http://www.fi nchannel.comMarch 28, 2011 News Making MoneyGEORGIAN WEBSITE http://www.fi nancial.ge
Fitch Ratings:
Main Challenge to be increase in competition See on p. 20
SPECIA
L EDIT
ION
General Sponsors: Golden Sponsor:
Anita Rachvelishvili, La-Scala’s Georgian Mezzo Soprano See on p. 34
Sponsors:
BEST GEORGIAN BANKS SUPPORTED BY NATIONAL BANK OF GEORGIA AND ASSOCIATION OF BANKS OF GEORGIA
Banking Sector will Banking Sector will Sustain and Support Sustain and Support Economic Growth in 2011Economic Growth in 2011Giorgi Kadagidze, Governor of the National Bank of Georgia See on p. 2
TBC Bank opening Representative Offi ces See on p. 6
Bank Republic Increasing Retail and Corporate Portfolios See on p. 8
Cartu Bank Portfolio to Increase by 34%, reaching over 52 million GEL See on p. 10
Internal AuditSee on p. 14
Radisson Blu Iveria Hotel has a High Portfo lio of Returning GuestsSee on p. 16
ADB Loaned 700 million USD to Georgian Public and Private Sectors See on p. 18
EBRD Invested 71.9 million EUR in Georgia’s Financial Sector in 2010 See on p. 19
Bank Constanta to Offer New Banking Products See on p. 4
The Georgian banking sector emerged from the global fi nancial crisis and the impact
of the Russian invasion in a substantially good condition, which was due to solid pre-crisis capital and liquidity positions of banks, the support of international fi nancial institutions as well as the countercyclical fi scal, monetary
and supervisory policies, all of which softened the impact of these events on the domestic economy and asset quality of Georgian banks.In his interview with The FINANCIAL, Mr. Kadagidze spoke about infl ation, larizationeffect, as well as interest rates and future potential of Georgian banking sector development.
Georgian Banks will be Georgian Banks will be Expanding to the RegionsExpanding to the Regions Zurab Gvasalia, President of the Association of Banks of Georgia See on p. 3
In the near future, the development of tourism and regional infrastructure, together
with increased employment, will support banking service centres’ moving to the regions,” said Zurab Gvasalia, President of the Association of Banks of Georgia to The FINANCIAL. “Bank profi ts increase in accordance with consumer
demand. As more people get employed, the demand for credit resources from the business side will be increased, this will be directly refl ected on the profi t indicators of the banking sector. Consequently, the bank service market is partly assimilated today, despite the fact that banks are maximally trying to develop it,” Gvasalia said.
Since the very beginning of 2011, Bank Constanta, for the fi rst time, introduced deposits with
unprecedented 17% interest upon opening which hadn’t yet been offered by any other commercial bank in Georgia. With the introduction of such
an innovative product on the Georgian market, the Bank was able to outnumber its projected attained deposits level by 456% and has collected 1.4 million GEL. Currently, in any branch of the bank, a person is able to open time, demand, children and recurring deposits.
FINANCIAL respects the intellectual property of others, and we ask our
colleagues to do the same. The material published in the FINANCIAL may not be reproduced without the written consent
of the publisher. All material in the FINANCIAL is protected by Georgian and international laws. The views expressed
in the FINANCIAL are not necessarily the views of the publisher nor does the publisher carry any responsibility for
those views.
PERMISSIONS
If you are seeking permission to use FINANCIAL trademarks, logos, service marks, trade dress, slogans, screen
shots, copyrighted designs, combination of headline fonts, or other brand
features, please contact publisher. “&” is the copyrighted symbol used by
the FINANCIAL
FINANCIAL (The FINANCIAL) is regis-tered trade mark of Intelligence Group ltd in Georgia and Ukraine. Trade mark registration by Sakpatenti - Registration
date: October 24, 2007; Registration N: 85764; Trade mark registratrion by Ukrainian State Register body - Regis-
tration date: November 14, 2007.
ADVERTISING
All Advertisements are accepted subject to the publisher’s standard conditions of insertion. Copies may be obtained from advertisement and marketing
FAX: (+95 32) 252 276E-mail: info@fi nchannel.com on the web: www.fi nancial.ge
daily news: www.fi nchannel.com
Intelligence Group ltd. 2010
best georgian banks
“The Georgian banking sector is in a good shape to support further economic growth in the country,” Giorgi Kadagidze, Governor of the National Bank of GeorgiaIn the Governor’s view, the Georgian banking sector emerged from the global fi nancial crisis and the impact of the Russian invasion in a substantially good condition, which was due to solid pre-crisis capital and liquidity positions of banks, the support of international fi nancial institutions as well as the countercyclical fi scal, monetary and supervisory policies, all of which softened the impact of these events on the domestic economy and asset quality of Georgian banks.In his interview with The FINANCIAL, Mr. Kadagidze spoke about infl ation, larizationeffect, as well as interest rates and future potential of Georgian banking sector development.
The FINANCIAL
At present, the system maintains comfortable liquidity and capital po-sitions coupled with im-
proved profi tability indicators, which suggests that that the bank-ing sector will sustain and support economic growth in 2011”.
“Needless to say, some down-side risks exist. Market partici-pants should make balanced deci-sions refl ecting on mistakes made in the past. At the same time, as a small open economy, Geor-gia remains vulnerable to global imbalances. Fragile recovery in developed countries and risks of overheating in emerging markets may pose new imbalances, which should also be taken into account,” Kadagidze concluded.
Over the past year, the NBG em-ployed monetary as well as mac-roprudential measures to tighten policy and ease domestic infl a-tionary pressures. These pressures arestill high but are caused by a number of external factors, in-cluding rising food and commod-ity prices worldwide. In the Gov-
ernor’s view, the monetary policy should take into account the risks of damaging economic activity and react on demand driven infl ation as well as possible second round effects of cost driven one.
Q. From the year 2009 and Q. From the year 2009 and during 2010 the banking sec-during 2010 the banking sec-tor’s main strategy was to tor’s main strategy was to offer high interest rates on offer high interest rates on deposits. While at the end deposits. While at the end of 2010 the trend changed of 2010 the trend changed and banks chose to decrease and banks chose to decrease interest rates on deposits. interest rates on deposits. In your opinion, what were In your opinion, what were these changes governed by?these changes governed by?
A. Retail and corporate depos-its of the banking system were affected by a number of shocks in 2008-2009 - confi dence shock instigated by the Russian invasion in 2008 and withdrawals during the 2009 recession. In response to these shocks, the Georgian banks took a conservative stance on li-quidity buffers carried on their balance sheets while maintaining credit activity muted until the be-ginning of 2010.
In 2010, private-sector deposit growth gradually rebounded on the back of recovery and strong macroeconomic fundamentals, which mitigated the banks’ con-cerns relating to uncertainty about liquidity risk. As a result, the banking sector’s offered deposit rates have gradually decreased.
Q. In interviews with The Q. In interviews with The FINANCIAL, key company FINANCIAL, key company representatives have de-representatives have de-clared that the high inter-clared that the high inter-est rates on loansare due to est rates on loansare due to increased costs of external increased costs of external borrowings. In your opin-borrowings. In your opin-ion, how realistic is it that ion, how realistic is it that
the Georgian banking sector the Georgian banking sector becomes wholly dependent becomes wholly dependent on internal rather than ex-on internal rather than ex-ternal sources of funding?ternal sources of funding?
A. Over the past year, NBG did not observe any major increases in the cost of borrowed funds that would explain and/or support the statements made by some of your respondents. At the same time, we believe that there are a number of other variables that explain recent loan interest rate trends in Geor-gia, such as higher liquidity buff-ers and credit risk premiums.
The Georgian banking system, as well as any liberal emerging banking market, relies on a mix of foreign and domestic funding.Capital accumulation, as well as increase in total factor produc-tivity, is essential for economic growth.In an emerging market, such as Georgia, rapid accumula-tion of domestic capital can only be achieved at the expense of con-sumption and quality of living. Consequently, many fast growing emerging markets access external sources of funding to compensate for low domestic savings rate and accelerate the growth of the econ-omy.
While the benefi ts of external funding are evident, banks are ex-pected to manage their wholesale funding,which is predominantly external and long-term, with the goal of minimizing refi nancing risks through diversifying sources of external wholesale funding and minimizing substantial concen-tration of repayments in a single maturity bucket. Overall, it is the NBG’s view that the funding mix of banks operating in Georgia
should complement the resilience of the system as a whole.
Q. High interest rates on Q. High interest rates on deposits make it attractive deposits make it attractive for foreigners to open depos-for foreigners to open depos-its in Georgia. If the volume its in Georgia. If the volume of infl ow of foreign deposits of infl ow of foreign deposits is increased, what tenden-is increased, what tenden-cies will it cause? cies will it cause?
A. The majority of bank depos-its are those of Georgian residents with the share of non-residents’ deposits reaching less than 10% as of January 2011. However, the share has been growing steadily over the past several years sug-gesting international investors’ growing confi dence in the Geor-gian banking market.
NBG commissioned research into the behavioural character-istics of non-residents’ depos-its during the turbulent 2008-2009period. The team found no empirical evidence suggesting that these deposits marginally contributed to the fl ightiness of the banking system’s funding. It is the NBG’s view that non-resi-dent deposits provide funding source diversifi cation benefi ts, while over-reliance on such non-core funding sources may lead to greater uncertainty going forward and signifi cant deterioration in the liquidity risk profi le of the sys-tem’s funding base. Even though the share of non-residents’ depos-its is moderate, NBG intends to take relevant measures targeted at ensuring viability of banking institutions’ funding vis-à-vis the potentially disruptive impact of international speculative infl ows.
“Banking Sector will Sustain and Support Economic Growth in 2011,” NBG
Continued on p. 23
Giorgi Kadagidze, Governor of the National Bank of Georgia
HEADLINE NEWS & ANALYSIS 3FINANCIALFINCHANNEL.COM | MARCH 28. 2011
C M Y K
best georgian banks
In the near future, the development of tour-ism and regional in-frastructure, together
with increased employment, will support banking service centres’ moving to the re-gions,” said Zurab Gvasalia, President of the Association of Banks of Georgia to The FINANCIAL.
“Bank profi ts increase in accordance with consumer demand. As more people get employed, the demand for credit resources from the business side will be in-creased, this will be directly refl ected on the profi t indi-cators of the banking sector. Consequently, the bank serv-ice market is partly assimilat-ed today, despite the fact that banks are maximally trying to develop it,” Gvasalia said.
In his interview with The FINANCIAL, Mr. Gvasalia evaluated banking sector op-erations in 2010 and spoke about the banking sector’s major challenges of the year 2011.
Q. How would you Q. How would you evaluate the banks’ op-evaluate the banks’ op-erations in 2010? What erations in 2010? What were the main chal-were the main chal-lenges for the banking lenges for the banking sector in 2010? In your sector in 2010? In your opinion, what will be the opinion, what will be the main challenges for the main challenges for the Georgian banking sector Georgian banking sector in 2011?in 2011?
A. The Georgian banking sector faced several chal-lenges in 2010. The major challenge was to overcome the trend of loss of 2009 and generate irreversible profi ts. The year 2009 turned out to be quite diffi cult for the banking sector, which was due to the recessional proc-esses of 2008. Despite the fact that the country received solid international aid, the increased tendency of over-due loans has been infl uenc-ing the banking sector since the end of 2008. This should be added to the amortization and restructuring expenses of problematic loans, which in total caused the banking sector to have losses.
The losses of the system would be much greater, and the results even harder if not for the politics of National Bank of Georgia, which were directed at better risk man-agement and supporting li-quidity management.
The second challenge was infl ation, which is in con-nection with on-going and economic cataclysms in the world. The challenge which is fi rstly associated with en-ergy and the price increase on food products, in terms of exogenic factors, naturally is refl ected on our consumer markets and consequently it will be the major challenge for the year 2011.
