Georgian Banking Sector Overview Q3 2017 | KPMG | GE
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Georgian Banking Sector Overview Q3 2017

Georgian Banking Sector Overview Q3 2017

This report summarizes and analyzes the financial results of the 16 commercial banks of Georgia for the 3rd quarter of 2017, as well as provides some insights into the recent developments in the sector.

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Currently there are 16 commercial banks operating in the Georgian market. In November 2016 National Bank of Georgia made the decision to revoke the banking license of JSC Capital Bank, in the first quarter of 2017 NBG issued a banking license to JSC Credo Bank, while in May 2017 TBC Bank and Bank
Republic merged. From May 2017 Ziraat Bankasi A.S. Tbilisi Branch offers services in Georgia as a Joint Stock Company called JSC Ziraat Bank Georgia.

According to the new NBG regulation from June 2017 commercial banks are obliged to disclose qualitative and quantitative information relating to a bank’s regulatory capital elements, risk weighted assets, remuneration of senior management, etc., within the frameworks of Basel III.

In July BGEO Group has released a statement on separation of banking and investment businesses. Namely, Bank of Georgia and the group’s investment business will be demerged. Previously, BGEO Group united both Bank of Georgia and the investment business.

At the end of July, the CEO of the Iran Chamber of Commerce, Rahim Abachi told CBW exclusively that Mellat Bank recently has been actively spreading information in the Iranian media about the plans on entering the Georgian market. According to Mr. Abachi, the talks about the entrance started in May. According to the Iranian Financial Tribune, Mellat Bank Yerevan, a subsidiary of Iran’s Bank Mellat, was planning to open a new branch in Georgia by the end of the first half of the current Iranian year, said Bank Mellat’s chief executive.

On August 10 the National Bank of Georgia (NBG) amended the Regulation on Asset classification and the creation and use of Reserves for Losses by Commercial Banks. Namely, retail loans issued after November 30, 2017 shall fulfill the minimum requirements of PTI (payment-to-income) and LTV (loan-to-value) ratios.

On August 15 the National Bank of Georgia (NBG) amended the Regulation on Capital Adequacy Requirements for Commercial Banks based on Basel III. Namely, risk position limit of related borrowers has increased significantly (from GEL 350,000 to GEL 2 million). According to NBG, this will enable commercial banks to allocate SME loans to the retail assets class, therefore, SME financing will increase.

In August JSC Bank of Georgia signed a one-year $75m trade finance facility arranged by Citi in collaboration with the bank’s long-term partner international financial institutions Asian Development Bank and International Finance Corporation.

On October 16 JSC Liberty Bank announced a change of control, whereby European Financial Group B.V. (“EFG”), a company established and organised under the laws of the Kingdom of Netherlands, purchased 74.64% of the equity interest in the Bank.

In November TBC Bank has signed two guarantee agreements of EUR 94 million with European Investment Bank Group (EIB Group). The EUR 80 million guarantee agreement known as the EU Funding for Innovators (InnovFin) will be spent on development of innovative small and medium companies in Georgia; The EUR 14 million agreement known as the EU for Business will support the development of micro companies.

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© 2018 KPMG Georgia LLC, a company incorporated under the Laws of Georgia, a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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