Tbilisi (GBC) – The impact of the planned acquisition of FINCA Bank Georgia on JSC MFO Crystal's (Crystal) ratings will largely depend on resulting changes to Crystal's leverage profile, Fitch Ratings says.

Crystal announced the transaction on 7 February 2020, which is pending regulatory approval.

Fitch will assess the strategic rationale for the transaction, how it is funded, the impact of leverage, the intended group structure and potential integration risks. While the acquisition - if successful - will expand Crystal's currently narrow franchise, the combined group would remain small relative to higher-rated Georgian financial institutions, which would constrain any rating upside.

Crystal's Long-Term IDR is rated 'B'/Stable (see also "Fitch Affirms 2 Georgian Microfinance Organisations" dated 31 May 2019), which reflects a monoline business model, an unsettled operating and regulatory environment, as well as reliance on wholesale funding.