Despite the non-optimis-tic picture, we do not have a basis for pessimism. The year 2010 showed that commer-cial banks and NBG managed to successfully overcome the harsh and large-scale chal-lenges.
The total profi t of the bank-ing sector reached 152 mil-lion GEL by the end of 2010, while the loss was 65 million GEL in 2009. The whole as-sets of the banking sector in-creased from 8.3 billion GEL to 10.6 billion GEL, by 28%,
from 2009 to 2010. The capital share of the
banking sector increased from 1.5 billion GEL to 1.78 billion GEL, or by 18.6%, which defi nes investors at-tractiveness towards the banking sector.
Q. The major initia-tive of National Bank of Georgia in 2010 was Larization. Despite this fact, the share of GEL did not change signifi cantly. In your opinion, what steps should be taken to increase the share of GEL in deposits as well as loans?
A. One of the major initia-tives of NBG in 2010 was Lar-ization, however no one said it could be reached in a short term period. Larization was declared a priority of NBG and foreseen as a long term process. Despite this, sev-eral serious steps were taken in this direction, including the stage by stage increase of minimal reserves to 15% of foreign currency brought deposits and increase of the current liquidity coeffi cient indicator.
The Georgian banking sec-tor is quite attractive for for-eign investors for its liberal banking legislation as well as for the dynamic development of the sector itself. In 2007-
2008 when the investment activities in the country were high, investments of 800 million USD were made in the banking sector.
The increase of the deposit base is not defi ned only with high interest rates. Today,
banks try to offer clients mul-tifunctional deposit accounts, which as opposed to mono-deposit accounts provide the opportunity for the client to together with percentage in-come, insure exchange rate and percentage risks. Moreo-ver so-called bonus offerings and overdrafts for guarantee-ing deposits are widely used.
The Larization strategy on one side is aimed at de-creasing the pressure of the currency course of USD and on the other hand to stimu-late the demand for GEL. It might be considered an anti-infl ation barrier. As you are aware, in trade turnover the share of import is signifi cant-ly higher compared to export, which stimulates infl ation while the prices on import are increased.
I do not believe that the Larization strategy does not work. The GEL’s stabilization is proof of its success, while in recent times the GEL’s strengthening tendency indi-cates an increase in demand for GEL. The banks plaid
their role in this strategy when they started offering loans in GEL.
For clients this is a sig-nifi cant privilege, as when their income is in GEL and liabilities are in USD, curren-cy exchange risk always ex-ists. Decrease in the value of GEL increases the payment amount of the individual.
Q. How would you Q. How would you evaluate banks’ cred-evaluate banks’ cred-iting politics? In your iting politics? In your opinion, which sectors opinion, which sectors have an advantage while have an advantage while crediting from banks’ crediting from banks’ sides?sides?
A. I believe that after the low crediting activities in 2009, banks have conducted quite active crediting politics in 2010. The 30% increase in the credit portfolio is quite a high indicator after a reces-sion period, while in separate banks’ cases this indicator is even higher.
Today, due to economic sectoral development, the
priority is addressed to trade operations and due to this fact, the fi nancing of trade consists of 65% in the credit portfolio.
If we take into account the recent development perspec-tives of the country, this indi-cator will decrease and conse-quently fi nancing the tourism and agriculture sectors will increase. Like last year, Tbili-
si City Hall in the framework of project New Life of Old Tbilisi, intends to start a new stage together with commer-cial banks and developers. If we take in to account that this project revived the construc-tion business, from the banks’ side fi nancing the construc-tion sector will increase.
Q. From the year 2009 Q. From the year 2009 and during 2010 the and during 2010 the Bank’s main strategy Bank’s main strategy was to provide high in-was to provide high in-terest rates on depos-terest rates on depos-its. While at the end of its. While at the end of 2010 the tendency was 2010 the tendency was changed and banks chose changed and banks chose low interest rates on de-low interest rates on de-posits as their strategy. posits as their strategy. In your opinion, what In your opinion, what were these changes gov-were these changes gov-erned by?erned by?
A. When the bank increases interest rates on deposit re-sources, it is due to resource bringing stimulation. There is nothing special in this strat-egy. In a period which was quite diffi cult for the bank-
ing sector in recent years, it was more diffi cult to acquire fi nances from international markets due to the global economic recession.
As for 2010, in the fi rst half of the year the banking sector faced over liquidity. From the point of risks profi tability, as a liquidity defi cit is non-de-sirable as well as over liquid-ity. Due to this fact together
with increased credit activi-ties interest rates decreased on loans as well as on depos-its.
Banks declared interest rates reduction at the begin-ning of the year. Moreover, it should be noted that decreas-ing interest rates are infl u-enced by the deposit price as well as the cost of acquiring resources from international markets, which is cheaper and which is also important in the long term as there are inter-
nal resources, which provide banks with the opportunity to fi nance long term assets.
Q. Could the decrease Q. Could the decrease of interest rates on loans of interest rates on loans from the bank’s side be from the bank’s side be defi ned by the fact that defi ned by the fact that banks have renewed banks have renewed crediting the economy?crediting the economy?
A. The decrease of interest rates on loans naturally sup-ported increased credit ac-tivities. Credit investment in-creased from 5.2 billion GEL to 6.3 billion GEL, or by 21%. Due to this fact, the credit portfolio increased by 30% in 2010 compared to the previ-ous year, which was recorded as a profi t indicator at the end of the year. Credit investment signifi cantly supported de-posit market increase.
The deposits of non-bank physical and juridical indi-viduals increased from 3.9 billion GEL to 5.5 billion GEL, or by 42%. The depos-its of physical individuals in-creased from 2.1 billion GEL to 2.6 billion GEL, or by 24% which in total is the indica-tor of increased trust in the banking sector.
Q. In your opinion, will large scale international banks enter the Geor-gian market in the near future?
A. The Georgian market has already been entered by large scale European banks such as HSBC and Societe Generale. Moreover, the banks which represent the leading bank institutions in their countries are represented in Georgia, such as Azerbaijan Interna-tional Bank, Turkish Ziraat Bank, Russian Vneshtorg Bank and Ukrainian Privat Bank.
Moreover, EBRD should be mentioned, which possesses large shares in Georgian banks.
The entrance of large-scale international banks in the Georgian market will depend on what large scale business-es enter the country.
If we take into account in-frastructural economic devel-opment tendencies and steps put ahead of liberalization of the economy, integration of the country into the Euro-At-lantic structure, this is quite possible even in the next 1-2 years.
“Georgian Banks will be Expanding to the Regions,” ABG
“The Georgian banking sector is quite attractive for foreign investors for its liberal banking legislation as well for the dynamic development of the sector itself.”
“There has been a 30% increase in the credit portfolio of corporate banks, which is quite a high indicator after a recession period, while in separate banks’ cases this indicator is even higher.”
“Due to economic sectoral development, the priority is addressed to trade operations and the financing of this sector consists of 65% in the credit portfolio.”
Zurab Gvasalia, President of the Association of Banks of Georgia
Q. What is Bank Con-Q. What is Bank Con-stanta’s profi le and its stanta’s profi le and its main direction?main direction?
A. Our bank has been ori-ented on providing fi nance for small and medium size enterprises during its long history, since 1997, even from when it was formed as a micro fi nance organiza-tion. Micro businesses are the majority of our clients and we’re the number one bank in the line of providing the best condition loans to SMEs and we aim to develop this direction even further.
Currently we have 21 branches of the bank where more than 400 people are employed. This year we’ll add one branch in Marneuli and next year in several oth-er places.
Q. You’re very active-Q. You’re very active-ly crediting agribusi-ly crediting agribusi-nesses in Georgia. Do nesses in Georgia. Do you have new products you have new products to provide to your cus-to provide to your cus-tomers?tomers?
A. Agribusinesses amount to 25% of our loans dis-bursed overall which clearly illustrates the importance of the product.
With the purpose of sup-porting our existing clients base in addition to new ones, we’ve introduced a totally new product, not offered by any other bank before, which is cooperating with “Borun AgroChemistry Ltd” which will itself be aimed at provid-ing needed chemicals and necessary products on in-stalment bases to our clients with the least possible terms. In accordance with the ne-cessity, we offer a 6 month preferential period, during which the client doesn’t pay anything till the fi nal realiza-tion of the product.
This year we introduced plastic card use in our bank branches which wasn’t pre-viously available.
We also plan to introduce micro deposits where people can deposit small amounts of money.
We’re always introducing new products which by itself depends on the demand on the market overall. We do analysis on new directions that need to be developed, and we’ll be having some other new, innovative offer this year too.
Q. How risky it is to Q. How risky it is to give out agribusiness give out agribusiness loans?loans?
A. Regardless of how risky the loans are, the main thing is still the insurance of those loans. Our risk management offi ce is in charge of oversee-ing the performance of the
loans provided. Our bank was rated in the list of the best per-forming banks in Georgia due to strong risk management. Our bank’s high profi tability can also be attached to that despite the war and previous year’s events.
As for the interest rates it largely depends on how risky the business is; also the amount of the loan and its terms. In general loans are given starting from 15%.
Q. Which are the most Q. Which are the most demanded products at demanded products at Bank Constanta?Bank Constanta?
A. Apart from agro loans, which account for 25% of our loans, there are: Trade - amounting to 52%, the Serv-ice sector - 11%, Production - 5%.
Q. How successful was Q. How successful was the start of this year?the start of this year?
A. Not only the start of this year, but also the previ-ous year, was very successful for the Bank. We grew more than the banking sector grew at large.
Our bank assets grew by 30%, our clients’ base in-creased by 36%, which is also very signifi cant. The main reason why we grew was the growing demand for the products that we provide to people.
In addition our deposits proved to have a very suc-cessful start this year which we plan to continue.
Q. What are the 2011 Q. What are the 2011 challenges for the bank-challenges for the bank-ing sector this year?ing sector this year?
A. Challenges always per-sist in the banking sector but the main thing is to timely
identify the risks and tackle them using all necessary opportunities. We, at Bank Constanta, are always dedi-cated to tailor the products to our clients at their best use and location.
In addition, general eco-nomic conditions affect our operations including the most recent price hikes on consumer products as well as non-tradable goods but we’re still very positive about the economy en masse.
Q. What about inter-Q. What about inter-est rates, are you going est rates, are you going to cut interest rates on to cut interest rates on loans soon?loans soon?
A. Usually interest rates are adjusted to the demands of customers, thus in the long-term we are certainly
going to cut interest rates. Our interest rates are also competitive compared to other players (commercial banks) on the market.
The Bank, overall, has re-newed crediting the econo-my, hereby 2010 was a very active year in this regard.
Business loans are the main direction of Bank Con-stanta.
Savings in Bank Constan-ta: this year we’ve also start-ed deposits at the Bank - one year deposit in USD - 10%, whilst in GEL - 17%. The Bank’s 456% more attained deposits than planned is a sign of trust among custom-ers towards the Bank.
Q. Are you going to Q. Are you going to implement any changes implement any changes in the management of in the management of the Bank?the Bank?
A. We’re not planning to have any changes in our management. In fact, we’re expanding our capital base through attracting large in-vestors like Oikocredit which is already present in 70 coun-tries, hence has huge experi-ence which will be valuable for us to use. Thus we’ll be able to offer more credit to people in need of it hence supporting growth of the economy.
Q. What are your ex-Q. What are your ex-pectations about the pectations about the banking sector in gen-banking sector in gen-eral in 2011?eral in 2011?
A. I think that the banking sector will be developed dy-namically. The main thing is that the crisis situation from 2008 is now over and the country is now on the road of development. Overall the 2010 credit portfolio has in-creased.
Now we’re positive about the growth of our market by providing a wide range of banking products, and in co-operation with our donors, increasing our capital base for the forthcoming year.
