiliations with companies like Rosaviaspetskomplekt and links to Gazprombank — a sanctioned Russian entity—have sparked caution among European regulators.

A regional outlet once described Safaryan as a “murky Russian aerospace mogul,” while other reports suggested that earlier mergers involving his companies may have helped evade Western sanctions following the annexation of Crimea.

In response, Ardshinbank has publicly denied any wrongdoing. In a statement released in 2024, the bank categorically rejected claims of political interference or hidden control of blacklisted companies, calling them “defamatory and categorically false.” The Yerevan General Court ruled in favor of Safaryan in a related defamation case earlier this year.

Regulatory and Market Implications for Malta

Should the deal move forward, it would mark a significant shift for Malta’s banking sector—potentially replacing a global heavyweight with a regional newcomer. The MFSA and ECB are expected to evaluate not only Ardshinbank’s financial soundness but also its corporate governance standards, transparency, and long-term commitment to Malta’s economy.

Earlier this year, Hungarian bank OTP, considered an early frontrunner, backed out of the acquisition process after similar reputational issues were flagged during due diligence. Local institutions, including APS Bank, have also reportedly withdrawn from consideration.

The sale of HSBC Malta has become something of a litmus test for Malta’s regulatory resilience and international standing. Finance Minister Clyde Caruana recently emphasized that the process "cannot drag on indefinitely," as international scrutiny mounts.

Meanwhile, HSBC clients in Malta continue to seek clarity on the bank’s future. Any transition will likely involve complex integration of banking systems, staff realignment, and continued service assurances for over 300,000 local customers.

A Bid with Big Stakes

Ardshinbank’s bid to acquire HSBC Malta brings both opportunity and controversy. The bank’s financial stability and recent expansion track record may suit the profile needed to operate within Malta’s sophisticated regulatory environment. Yet lingering reputational concerns surrounding its owner and past Russian business connections could complicate the road to approval.

For Malta, the sale is more than a change of ownership — it is a question of trust, compliance, and strategic alignment with European financial norms. Whether regulators are willing to take a calculated risk on Ardshinbank remains to be seen.