Xinjiang Hualing Trade and Industry (Group) Co Ltd said on Wednesday that it had entered into a preliminary agreement with Societe Generale Group and the European Bank for Reconstruction and Development to buy Societe Generale's majority stake in Bank Republic, its Georgian subsidiary.

The transaction will help Hualing, a large private conglomerate based in China's Xinjiang Uygur autonomous region and one of the major foreign investors in Georgia, to strengthen its banking arm in Georgia.

According to the transaction terms, Hualing will merge Bank Republic with its banking entity BasisBank to create a universal bank that will become the No 3 player in the Georgian market with total assets reaching about 2.5 billion Georgian lari ($1.07 billion). The new bank will have 250,000 clients, 61 branches and some 1,300 staff.

After the merger, Societe Generale will own approximately 8 percent of the shares in the new combined entity and remain a member of the supervisory board.

The European Bank for Reconstruction and Development will also hold a minority stake of approximately 3.9 percent in the new entity and remain a member of the supervisory board as well as a committed financing partner for the Georgian banking market.

The transaction is subject to Georgian regulatory approvals and registration with relevant Chinese authorities, according to Societe Generale.

Hualing first entered the Georgian market in 2007 and invested in local forestry exploration, wood processing and mining. Two years later, it invested in the free industry zone in Kutaisi, the legislative capital of Georgia, with ongoing construction of infrastructure facilities and installation of equipment, amid great efforts to take an active part in global competition.

The group made a medium- and long-term development plan to seek sustainable development and new engines for profit growth by going global.

Its previous experience in helping with the exchange of building materials and personnel between countries along the Silk Road, a historically important trade route connecting the West and the East from China to the Mediterranean Sea, established a solid foundation for the group's deployment along the route, according to information posted on its website.

In June 2012, Hualing acquired a 90 percent equity stake in BasisBank. Following the acquisition, it injected an additional $30 million into the bank. As of March 31, the total assets of BasisBank increased 6.5 percent from the same period last year to 724 million lari, according to its quarterly financial highlights.