Bank Constanta to Offer New Banking Products
Interviewed by KOKA KALANDADZE The FINANCIAL
“Micro loans were the most profitable direction at our bank”
Levan Lebanidze, General Manager of Bank Constanta
S ince the very beginning of 2011, Bank Constanta, for the fi rst time, introduced deposits with unprecedented 17% interest upon opening which hadn’t yet been offered by any other commercial bank in Georgia.
With the introduction of such an innovative product on the Georgian market, the Bank was able to outnumber its projected attained deposits level by 456% and has collected 1.4 million GEL. Currently, in any branch of the bank, a person is able to open time, demand, children and recurring deposits.
In 2010 the Bank was joined by Netherlands based investor namely Oikocredit. The latter investor operates in up to 70 countries worldwide and owns the Shareholder Capital of 31 countries’ micro fi nancial institutions. In essence, Oikocredit owns 13% of Bank Constanta shares.
The Bank, with a 71 million GEL portfolio serves 19,000 clients. All through 2010, Bank Constanta disbursed 83 million GEL loans which itself was 66% growth compared to the previous year’s (2009) fi gures. The number of the customer base also expanded by 36%.
By the end of 2010 data the Bank had fi nished the year with 2,4 million GEL profi t by which it stood in 6th position out of 19 commercial banks whilst in terms of ROE (return on equity) and ROA (return on assets) – 3th and 4th position correspondingly.
Total fi nancial resources attracted from international fi nancial institutions in 2010 - 32 million Gel by Bank Constanta.
In the direction of risk management, Bank Constanta closely cooperates with international fi nancial institutions like International Finance Corporation (IFC). The latter strategy is part of a global initiative since the fi nancial crisis hit the world and Georgia is a part of the world economy.
Bank Constanta, offi cially registered as a bank in 2008, has had a longstanding presence on the Georgian fi nancial market since 1997 as a micro-fi nance organization. With the strong leadership and the right strategies it has been holding a leading position on the market itself, since its founding.
Despite hardships in the very fi rst months of its foundation, in July 2008 the Bank was able to withstand the developing crisis and continue crediting of an economy.
Currently, with March 2011 ratings, out of 19 commercial banks, Bank Constanta holds 7th position due to overall net income among banks.
Throughout its existence as a micro-fi nance organization, the management was able to accumulate the experience which now gives them the opportunity to be leaders of the market in the direction of micro loans.
Bank Constanta has been very active in the direction of agriculture too, as 25% of loans are by agribusinesses.
Cooperation between the Bank and “Borun AgroChemistry Ltd” will benefi t customers by providing all the needed chemicals and other necessary products on instalment bases. In accordance with necessity, the Bank offers a 6 month preferential period, during which the client doesn’t pay anything till the fi nal realization of the product.
The project is aimed at easing conditions for clients to obtain all the necessary products for better performance of their own business.
HEADLINE NEWS & ANALYSIS 5FINANCIALFINCHANNEL.COM | MARCH 28. 2011
C M Y K
best georgian banks
Advertiser: Bank Constanta. Contact FINANCIAL Ad Dep at marketing@fi nchannel.com
“Now when the “Now when the fi nancial crisis is fi nancial crisis is over TBC bank over TBC bank is given huge is given huge opportunities opportunities to set ambitious to set ambitious growth plans growth plans both in the local both in the local and international and international market, plus market, plus Azerbaijan,” Azerbaijan,”
Vakhtang Butskhrikidze, General Director of TBC Bank
By KETI CHKHIKVADZE The FINANCIAL
In his previous interview with The FINANCIAL, Mr. Butskhrikidze stated that the high interest rates
make it attractive for foreigners to open their deposits in Geor-gia banks and according to him each month deposits amounting to several million are opened by foreigners at TBC Bank.
To the question - does TBC Bank promote the above men-tioned advantage in the inter-national market? Butskhrikidze said “Yes, of course, we outline the big difference among inter-est rates in Georgia and in the international market. To en-courage this, we took the deci-sion to open our fi rst represent-ative offi ce in Tel Aviv, Israel, We think that by the end of the year several representative of-fi ces will be added throughout the world,” Butskhrikidze said.
The year 2010 was quite prof-itable for TBC Bank, with total net profi t of 45 million GEL, exceeding the fi nancial results of 2007 by 17 million GEL. But-skhrikidze said that net income of 45 million GEL is not a high indicator as investors are main-ly interested in return on capital which turned out to be 14% at TBC Bank in 2010.
“I strongly believe that in the next 5 years the banking sector will grow rapidly. How-ever, we should not forget those mistakes the banks made in the years 2007 and 2008, the growth should be more dynam-ic. In the fi rst half of 2008 the growth was 70% which meant that risks would not be manage-able,” Butskhrikidze said.
Q. How has the demand Q. How has the demand for different banking for different banking products changed at TBC products changed at TBC Bank? Bank?
A. The demand for different banking products depends on the country’s economic condi-tions. After the August war, for a year and a half, the focus was on deposit products, which was for a reason. Due to increased risks people took fewer decisions on spending and preferred to keep money for the future, conse-quently the number of deposits was increased. However, as the economy is returning back to its old indicators, there is expecta-tion that the economy will sta-bilize and lead to growth. Con-sequently, from the second half
of 2010 the demand increased for loans, and we forecast that within 2-3 years the tendency for loans will be stable.
Q what is prognosis on Q what is prognosis on rates on deposits and loans rates on deposits and loans for the next months?for the next months?
A. Interest rates on loans will be decreased; the fundamental base exists for this. However, fi rst of all the interest rates on deposits should be decreased and this will happen later, Eve-rything depends on the next 3-4 months, what the bank sector’s behaviour will be regarding in-terest rates.
If the infl ow of deposits will increase in huge sums from lo-cal as well as foreign markets, the interest rates on deposits will be decreased which auto-matically in several months will cause the rates on loans to de-crease. TBC Bank always prefers to provide a low interest rate loan which carries lower risk. We are interested in creating the environment which gives us the opportunity to provide low rate loans.
Q. Out of banking prod-Q. Out of banking prod-ucts, which provides the ucts, which provides the largest share of profi t?largest share of profi t?
A. If we discuss the issue ac-cording to segments, currently TBC Bank is a corporate and retail bank. Most of the profi t-ability came from the corporate sector in 2010.
Historically we were a cor-porate bank and from 2007 we decided to enter the retail sec-tor. When the company started expanding the chain, it coin-cided with the August war. Con-sequently we opened the chain and could not provide lending. We started developing the retail chain from 2010 and will con-tinue making it a more profi t-able direction.
Q. In your opinion, which Q. In your opinion, which products will be most in products will be most in demand in 2011?demand in 2011?
A. We believe that the year 2011 will be active both from a deposit and lending side, not only at TBC but in the whole banking sector.
Q. From the year 2009 Q. From the year 2009 and during 2010 the Bank’s and during 2010 the Bank’s main strategy was to pro-main strategy was to pro-vide high interest rates on vide high interest rates on deposits. While at the end deposits. While at the end of 2010 the tendency was of 2010 the tendency was changed and banks chose changed and banks chose low interest rates on de-low interest rates on de-
posits as their strategy. In posits as their strategy. In your opinion, what were your opinion, what were these changes governed these changes governed by?by?
A. Due to the fact that in the fi rst half of 2009 there was outfl ow of deposits, there was high competition on deposits and banks offered high interest rates. However in 2009 there was more than 40% liquidity in the market, which is quite high according to Georgian and international standards. There was necessity for the banks to start lending. For motivating lending banks started cam-paigns which caused a decrease in interest rates.
Q. The Bank had signifi -Q. The Bank had signifi -cantly decreased cantly decreased interest rates on interest rates on mortgage loans at mortgage loans at the end of the year the end of the year 2010. You offered 2010. You offered mortgage loans mortgage loans from 11% interest from 11% interest rate - what was rate - what was the total amount the total amount distributed in that distributed in that direction in 2010?direction in 2010?
A. The two month campaign turned out to be quite successful and within this peri-od only we increased our credit portfolio by 64 million GEL. The major aim of the campaign was to test the behaviour of cli-ents, how they would respond to decreased interest rates.
Q. Out of the Q. Out of the cards issued by cards issued by TBC Bank, which TBC Bank, which types of cards are types of cards are most popular?most popular?
A. The most successful card was Cosmo, specially designed for Georgian women. Cosmo Cardholders are offered dif-ferent discounts at very wide range of merchants, which they visit for everyday shopping. Our experience shows, that if a consumer is offered even low discount at the merchant, this usually becomes a reason for them to choose it. In May we will have a big campaign of new cards and will offer completely new types of cards to society.
Q. How would you evalu-Q. How would you evalu-ate client’s loyalty towards ate client’s loyalty towards TBC Bank before and after TBC Bank before and after the crisis? In your opinion, the crisis? In your opinion,
what are the expectations what are the expectations of clients towards TBC of clients towards TBC Bank?Bank?
A. Client loyalty is vital for us. Each year TBC Bank con-ducts research which indicates that we have high outcomes. In 2010 we launched a big loyalty campaign - Smart Club. This is a long term project and has al-ready incorporated 70,000 TBC Bank clients. This project is one of the most successful projects launched by Bank, which di-rectly linked to the activities of our individual clients. Whether you make a transaction, open a deposit or take a loan within TBC Bank you’re given Smart Club points. Besides, TBC Bank
constantly offers various events, exclusives to the members of Smart Club. Smart Club has at-tracted some tens of thousands of people from the very begin-ning and we’ll be launching big-ger marketing activities to fur-ther promote this project.
TBC Bank’s Smart Club is also the most large-scale social media project in Georgia. Cur-rently the number of fans of Smart Club page on Facebook exceeds almost 130 000 and this number signifi cantly in-creases every day. We pay lots of attention to clients and spend millions each year on increasing their loyalty.
Q. How would you eval-Q. How would you eval-uate the activities of corpo-uate the activities of corpo-rate clients in 2010? rate clients in 2010?
A. Corporate banking plays an important role in the crea-tion of competitive advantage of TBC Bank. TBC Bank’s in-dicators in this direction are in-creasing annually. At the same time, the bank’s structure and operation methodology is being developed in order to improve quality of service.
In 2010 the whole banking sector increased fi nancing of corporate clients, which had been restricted since the sec-ond half of 2008. This year we plan to have an increase in the corporate sector by 25%. As for
2010, we managed to have a 35% in-crease on corporate clients lending and deposits practically doubled.
Q. What will Q. What will be TBC Bank’s be TBC Bank’s offers for corpo-offers for corpo-rate clients in rate clients in 2011?2011?
A. Our approach will be more client-oriented in 2011. We have already considered with whom to continue partnership. We will try to acknowl-edge what the de-mand from corpo-rate clients is and try to satisfy these demands from the Bank’s side.
Q. In your Q. In your opinion, what opinion, what challenges does challenges does the Georgian the Georgian
banking sector face in banking sector face in 2011?2011?
A. I believe that there will be more activities in retail as well as corporate sectors in 2011. However, National Bank of Georgia has restricted banks’ regulations from a liquid-ity point, capital adequacy and reserves were increased also. Whereas in the banking system the credit activities growth con-sisted of 25% in 2010, we ex-pect this number to be 15-20% in 2011.
Q. TBC Bank is repre-Q. TBC Bank is repre-sented in Azerbaijan also sented in Azerbaijan also by TBC Credit. How does by TBC Credit. How does Azerbaijan’s banking sec-Azerbaijan’s banking sec-
tor differ from that of tor differ from that of Georgia’s? How is this re-Georgia’s? How is this re-fl ected in numbers?fl ected in numbers?
A. The banking sector in Az-erbaijan is developing dynami-cally. Compared to 2009 when the banking sector in Georgia decreased in Azerbaijan the market was increasing. How-ever the percentage increase was lower in Azerbaijan than in Georgia in 2010. The fi nancial crisis did not infl uence Azerba-ijan’s economy much, as the country is an exporter and has income from oil.
The banking sector in Az-erbaijan will grow. However as opposed to in Georgia where the banking sector is presented by local as well as international banks, and there is high com-petition, in Azerbaijan we see more local banks and inter-national institutions are not present there.
Q. Did the demand for Q. Did the demand for Gold Deposits change? Is Gold Deposits change? Is gold currently considered gold currently considered a solid guarantee?a solid guarantee?
A. Demand for gold has in-creased not only in Georgia but throughout the world. If we ob-serve the price change of gold, we will see permanent growth. The gold campaign which we started two years ago was suc-cessful. Those who believed and trusted us received a 16% interest rate.
Q. How did the demand Q. How did the demand for GEL and USD deposits for GEL and USD deposits change in 2010?change in 2010?
A. There was a slight ten-dency of an increasing share of GEL in lending and deposits. However it is vital to decrease the level of dollarization in the banking sector, which is a long term issue, needs years and co-operation from the banks’ side, from NBG as well as the Gov-ernment. GEL, which is mainly used for daily transactions, is to become a saving mean.
Q. Does TBC Bank in-Q. Does TBC Bank in-tend to expand the chain in tend to expand the chain in 2011? How many branches 2011? How many branches and service centres does and service centres does TBC Bank currently have?TBC Bank currently have?
A. TBC Bank will add seven new branched and service cen-tres during the year in Tbilisi as well as outside the capital. We are maximally trying to cover and provide our service through-out Georgia. Currently TBC Bank operates 44 branches.
Q. Does the Bank plan to Q. Does the Bank plan to form an agreement with form an agreement with an online payment system an online payment system like PayPal? like PayPal?
A. First of all the Government should switch to the system. As soon as this happens, we will be switched to the system also.
Q. In February, TBC Q. In February, TBC Bank announced that in-Bank announced that in-ternet banking is already ternet banking is already available in Safari and available in Safari and Firefox. However, using Firefox. However, using Bank Client is impossible Bank Client is impossible on Mac computers. Does on Mac computers. Does the Bank plan to imple-the Bank plan to imple-ment any changes in these ment any changes in these directions?directions?
A. TBC Bank will have com-pletely new internet banking by the end of 2011. This will be a modern programme based on high-edge technologies, which will be more fl exible than mod-ern technologies.
Q. In 2010 TBC Bank Q. In 2010 TBC Bank accumulated more than accumulated more than 100,000 likes on facebook. 100,000 likes on facebook. Do you intend to use such Do you intend to use such a critical mass for other a critical mass for other purposes?purposes?
A. We believe that together with the development of social networks, TBC Bank’s participa-tion in this system is important. Through facebook and other pages we try to raise awareness of our products and company, and gain potential clients.
TBC Bank opening Representative Offi ces
Vakhtang Butskhrikidze, General Director of TBC Bank
SCAN TO READ IN MOBILE
HEADLINE NEWS & ANALYSIS 7FINANCIALFINCHANNEL.COM | MARCH 28. 2011
C M Y K
best georgian banks
Advertiser: TBC Bank. Contact FINANCIAL Ad Dep at marketing@fi nchannel.com
“Bank Republic plans to develop its business in both directions – Retail and Corporate in 2011, therefore we are aiming at increase of our portfolios in both fi elds in line with the market development and our ambition to gain market shares,” told Christian Carmagnolle, CEO of Bank Republic, Societe Generale Group, one of the leading fi nancial service groups in Europe.
By KETI CHKHIKVADZE The FINANCIAL
When we launched our lending campaign early December, we
sent a clear message to the “market’: Bank Republic is back to business. It was well perceived and our com-mercial results are positive. The campaign was a “com-mercial rebound” for our teams who worked very hard to satisfy our clients with the timely response for their credit application and for sure with very good price during the campaign,” Mr. Carmagnolle told.
According to Mr. Carmag-nolle, Bank Republic will con-tinue to provide clients with new products and advantages in the future. “Bank Republic will offer very soon new inno-vative solutions for day-to-day banking, deposits and all the range of services for retail and corporate clients. We are ready to implement many new solu-tions during 2011 and for the years to come,” Mr. Carmag-nolle said.
“We continue to adapt our commercial organization and we just implemented some in-ternal improvements. Thanks to that, we are able to dedicate more skilled bankers to our cli-ents to better know and thus better serve them. In accord-ance with Societe Generale am-bitions 2015 strategy, we need to be the “most desirable” bank on the market.
We are challenged to be in-novative but stable, proactive but smooth fi nancial institu-tion for delivery of the best terms products and superior quality of service,” Mr. Car-magnolle added.
Mr. Carmagnolle joined Bank Republic in December, 2010. Before appointed as CEO of BR, Mr. Carmagnolles’ very fi rst career step in SG was un-dertaken in 1972, in corporate direction, being later promoted to Deputy Executive Director in SG affi liated Komercni Banka in Czech Republic.
Q. Mr. Carmagnolle you Q. Mr. Carmagnolle you have been in charge of have been in charge of CEO position, since the be-CEO position, since the be-ginning of the year 2011. ginning of the year 2011. What has changed in BR What has changed in BR after your arrival? after your arrival?
A. Bank Republic is very in-teresting institution, with good
experience and practice. The Western standards have been already successfully pioneered in the Bank and the corporate culture of the Bank is overall high. It was really interesting and challenging for me to join BR as the CEO.
In addition to that, my ar-rival coincided with the period of “commercial rebound” of the Bank, when the new commer-cial campaigns and projects have been implemented. The projects ultimately became very
successful thus contributing to the overall rehabilitation of the Bank. From the end of last year, our commercial status became more active and the results improved respectively.
Q. According to the last Q. According to the last audited fi nancial state-audited fi nancial state-ments of September 2010, ments of September 2010, BR profi t and loss state-BR profi t and loss state-ment shows 27 million ment shows 27 million net loss. In your opinion, net loss. In your opinion, what were the main caus-what were the main caus-es of high expenditures? es of high expenditures?
A. When the crisis happened, Bank Republic decided to take care of its clients and acted in accordance with Societe Generale culture and princi-ples. We spent lot of time to elaborate solutions with our defaulted clients, in a period where all our organization and strategy was to develop our networks (branches, call center and Internet banking) and our franchise. We were longer to react than our main com-petitors which are much more mature “universal banks”.
It is also right that the structure of our “new” retail portfolio was quite “short term maturity oriented”, due to the fact that many loans were dedicated to short term needs, as consumer fi nance or auto loans. That was the reason why in 2009 and 2010, portfolios
natural amortization was so signifi cant.
Furthermore, in line with our strong social responsibil-ity behavior, we decided to strengthen the credit param-eters and criteria in order to avoid generating additional turmoil in our clients’ indebt-edness. Doing so, we were less developing our new portfolios than some competitors hav-ing more aggressive lending policies. As you can see, we are developing a long term sustain-
able strategy, oriented on the social responsibility thus focus-ing on ours clients’ benefi ts and profi table long term relation-ships with them.
A. Thank to our retail cam-paign and strong commercial action, fi rst quarter is well oriented, but it’s too early to talk about fi nancial results.
Q. BR, is part of Societe Q. BR, is part of Societe General Group, does this General Group, does this mean access to Societe mean access to Societe Generale funds? How does Generale funds? How does Societe Generale Group Societe Generale Group participate in strengthen-participate in strengthen-ing BR fi nancial state-ing BR fi nancial state-ments? ments?
A. We are the member of So-ciete Generale, large fi nancial institution. As any other sub-sidiary, we enjoy the competi-tive edge of being the interna-tional brand thus facilitating the international transactions / trade fi nance for any our client which is interested in such type of operations.
SG supports Bank Republic not only fi nancially, but in any rational initiative and action. The recent capital increase dedicated to strengthening our lending capability is, if neces-sary to stress, the confi rmation of our shareholders’ and mainly Societe Generale group’s confi dence and support to Bank Republic.
Being part of SG group means to benefi t from SG rating to improve cost of funding thus ultimately leading to better service of our clients.
Q. Among banking Q. Among banking products, for which comes products, for which comes the biggest share of the biggest share of profi t? profi t?
A. On lending activi-ties, our strategy is to balance Retail and Corporate revenues on one side and short and medium/long terms revenues on the other side. We also need to increase our fees and commis-sions revenues thank to news innovative offers.
Q. How would Q. How would you evaluate clients’ you evaluate clients’ loyalty before and loyalty before and after crisis period? after crisis period? In your opinion, In your opinion, what is the expecta-what is the expecta-tion from clients tion from clients towards BR?towards BR?
A. We are estimated as highly reliable bank, and the customers are really keen to save the deposits with us, to implement the differ-ent transactions and, gener-ally speaking, bank with us. We have been several times awarded for trustfulness and reputation. The volume of deposits is constantly increas-ing. The clients are really loyal, and of course they naturally
expect the even wider range of the banking solution and more improved quality of service, which is and will be defi nitely delivered by us.
Q. How has the demand Q. How has the demand changed for different changed for different products at BR? Which products at BR? Which products are mostly de-products are mostly de-manded currently?manded currently?
A. Our clients are interested
in both retail and corporate products and solutions. The mortgage, business, consumer loans, corporate packages and deposit products are equally popular among the respective segment.
Recently the mortgage loans have been very popular during the campaign; now we are stimulating the business loan campaign to enable the business representatives to enjoy attractive products and solutions. We design the products with very competitive terms and rates to make them very popu-
lar, useful and benefi cial for the retail and corporate customers.
Q. How would you Q. How would you evaluate activities of cor-evaluate activities of cor-porate clients in 2010? porate clients in 2010?
A. As economy is gradu-ally recovering, large compa-nies have activated their trans-actions with banks. Although some segments have not fully recovered yet, 2010 year has
proved that the worst is already behind for large companies. These positives trends are re-fl ected in most of our corporate customers’ activities. In fact, some of them are starting to think about gradual expansions of their businesses, which is good sign. We would be happy to support them in those plans.
Q. What offers will BR Q. What offers will BR have for corporate clients? have for corporate clients?
A. Bank Republic provides tailor made fi nancial services to its corporate customers.
Our Corporate Banking Division is responsible for managing and developing the relationship with corporate customers. We aim to be the true banking partner by helping our clients to meet their long-term, stra-tegic goals across all essential functions, like fi nancing and operational services. In addi-tion, we provide a complete range of trade products and services, such as guarantees and letters of credit, to help corporate clients to secure and fi nance their international transactions.
Q. Which product will Q. Which product will be the most actual for be the most actual for Bank Republic’s corporate Bank Republic’s corporate clients in 2011? clients in 2011?
A. The most active corporate banking products still remain short and medium terms credit facilities, both cash and documentary fi nancing. Being part of Société Générale Group enables us to offer these prod-ucts, like credits, international guarantees and letters of credit with exclusive terms to our Georgian customers.
Q. What is the index Q. What is the index of bank deposit of bank deposit growth in Bank growth in Bank Republic? Please Republic? Please compare it to the compare it to the last year. last year.
A. The deposit growth rate is suf-fi ciently high in Bank Republic. The growth rate of the deposits in Decem-ber 2010 vs. Decem-ber 2008 decreased very insignifi cantly, just by 1%.
Q. The ma-Q. The ma-jor strategy jor strategy for banks was for banks was to charge high to charge high interest rates on interest rates on deposits at the deposits at the end of 2009 and end of 2009 and during 2010. during 2010. However, by the However, by the
end of 2010 the tendency end of 2010 the tendency was changed and banks was changed and banks main strategy became main strategy became to charge lower interest to charge lower interest rates on loans. In your rates on loans. In your opinion, what were these opinion, what were these changes governed by? changes governed by?
A. Each bank follows its own commercial strategy based on several criteria on which the cost of funding is crucial. To offer better prices on loans it is obvious banks must offer lower prices on deposits which are “banks raw materials”.
Q. NBG increased saving Q. NBG increased saving reserve from 10% to 15%. reserve from 10% to 15%. In your opinion, what will In your opinion, what will be the affect from bank’s be the affect from bank’s side in crediting Georgian side in crediting Georgian economy? economy?
A. The usual mechanism of such central bank policy is to tighten lending policy of the banks to mitigate infl ation. It should lead banks to refl ect cost of liquidity in their pricing.
Q. Does BR plan to ex-Q. Does BR plan to ex-pend the chain and service pend the chain and service centres in 2011 during the centres in 2011 during the end of the year?end of the year?
A. We are very pragmatic in this area. Any good opportunity will be studied but we need to be selective with places which are already over covered by banks.
best georgian banksBank Republic Increasing Retail and Corporate Portfolios
“Bank Republic is developing a long term sustainable strategy, oriented on the social responsibility thus focusing on ours clients’ benefits and profitable long term relationships with them.”
“Societe Generale supports Bank Republic not only financially, but in any rational initiative and action. Being part of SG group means to benefit from SG rating to improve cost of funding thus ultimately leading to better service of our clients.”
Christian Carmagnolle, CEO of Bank Republic
Bank Republic is one of the leading commercial banks in Georgia employing more than 1000 staff, serving its clients through 49 branches and serv-ice centers. Currently, Societe Generale posses 80% share in Bank Republic.
HEADLINE NEWS & ANALYSIS 9FINANCIALFINCHANNEL.COM | MARCH 28. 2011
C M Y K
best georgian banks
Advertiser: Bank Republic. Contact FINANCIAL Ad Dep at marketing@fi nchannel.com
Q. What is Cartu Bank’ Q. What is Cartu Bank’ business strategy for the business strategy for the years 2011-2012? years 2011-2012?
A. The Bank’s strategy in 2011 is concentrated on the diversi-fi cation of its activities, includ-ing within the credit portfolio, which means a greater focus on Small and Medium Enterprises. The Bank’s plan is to guarantee organic and healthy growth to provide stability for its share-holders and clients.
Q. Which products are Q. Which products are most interesting and de-most interesting and de-manded by your clients? manded by your clients?
A. Cartu Bank is a uni-versal bank which provides a wide range of banking products to its customers. This includes: • Loans• Checking accounts• Plastic Cards• Deposits• Documentary Operations• Distance banking (internet banking, SMS banking, Bank-client software)
Considering the fact that our main client base is medium and large corporations, we are pri-marily concentrated on corpo-rate fi nancing, as well as private banking for our managers and owners of our corporate clients.
Q. Tell us the main phi-Q. Tell us the main phi-losophy of the Bank? Who losophy of the Bank? Who are your main clients and are your main clients and for which sector is Cartu for which sector is Cartu Bank providing fi nance?Bank providing fi nance?
A. Cartu Bank is a fi nancial institution providing universal banking services to private and corporate clients. Its strategy centres on providing superior quality services to corporate cli-ents and a full spectrum of private banking products to owners, top and middle-level management of the companies. Moreover, the Bank offers com-petitive products to Small and Medium Enterprises.
Bank Cartu has been oper-ating in the Georgian banking industry for 14 years. The Bank was established in 1996 as a Joint Stock Commercial Bank. Since then, the Bank has been steadily developing. Cartu Bank
was one of the fi rst Georgian banks granted full membership to the VISA and MasterCard Payment Systems. Cartu is the fi rst Georgian bank to have VISA and MasterCard service licenses in e-commerce. Also, the Bank is actively cooperating with the Eu-ropean Bank for Reconstruction and Development, the Black Sea Trade and Development Bank and the World Bank to fi nance Georgian businesses. The Bank fosters import and export op-erations among BSEC countries and stimulates energy effi ciency and renewable energy projects in Georgia, helping the economy to reduce its energy intensity with a credit line for on-lending to local private companies.
Q. How supportive is Q. How supportive is Cartu Bank towards SMEs Cartu Bank towards SMEs in Georgia?in Georgia?
A. Cartu Bank has experi-ence, proven stability and a broad portfolio of products and services to be the best partner in Georgia. In order to meet the expectations of our SME clients we developed several credit pro-grammes which are tailored to their needs:
Chain business loans - de-signed for companies having two or more branches or just planning to expand more.
Export-import loans - de-signed for companies working in international trade.
Government property priva-tization loans - designed to help companies or individuals buy government property and ex-pand their business.
Import Substitution loans - designed to support local pro-duction and help substitute or reduce imports.
Q. How successful is Q. How successful is the import replacement the import replacement production support pro-production support pro-gramme?gramme?
A. I would like to mention fi rst that Cartu Bank was one of the fi rst local fi nancial institu-tions which decided to support local producers and substitute imports. The programme is quite successful; the Bank has fi nanced a number of Georgian
companies in different indus-tries (including poultry farms, egg production, vegetable oil production, plastic production etc).
Q. Agriculture is one of Q. Agriculture is one of the main priorities of the the main priorities of the Government this year. How Government this year. How active is Cartu Bank in this active is Cartu Bank in this regard - how many busi-regard - how many busi-nesses have been fi nanced?nesses have been fi nanced?
A. Last year we outlined agri-culture as one of our priority in-dustries for the Bank’s future de-velopment, because we see that this industry has a much higher potential for growth compared to others. Currently we are working on a special offer for farmers in the Kakheti region. This project aims to create a tailored-made offer for farmers (primary pro-duction) in the region.
Q. What is the amount Q. What is the amount of deposits in Cartu Bank - of deposits in Cartu Bank - what is the interest paid on what is the interest paid on
them? And how about peo-them? And how about peo-ple’s behaviour in recent ple’s behaviour in recent months towards infl ation?months towards infl ation?
A. As of December 31, 2010, the Bank’s Deposit Portfolio amounted to 50,225,501 GEL which is a 34% increase com-pared to 2009’s results. This al-lows us to conclude that (1) the Georgian population regained its trust in the stability of Geor-gian banks and (2) their saving behaviour is higher compared to in the last several years.
Q. What requirements Q. What requirements should businesses nowa-should businesses nowa-days satisfy in order to get days satisfy in order to get a low interest loan from a low interest loan from Cartu Bank?Cartu Bank?
A. Again, Cartu was one of the fi rst banks to offer its clients low interest rates on loans. We have an individual approach to each project. However, there are some common requirements (based on the world’s best practices
and our expertise) for the loan applicant to be successful: (1) a company should demonstrate good historical performance (in-cluding fi nancial and operation-al) and (2) the ability to repay the loan based on current cash fl ows. If these requirements are fulfi lled, then the Bank will be able to offer the best rates cur-rently available.
Q. What are your expec-Q. What are your expec-tations of 2011? tations of 2011?
A. As a frontier economy, Georgia stills needs consider-able investment into its infra-structure development. More importantly, Georgia would benefi t from the expertise and knowledge of the international community. Along with consult-ing or technical assistance, it is essential to gain practical, em-pirical knowledge through doing business together, agriculture, starting new production plants, developing value chains in the economy or creating new indus-try clusters, etc.
Q. What growth do you Q. What growth do you foresee at your bank and foresee at your bank and what will it depend on? what will it depend on?
A. With our new products we have been introducing in 2010 and the high level of support and interest of our clients we expect continued growth in these new services and a steady increase in the growth of our portfolio.
Q. How about CSR - how Q. How about CSR - how active are you in this re-active are you in this re-gard and what activities do gard and what activities do you plan for the forthcom-you plan for the forthcom-ing year?ing year?
A. Social Responsibility is one of Cartu Bank’s core values. Therefore, a signifi cant portion of our profi t is donated to the Cartu Charity Foundation every year, which is the biggest charity fund in the country.
Moreover, we stimulate the Georgian economy through vari-ous credit programmes. Particu-larly important is our Import Re-placement Support Programme; the goal of the programme is to support local entrepreneurs and increase local production levels.
best georgian banks
Cartu Bank, with 14 years of experience on the Georgian market, extended its deposit portfolio by 34% overall in 2010 which amounted to 50,225,501 GEL com-pared to the previous year’s fi gure.
According to the lat-est statistics, those of 28 February, the Bank disbursed up to 76 mil-lion GEL worth of loans whilst the total amount of loans disbursed adds up to more than 440 million GEL.
Cartu Bank was one of the fi rst Georgian banks to be granted full membership to the VISA and MasterCard Payment Systems. Cartu is the fi rst Geor-gian bank to have VISA and MasterCard service licenses in e-commerce.
The Bank’s main client base is held by me-dium and large corpo-rations hence it con-centrates on corporate fi nancing mainly, as well as private bank-ing for managers and corporate clients.
Loans disbursed by Cartu bank are of the following types: Chain business loans, Export-import loans, Import Substitution loans, Small and Medium-sized, Government Enterprises Privatization loans, Energy Effi cien-cy Loans.
Cartu Bank ended February with profi ts of 3.2 million GEL and the net profi ts equalled 4,411,196 GEL as of March 1, 2011. The ra-tio of foreign currency denominated loans accounts for 82.8% (365,027,686 GEL).
Cartu Bank Portfolio to Increase by 34%, reaching over 52 million GEL
By KOKA KALANDADZE The FINANCIAL
George Kvirikashvili, Cartu Bank CEO
ABOUT THE CEOGeorge Kvirikashvili has focused his career on commercial banking in Georgia for the last 13 years. Currently Mr. Kvirikashvili serves as CEO of Cartu Bank. He holds a Master’s Degree in Finance from the University of Illinois and has extensive knowledge of the local banking sector.
Prior to working with Cartu Bank, Mr. Kvirikashvili served as the Director of Business Development and Branch Network Management at United Georgian Bank, where he oversaw the entire branch network. As a member of ALCO, he managed the Bank’s liquidity positions, including branch liquidity strategies, securing provisions of adequate liquidity sources.
Mr. Kvirikashvili also worked with the State Chancellery of Georgia where he served as Deputy Head of Fiscal, Monetary and Foreign Economic Relations. He successfully promoted land privatization and titling to private landowners as part of the Land Market Development Project sponsored by USAID.
SCAN TO READ IN MOBILE
HEADLINE NEWS & ANALYSIS 11FINANCIALFINCHANNEL.COM | MARCH 28. 2011
C M Y K
best georgian banks
Advertiser: Cartu Bank. Contact FINANCIAL Ad Dep at marketing@fi nchannel.com
AUTO EXPRESS STARTED TRANSFORMATION OF CARS ON CNG
On 22nd of March Wis-sol daughter brand Auto Express start-ed a new service of
transformation of cars on Com-presssed Natural Gas (CNG). Considering the raised prices of oil on the international markets Wissol, as a socially responsible company, plans to further de-velop the CNG stations nation-wide as well. Auto Express of-fers service of transformation of cars on gas at the Wissol brand-ed service station in Mukhiani, #4 Gobronidze Street.
Wissol cooperates with Ital-ian OMVL SMA to offer safe gas transformation services and is an exclusive distributer of OMVL fuelling systems in Geor-gia. OMVL is a leading player in the alternative fuel vehicles sec-tor, designing, manufacturing and marketing complete fuel-ling systems for gas-propelled vehicles and for the conversion of engines from petrol to CNG.
“Consumption of CNG de-creases fuel expenses by 50% and providing safety guaran-tees by offering international standard fuelling systems hav-
ing ISO quality and safety cer-tifi cates, customers will be able take care about environment as well as CNG is ecologically clean fuel,” As technical expert of OMVL SMA Salvatore Rico-benne claims.
Salvatore Ricobenne was in-vited in Georgia to give train-ings and instructions for Auto Express staff.
“The cars will be technically safe, and the customers will get a guarantee as well being trained and given instructions. Moreover Wissol will be offer-ing an installment service and needing only ID card they can get a bank loan to cover ex-penses”, according to Guram Dapkviashvili, Director of Auto Express.
Wissol, one of the largest scale businesses is Georgia, has added the new Auto Ex-press brand to its diversifi ed business in February, 2011. Besides transformation of cars on gas, Auto Express is devel-oping in two other directions as well: provides oil and lubricant change services exclusively of-fering French Total lubricants to customers and provides vul-canization services and sells wheels;
The FINANCIAL
Mikhail Saakashvili Visited Smart Trade Center Construction in Marneuli
On 21st of March The President of Georgia Mikhail Saakashvili visited Smart Trade
Center in Marneuli and ob-served construction works to be fi nished by September, 2011. Wissol Group is further expand-ing Smart supermarket chain throughout Georgia.
Smart Trade Center is lo-cated at #26 May Street on the 2500 square metre territory in the center of Marneuli. Beside Smart supermarket, pharmacy, bank branch and other trade objects, cinema ready to host 150 guests will be located in the Marneuli Trade Center.
100 people will be employed at the high technological trade center.
The fi rst supermarket of Smart Retail appeared in Tbilisi in 2010. Located at D. Aghmash-enebeli Alley 13th kilometer the fi rst Smart supermarket offers “everything at one place”.
Wissol Group entered the supermarket business after two years of market research and international or local experi-ence analysis to minimize risks and successfully use market opportunities. Foreign experts were also involved in Smart Retail development strategy. In the nearest future Smart Super-markets will appear in Gldani, Vazisubani and Khakheti high-way.
The FINANCIAL
WISSOL GROUP LAUNCHES EUROPEAN STANDARD FITNESS CENTER LAGUNA IN KUTAISI
On 24th of March Wissol Group opened modern standard fi tness
center Laguna at the Torpe-do Kutaisi sports complex in Kutaisi, the Imereti Region. Laguna is considered to be the only European standard sports complex all over Georgia. Wissol Group Supervisory Board Chairman Samson Pkhakadze said the company has invested about 1 million GEL in the com-plex construction.
“Wissol Group acquired the swimming pool jointly with Kutaisi Torpedo football club
as part of the interesting coop-eration between the state and private sectors. After the deal, we started investing in con-structing a modern complex. Besides a swimming pool, visi-tors are able to use fi tness fa-cilities, massage and solarium services. The fi tness center is equipped with modern Ameri-can and German technologies”, Pkhakadze noted.
Laguna complex offers vari-ous individual, family and cor-porate service packages. The price of a one-month member-ship fee starts from 90 GEL for the swimming pool.
Laguna complex is located on 2 500 square meters and em-ploys 60 individuals.
The FINANCIAL
Japan Tobacco International, JTI, has made
the decision to locate its headquarters for the Caucasus region in Georgia, according to Martin Braddock, JTI Regional President for the CIS, Romania and Adriatica Region.
“There were many reasons for our decision. We looked at the investment and business climate here in Georgia. In the tobacco industry two things are very important: excises and regulations. Here in Georgia, what we have seen is that the Government is willing to talk to the industry and listen to the industry and with the industry help to ensure that the operat-ing environment is well regu-lated,” Braddock said.
“Moreover, we had to look at the quality of resources avail-able in the country in terms of offi ce, people, and professional skills. Our decision was that Georgia is the right place to lo-cate headquarters of our Cauca-sus business,” said Braddock.
“We are also looking at busi-ness performance in the Cauca-sus. In 2010 we increased busi-ness here by 50% compared to 2009. In Georgia we signifi cant-ly increased our Camel business and our Winston business. We had 44% growth of JTI sales. Clearly business performance and the investment climate helped us make the decision to base our headquarters here in Georgia,” Braddock added.
JTI operations in Georgia have generated signifi cant tax revenues: in 2006-2010, JTI importer, Eliz Group Ltd., paid over 327 million GEL in dif-ferent types of taxes, including more than 98.5 million GEL in 2010 only.
Currently, JTI is in the proc-ess of looking for offi ce space in Georgia, establishing a legal entity and hiring 41 employees in addition to already existing staff. As Braddock mentioned formal registration documents will be completed sometime in the middle of the year and currently the company is being presented by a representative offi ce.
JTI is one of the leaders of the domestic tobacco market. The company has reached a 23% SOM in Georgia since its entry in 2000.
JTI offers Georgian smokers renowned international brands: Winston, Camel and Sobranie. JTI has a strong growth trend. In 2010 JTI sales increased by 44% compared to 2009. The company’s leading brands Win-ston and Camel have grown by 38% and 71% respectively. The number of JTI employees in Georgia increased by 39% since January 1, 2008.
“We are assessing that the Georgian tobacco market vol-ume is 7 billion cigarettes, and I think year on year we have not seen signifi cant changes in de-mand volumes,” Braddock said.
JTI is the international to-bacco division of Japan Tobacco Inc. (JT), the leading interna-tional tobacco product compa-ny with 23 billion USD net sales (fi scal year ended March 31, 2009). JT is the third largest global tobacco company, with a global tobacco market share of 10.5% and is listed in global Fortune 500 Company.
JTI was formed in 1999 when
JT purchased, for 8 billion USD, the international tobacco operations of the US multina-tional R.J.Reynolds. JTI total sales amounted to 435 billion cigarettes in 2009, generating net sales of 9.6 billion USD and growth rate of 15% compared to 2008.
The company brands are sold in over 120 countries world-wide. It has 89 offi ces all around the world, employing over 90 nationalities. Eight Global Flag-ship Brands constitute the core of JTI’s brand portfolio, includ-ing Winston, Camel, Sobranie, Mild Seven, B&H, Silk Cut, LD, and Glamour.
Martin Braddock started his career at JTI/RJR in 1993 at the company’s headquarters in Geneva, where he held various
fi nancial positions. Braddock rose to the position of Senior Vice President Finance, Infor-mation Technology & Chief Fi-nancial Offi cer for JTI in 2002.
Braddock is a qualifi ed ac-countant who trained with Price Waterhouse and worked on dif-ferent assignments in Eastern Europe advising on accounting, privatization and business valu-ation matters.
He believes that one’s ca-reer path is like a pyramid, the stronger the base the higher one can climb. “I believe the accounting qualifi cation I have is a very strong stone in my career. The professional expe-rience I gained in PwC allowed me to work with many big com-panies in a very short period of time, gave me business experi-ences in the short term. I was lucky to go to work in Eastern Europe as soon as I qualifi ed as an accountant, which gave me huge experiences and put an-other very strong stone in the pyramid,” Braddock said.
Q. What are JTI’s expec-Q. What are JTI’s expec-tations in terms of sales tations in terms of sales growth and market share growth and market share growth after establishing growth after establishing headquarters in Tbilisi, headquarters in Tbilisi, Georgia?Georgia?
A. Clearly the decision to
base management here is aimed at increasing our business in the future. We have plans and a number of products that are coming into the market, which are aimed at increasing our market share in the future. We have plans for the strength-ening for two of our leading brands - Winston, Camel. Moreover, we have brought our brand Sobranie into the market, a trademark with unique herit-age and history. JTI is looking for opportunities in market to access segments which we do not compete in yet. We aim to become the number one tobac-co company in terms of market share.
Q. In your opinion, what Q. In your opinion, what are the main challenges are the main challenges JTI will face in Georgia?JTI will face in Georgia?
A. The main challenges as always in any business are con-tinuing to increase business vol-ume. JTI has many plans. Re-cently, in Camel we introduced a new line extension called Camel Black and Camel White, it took a lot of effort from marketing and sales force to management force and required time.
We have plans to increase the market share of Camel, Winston, Sobranie and many other brands which are still not present in the market. The fi rst challenge is to keep that going, and second to establish the management structure here. The company has to hire staff, that’s 41 people who are not employed yet. We have to fi nd those people, staff those peo-ple and educate them. Building the organization is a huge chal-lenge. So the challenge is to continue to run and grow the business, and second, to build management structure.
Q. JTI sales in Georgia Q. JTI sales in Georgia started in 2000. What has started in 2000. What has changed since then in the changed since then in the Georgian market? How Georgian market? How would you compare the would you compare the present and past situa-present and past situa-tion?tion?
A. I have seen that the market has become much more sophis-
ticated. All the international players in the market are pre-sented here, the environment is very competitive, you have well established local players, and you have some very sophis-ticated distribution companies right now that you did not have 10 years ago. You have very dis-cerning consumers who only want quality products. Moreo-ver, now you have a much more regulated tobacco market, ex-cise is signifi cantly higher than 10 years ago, so there are many changes that are already evident in the market.
Q. Georgia is among the Q. Georgia is among the countries with the cheap-countries with the cheap-est prices for cigarette and est prices for cigarette and largest number of smokers. largest number of smokers. In your opinion, will the In your opinion, will the prices of tobacco increase prices of tobacco increase in the near future?in the near future?
A. This is a very simple ques-tion with a complex answer. If you say that in Georgia the price of tobacco is cheap you should look at the purchasing power of the consumer. So, when you consider countries like Ukraine, tobacco is more expensive for the consumer than countries like the USA due to purchasing power. So looking at absolute prices is not necessarily the right view to take.
To answer the question will tobacco prices rise - of course they will. Two things are cer-tain in this industry: excise will grow higher and regulations will become stricter. And these two things combined with gov-ernmental policies to reduce to-bacco consumption will ensure that over time tobacco prices will grow.
Q. Japan Tobacco is Q. Japan Tobacco is listed on the Tokyo Stock listed on the Tokyo Stock Exchange. In your opin-Exchange. In your opin-ion, what will be the effect ion, what will be the effect and outcomes of the recent and outcomes of the recent events in Japan on your events in Japan on your production, sales as well production, sales as well as stock price?as stock price?
A. I think, in looking at re-cent events in Japan the fi rst issue is really the scale of hu-man suffering as a result of the tsunami, earthquake and situa-tion around the nuclear facility. From a JT perspective the busi-ness has been impacted and JT has made external releases in terms of the specifi c impact on its production and sales opera-tions. There is clearly an impact on the business, and the com-pany is currently assessing it, what that means and how we can continue to run effective operations.
At JTI we are separate from the business in Japan as we run a separate organization in Ge-neva, Switzerland. So, we con-tinue to produce and sell ciga-rettes. Within the company we have established a disaster relief fund to show solidarity and sup-port to our colleagues in Japan. This programme allows employ-ees and our business partners to contribute to the fund, and whatever amount is contributed by April 30, the company will double that money.
Q. What are the CSR ac-Q. What are the CSR ac-tivities JTI is engaged in in tivities JTI is engaged in in Georgia?Georgia?
A. As any company we have the duty to contribute to soci-ety, and we set a goal to be the most responsible tobacco com-pany from a CSR point of view. We have many programmes across the world which we are supporting including charity projects and cultural activities.
On the philanthropic side we have established a programme with Caritas here in Georgia, where we have agreed to sup-port a soup kitchen over 3 years, supporting primarily the elderly. Currently 190 people are getting daily food at Cari-tas soup kitchen. Moreover JTI supports cultural activities in Georgia. We are working with the Japanese Embassy and held several events together. We have brought Japanese and Georgian culture closer to each other.
JTI to Open Caucasus Regional Headquarters in Georgia
By KETI CHKHIKVADZE The FINANCIAL
“Two things are certain in this industry: excise will grow higher and regulations will become stricter. And these two things combined with governmental policies to reduce tobacco consumption will ensure that over time tobacco prices will grow.”
Martin Braddock, JTI Regional President for the CIS, Romania and Adriatica Region
HEADLINE NEWS & ANALYSIS 13FINANCIALFINCHANNEL.COM | MARCH 28. 2011
C M Y K
special edition
Advertiser: The FINANCIAL. Contact FINANCIAL Ad Dep at marketing@fi nchannel.com
best georgian banks“MORE GEORGIAN COMPANIES USING INTERNAL AUDIT FUNCTION,” GRANT THORNTON
By KETI CHKHIKVADZE The FINANCIAL
“More and more Georgian companies realize the advan-tages of internal audit function. The banking sector is one of the good examples where in-ternal audit functions are put in place,” told Nelson Petrosy-an, Director/Partner of Grant Thornton Georgia in exclusive interview with The FINAN-CIAL.
Large companies are also an-other example where more and more often we see internal au-dit divisions being instituted.
“Internal audit function has a rather complimentary out-come because internal action is always better understood than any similar external ac-tion. Internal auditors are the best ambassadors, inside their companies, about the need for a professional approach in any division of company manage-ment,” Petrosyan added.
Grant Thornton Georgia, part of Grant Thornton In-ternational, is a multi-profes-sional group of public account-ants and auditors, specialist advisers in fi nance, business and management, as well as tax and legal advisers operating in Georgia since the year 1999.
Grant Thornton Georgia has increased its turnover by approximately 40% in 2010.The company has experienced signifi cant growth of its activi-ties in Georgia in the past year. The entity says the major factor behind such growth were the strategic decisions made by the company management, includ-ing but not limited to, increased level of market presence and expanding our investments related to obtaining a stronger presence in Georgia.
To the question of from when should company start using the audit service, including compa-ny size, growth rate, structure, Mr. Petrosyan told this was not a question of size or turnover. “If the company management hesitates on whether or not it is best timing to undergo audit, I would suggest management to answer to one simple question: Would you like a professional to give you his opinion and recommendations about your business?” Petrosyan asked.
“If the answer is “Yes”, go and fi nd an auditor who will be so happy to create a real team with you. If this team operates, in a year’s time company man-agement will be surprised how much added value their auditor has brought to the business.”
Q. Small and medium Q. Small and medium size companies do not au-size companies do not au-dit their companies due to dit their companies due to high costs of the service. In high costs of the service. In your opinion, why is not your opinion, why is not special low price service special low price service created for SMEs?created for SMEs?
A. I will need to surprise you here. Audit costs are much cheaper than you would imag-ine! We perform many audit assignment at SMEs and the audit cost has never been a problem as soon as managers understand what audit means and what benefi ts it brings to their business.
Q. Businesses in Georgia Q. Businesses in Georgia are among the most opti-are among the most opti-mistic owners according mistic owners according to the 2011 Grant Thorn-to the 2011 Grant Thorn-ton International Busi-ton International Busi-ness Report (IBR). It holds ness Report (IBR). It holds ninth position in the list ninth position in the list following Germany. Geor-following Germany. Geor-gia is followed by Argen-gia is followed by Argen-tina, Canada, Botswana tina, Canada, Botswana and Singapore. However, and Singapore. However, despite this fact invest-despite this fact invest-ments are still low in the ments are still low in the country. In your opinion country. In your opinion why?why?
A. I believe it is question of time. Businessmen are not used to fi nd such a good place to in-vest in the former Soviet coun-ties. That’s why Grant Thorn-ton study was very interesting. There are yet some very ap-pealing and prospective invest-ments taking place as we speak. Those who invest fi rst are right as they choose the best part!
Q. Ed Nusbaum, CEO of Q. Ed Nusbaum, CEO of Grant Thornton Interna-Grant Thornton Interna-tional, told that in recent tional, told that in recent years the focus for emerg-years the focus for emerg-ing economies has been ing economies has been on the BRIC economies of on the BRIC economies of Brazil, Russia, India and Brazil, Russia, India and China. How would you China. How would you evaluate potential of Geor-evaluate potential of Geor-gia from investment side gia from investment side in the global market while in the global market while making choice among making choice among emerging and BRIC econo-emerging and BRIC econo-mies?mies?
A. Even if Russia is for sure with huge natural resources, it’s not so easy to invest there. As you know, investors don’t need only potential markets, they obviously need to be se-cured, for the long-term pros-pect, about their investments. This is what Georgia must focus on: clear rules, not too many frequent changes in legislation, clear and long term objectives.
Q. In your previous in-Q. In your previous in-terview with The FINAN-terview with The FINAN-CIAL you mentioned that CIAL you mentioned that throughout Grant Thorn-throughout Grant Thorn-ton’s 12 years of opera-ton’s 12 years of opera-tions in the Georgian mar-tions in the Georgian mar-ket, Georgian companies ket, Georgian companies have become more and have become more and more aware of the ben-more aware of the ben-efi ts of trustable fi nancial efi ts of trustable fi nancial information. Please name information. Please name the advantages trustable the advantages trustable fi nancial information both fi nancial information both for internal and external for internal and external use?use?
A. I answered, yet, about ex-ternal use. But, you are right, there is, fi rst of all, a signifi cant benefi t for internal purposes for those companies who run an accurate accounting sys-tem. When companies are de-veloping fast or when their size turns to be large enough, management needs a full and comprehensive fi nancial sys-tem in place. This accounting record keeping system help to timely fi nd the right informa-tion, to evaluate consequences of management actions. So, the fi nancial system has multiple advantages.
Q. How would you eval-Q. How would you eval-uate the fi nancial docu-uate the fi nancial docu-mentations and state-mentations and state-ments of current Georgian ments of current Georgian companies you are audit-companies you are audit-ing? How has the situa-ing? How has the situa-tion as well as companies tion as well as companies attitude changed towards attitude changed towards preparing more detailed preparing more detailed and accurate fi nancial and accurate fi nancial documentations?documentations?
A. One cannot imagine op-erating or collaborating with international companies or western banks or international investors without fair fi nancial information. Many Georgian companies understand this it and are preparing better qual-ity fi nancial information. Com-pany managements understand that they need their fi nancial statements to be audited by an international recognized audit
company. This also explains Grant Thornton’s rapid devel-opment, especially in the last couple of years.
Q. The European Com-Q. The European Com-mission recently issued mission recently issued Green Paper on Audit Pol-Green Paper on Audit Pol-icy which identifi es excess icy which identifi es excess market concentration by market concentration by Big Four fi rms? What was Big Four fi rms? What was your reaction to this poli-your reaction to this poli-cy paper?cy paper?
A. Grant Thornton welcomes the debate which has been opened by the Green Paper. We believe that it represents a timely and signifi cant op-portunity for change. Follow-ing issuance of the EC Green Paper, prominent global mid-tier audit fi rms have called for regulatory intervention to im-prove competition and reduce Big Four concentration of the audit market. In Georgia, this is especially true for the bank-ing sector.
There is really a need for reg-ulatory intervention. We are ready to work with the Nation-al Bank and other government agencies to address the issue. Abolition of Big Four lending clauses will introduce practices that require audit committees to regularly reassess audit ap-pointments. We need to ad-dress the misperception that there are a limited number of fi rms that can do certain work.
Abolishing these clauses is one way to promote free trade. We have clients that want to engage us but are restricted be-cause of restrictive covenants that are imposed on them by banks and other outside par-ties. The theory behind the reg-ular reassessment of audit ap-pointments is that it improves transparency and corporate governance, and allows audit committees to assess other fi rms in the market.
Q. Auditor’s profession Q. Auditor’s profession is somewhat universal is somewhat universal in many countries. How in many countries. How is your work regulated is your work regulated when there are increasing when there are increasing number of cross-border number of cross-border assignments?assignments?
A. Uniformity across the profession is infl uenced by the cohesion among the profes-sional bodies. For example, International Federation of Ac-countants (IFAC), Association
of Chartered Certifi ed Account-ants (ACCA) and Georgian Fed-eration of Professional Account-ants and Auditors (GFPAA) all these three professional bodies share the same core princi-ples, code of ethics and profes-sional standards. This is pretty consistent. That is why, global fi rms like Grant Thornton in-vest signifi cant resources quali-ty of their professional services. Our strength is in being a part of a cohesive global organiza-tion, providing our clients with distinctive, high quality service in over 100 countries.
What refers to regulation of profession, I will just give you a recent example from US and UK. Grant Thornton and col-leagues from fi ve other global fi rms have recently welcomed the cooperative agreement between US Public Company Accounting Oversight Board (PCAOB) and UK Professional Oversight Board (POB) for reg-ulating the audit fi rms.
The global nature of cor-porate activity demands that audit regulators share informa-tion and cooperate across bor-ders. This enables audit fi rm in-spections to move forward and hopefully regulators in other countries will also follow. Such cooperation benefi ts not only the regulators and registered audit fi rms but also investors, whose investments today in-creasingly cross borders.
Internal Audit
“Georgia must focus on: clear rules, not too many frequent changes in legislation, clear and long term objectives.”
Nelson Petrosyan, Director/Partner of Grant ThorntonGeorgia
HEADLINE NEWS & ANALYSIS 15FINANCIALFINCHANNEL.COM | MARCH 28. 2011
C M Y K
best georgian banks
Advertiser: GrantThotnton. Contact FINANCIAL Ad Dep at marketing@fi nchannel.com
son BLU Iveria Hotel hosted over 40,000 people. As Mr. Atakan Turhan, General Manager of the hotel says, out of this number a very high percentage of guests will return.
By TAKO KHELAIA The FINANCIAL
By the end of this year the hotel plans to open a new restaurant. The hotel will of-fer its guests a new menu this summer. “There will be new cocktails and new products that haven’t been available on the market before,” said Atakan Turhan.
“We have a very good port-folio of return guests. One of our biggest concerns is to make our guests want to come back to our hotel. We are sure that a very high percentage of our 40,000 guests will come back again,” Turhan said.
“I’m proud to announce that the Rezidor Hotel Group which is our mother company has been named one of the World’s Most Ethical Com-panies in the hotels, travel and hospitality sector by the Ethisphere Institute for the second year in a row. So this means that we have not just sat back and relaxed after having received the award last year, but strived to deserve it the second year in a row. Our head offi ce is really controlling what we are doing in every in-dividual hotel in the sight of ethical standards, global ethi-cal standards and we pay a lot of attention to following these standards,” Turhan said.
Radisson Blu Iveria Hotel Tbilisi won the award of Best New Hotel presented by the Central Asia and Turkey Ho-tel Investment Conference (CATHIC) in Istanbul in Feb-ruary 2011.
“The criteria for receiving this award includes invest-ment terms and the prod-uct that consists of different things together which make leisure and business trav-ellers happy. This package is not really easy to fi nd in many hotels, either its more business oriented or its lei-sure oriented. In our case it’s a product that covers both segments,”Turhan said.
“We have a good variety of outlets where people can spend their weekend or spend their time in the evening, or do their business throughout the day. It’s a good product, it’s a design product, we call it a new breed design, and it has quite a unique design. The style of the rooms is really great. Most of the guests who are staying at our hotel for the fi rst time are really surprised,” Turhan said.
“We are proud to say that the service level at our hotel is recognized as the best on the market. We have very high guest satisfaction scores,” Turhan said.
“In 2010 Radisson Blu Iv-
eria Hotel was evaluated by a Mystery Guest giving 97.2 points to the hotel out of 100. This was the highest score of a Rezidor Hotel Group hotel in 2010,” Mr. Turhan said.
“While evaluating the hotel, the company who is sending a Mystery Guest does not re-veal that information. During their stay the Mystery Guest scores the hotel in terms of service quality, guest satisfac-tion level, our standards, and conditions.
Receiving such high scores is a thing that we are re-ally proud of. It’s a result of teamwork and how we pay very special attention to standards. We really focus on each small issue that can make our service better. If we receive any guest complaints which are not really positive, we really spend much time on how we can improve our-selves, how we can change the procedures and how we can recover the guests. We do our best to make our guests happy,” Turhan told The FI-NANCIAL.
“I can say that our advan-tage as a hotel in Tbilisi is having the friendliest and most smiley people of Georgia working as our team. You can taste Georgian hospitality in Georgia and the best place to
experience it is at the Radis-son BLU Iveria in Tbilisi,” Turhan said.
The hotel room rate at the Radisson is around 280 USD without breakfast and 300 USD with breakfast for single occupancy, without TAX.
“We do discounts for groups. Sometimes, the prices change based on different products or on the potential of the company,” Turhan said.
“For the weekends we have special discount rates, for special locations we come up with special promotions and we inform our customers with direct mailing or we put out advertisements. We are one of the best users of facebook in Georgia. I believe that we are quite active and we have a high number of followers on our facebook account. From time to time we offer different surprises to our facebook us-ers,” Turhan said.
As Mr. Turhan says, the ma-jority of guests of the Radisson BLU Iveria are Americans.
Americans are fi rst in terms of the major nationality of our guests, second are guests from Turkey, the rest are mainly Europeans and those from our neighbour countries.
“For this summer we expect the majority of guests to be from the same countries, but
to have more leisure guests than we served in the winter. The number of leisure tourists from Azerbaijan and Armenia is increasing and we also ex-pect more local guests,” Tur-han said.
“We will soon open our ter-race that will attract guests in summer and we are work-ing on a new design at the moment. We will have a new product at out terrace, which is an upgraded version of last year. We expect increased de-mand for our terrace. It was almost occupied every night, so this year we will probably have to say no to some people unfortunately - this is my pro-jection that with the new de-sign it will be more popular,” Turhan said.
“In summer we will of-fer our guests a new terrace menu. The terrace menu is centred more on grilled prod-ucts, more Georgian tastes which we are happy to offer. The Filini menu is updated every six month; we receive menus from the head offi ce of Filini. By the end of the year we well come up with a new restaurant at our hotel which will soon be designed by our team. We also updated the menus of both our bars. We have new menus with more varieties of dinks; we have a
bigger variety of food prod-ucts now,” Turhan said.
As summer is coming soon, hotel guests as well as many others would like to have a va-riety of entertainment outlets at the hotel. Together with restaurants and bars, Radis-son Blu Iveria offers people the already-well known Anne Semonin Spa.
“People have the oppor-tunity to try the best spa in Georgia at the Radisson hotel, an international brand - the Anne Semonin Spa. I often receive compliments from our guest that this is a re-ally unique spa. Most of our guests are people who travel a lot, so they are the experts on hotels and who can compare the products of different plac-es with our products,” Turhan said.
“People who have visited spas in different places of the world say that our spa is the best one that they have ever seen. The design of our spa is really unique. There is Geor-gian poetry on the spa’s walls in Georgian and in Latin let-ters, so this is a special con-cept - we are refl ecting Geor-gian culture. The treatment quality is best at the spa and it satisfi es all international standard levels of spa serv-ice,” Turhan said.
“Our casino is also very big and a very popular one. People are very happy that we have such an outlet. Our summer outlet terrace is re-ally nice as well. Our Oxygen bar is also very famous and usually we run out of space unfortunately for all the peo-ple who want to visit us there. We will also come up soon with new cocktails and new products that haven’t been on market before. We are keep-ing it alive with new offers,” Turhan said.
“We are expecting a new music programme in the Filini restaurant, Piano night; Gigi Wonder will start play-ing at our hotel. He is a very popular artist and musician, so this will bring more busi-ness to our restaurant. 3 days a week he will be playing with us and we will soon be an-nouncing this. We are open-ing a new hotel in Batumi and our executive chef has trans-ferred to Batumi, so we will come up with interesting of-fers in Batumi. Our hotel will have a new chef with different tastes and we will come up with more attractive offers in Tbilisi. We will make a couple of changes to our menus too,” Turhan said.
Radisson Blu hosted the most infl uential business awards - Golden Brand - in March 2011.
“It was a gorgeous night with very high profi le peo-ple representing the lead-ing brands in Georgia. I was happy to attend the Golden Brand event myself. Golden Brand adds more credit to our portfolio of business and cor-porate clients,” Turhan said.
The Radisson has signifi -cantly reduced energy con-sumption, making the hotel more green.
“We have improved a lot, saving energy after the open-ing of the hotel. Our building has an automation system and I can say that it’s an intelligent building. We have decreased energy consumption by 40% by better management and optimization. This environ-mental protection system is one of the focuses of our hotel chain. We have to report the consumption of utilities to our head offi ce every month and we have to come up with different resource-saving ac-tivities.”
“We have to make sure that we are consuming less and less energy and we im-prove our effectiveness and effi ciency. So we really spend much time on this issue. The return of investments is sav-ing in money and also using these energy resources less. It’s good for the environment around us, it’s good for the resources of the country and we spend a lot of time on this issue. It’s called a responsible business that is a part of the responsible business pro-gramme that the Rezidor Ho-tel Group has. We also focus on charity activities, improv-ing our staff, adding value to our community around us and also helping people who need help,”Turhan said.
“Georgia has its own cui-sine, own music and even its own alphabet. It’s interest-ing to see Tbilisi, its people, nature and the country itself. Georgia has a great wine cul-ture. What I like the most about Georgia is its own, spe-cial taste; it’s a combination of different things that makes Georgia - Georgia!”
Radisson Blu Iveria Hotel has a High Portfolio of Returning Guests
Atakan Turhan, General Manager of the Radisson BLU Iveria Hotel
HEADLINE NEWS & ANALYSIS 17FINANCIALFINCHANNEL.COM | MARCH 28. 2011
C M Y K
best georgian banks
Advertiser: Radisson Blu Iveria Hotel. Contact FINANCIAL Ad Dep at marketing@fi nchannel.com
“Private sector “Private sector development in development in Georgia is very Georgia is very promising and the promising and the Bank is currently Bank is currently studying a number studying a number of opportunities in of opportunities in several important several important sectors including sectors including banking, renewable banking, renewable energy and energy and transport” transport”
Giorgi Kiziria, ADB Country coordinator in Georgia
The FINANCIAL
On the private sec-tor side, up to this date ADB has been focusing on
banking and SME sector development. ADB has ap-proved 75 million USD in two separate loans to the Bank of Georgia for SME on-lending between 2007 and 2010. These loans are expected to help Georgia expand its SME sector, as well as strengthen confi -dence in banks in the wake of the global fi nancial cri-sis.
In 2011 ADB is planning to extend its trade fi nance programme to the two largest local banks - Bank of Georgia and TBC. These two banks have shown in-creasing trade volumes and a potential for growing demand for trade related transactions. The facil-ity will assist the banks in the development of trade through revolving credit lines for on-lending,
Asian Development Bank (ADB), based in Manila, Philip-pines, is one of the major Inter-national Financial Institutions dedicated to reducing poverty in its developing member countries through inclusive and environ-mentally sustainable economic growth and regional integration. Established in 1966, the Bank is owned by 67 member countries - 48 from the region. In 2010, it approved a total of 13.8 billion USD in fi nancing operations through loans, grants, guaran-tees, equity investments, and technical assistance projects.
Georgia joined ADB in 2007 and the resident mission began operations in December 2008. The partnership between Geor-gia and ADB has been expand-ing since then at a rapid pace encompassing a number of key sectors including municipal in-frastructure, urban transport, road corridors, water supply and sanitation, energy, social services and private sector development.
Between 2007 and 2011 ADB has approved loans for Geor-gia’s public sector surpassing 600 million USD and grants totalling 5 million USD. The pri-vate sector has received loans in the amount of 75 million USD. Today, ADB is one of the largest donor organizations in Georgia with a pivotal role in reform-ing and upgrading Georgia’s transport and water supply and sanitation sectors. ADB is also involved in banking and SME development through its private sector operations and is expanding to cover private infrastructural projects carry-ing developmental impact. The sectors of interest include re-newable energy, transport and manufacturing.
In his interview with The FI-NANCIAL, Mr. Kiziria spoke about ADB’s role in Georgia, as well as projects implemented by ADB in Georgia.
Q. ADB’s commitment is Q. ADB’s commitment is part of a 4.5 billion USD part of a 4.5 billion USD pledge by donors made in pledge by donors made in Brussels in order to revital-Brussels in order to revital-ize the Georgian economy. ize the Georgian economy. What is the share of Geor-What is the share of Geor-gia’s fi nancing in the total gia’s fi nancing in the total lending of ADB for 2011?lending of ADB for 2011?
A. ADB pledged 300 million USD in assistance to Georgia over the 2008-2010 period at a donor conference held in Brus-sels in October 2008. Up until
today, the Bank approved loans to Georgia’s public and private sectors surpassing 700 million USD. The projects to be ap-proved by the Bank in 2011 are currently under preparation and more detailed information regarding the volume of assist-ance in 2011 will be shared once those volumes are confi rmed.
Q. What is the status of current projects sponsored by ADB, including Small Business, Water Supply, Transport and ICT?
A. As of today, ADB’s inter-ventions fall within several key sectors including the Road Cor-ridors (East-West highway), Ur-ban Transport, Municipal Infra-structure and Water Supply and Sanitation Systems. Following is the break down of the current projects and programmes.
Municipal Infrastructure: Municipal Services Develop-ment Project is fi nancing the re-habilitation of roads and water supply and sanitation systems in many municipalities benefi t-ing hundreds of thousands of Georgians across the country through more than 100 sub-projects. Some of the highlights of this programme include the rehabilitation and expansion of water supply and sewerage sys-tems in Poti, Oni, Lagodekhi and others; construction of roads in high mountainous areas like Mestia, Keda, Shuakhevi etc.; rehabilitation of roads within the important urban centres such as Borjomi, Telavi, Akhalt-
sike and others. The programme is nearing its completion and its impact can be easily examined on the ground.
Another programme is Road Corridors Investment Pro-gramme: Together with other donors ADB is fi nancing the rehabilitation and expansion of Georgia’s East-West highway with a focus on the Adjara re-gion. The on-going projects in-clude the construction of bypass roads in Batumi and Kobuleti in order to decongest these re-sort towns, enhance the transit capacity of the highway and im-prove road safety. The project is
in the early stage of construc-tion. Within the same pro-gramme ADB is also preparing to fi nance the modernization of customs at Sarpi crossing point in order to allow for faster and more effi cient crossing.
Sustainable Urban Transport Investment Programme ap-proved in 2010 is designed to improve the public transport network and support the devel-opment of green and effi cient transportation modes in key urban areas. The programme includes technical assistance to develop the Transport Master-Plan for the capital Tbilisi - a fi rst in its post-soviet history.
Some of the confi rmed projects for 2011-2012 include extending the subway network on Vazha Pshavela avenue, construction of a tunnel on Gor-gasali Avenue to decongest the historical heart of Tbilisi; con-struction of an additional bridge on Mtkvari river; moderniza-tion of the Tbilisi-Rustavi road; rehabilitation of the connecting road to Mestia; coastal protec-tion works in Batumi aimed at protecting the Black Sea coast from erosion and loss of urban space. These and other urban interventions are part of a larger urban transport development roadmap jointly developed by the Government and ADB.
Urban Services Improve-ment Investment Programme is currently under considera-tion to support the rehabilita-tion of water supply and sanita-
tion systems in 6 urban centres - among them, the largest cit-ies, administrative capitals and towns of growing economic po-tential (Kutaisi, Marneuli, Zug-didi, Poti, Mestia and Anaklia). As a result of the programme, 335,000 inhabitants will be pro-vided access to uninterrupted safe water supply and function-ing sewage systems. This in turn will improve health safety con-ditions, decrease environmen-tal pollution through improved sewage treatment and strongly support development of local economies - in particular tour-ism and processing industries. The programme is based on a sector development approach to ensure long-term sustain-ability of the investment. This implies extending the technical assistance to the relevant state agencies and the publicly owned Water Company to help improve legal and regulatory framework, tariffi cation methodology and overall technical capacity. The technical components include state-of-the-art technology transfer that will boost the asset management capacity.
Q. How do you manage Q. How do you manage to control implementation to control implementation of the above projects?of the above projects?
A. All ADB fi nanced projects in the public sector are designed and implemented by government agencies with a need based sup-port from ADB. The Bank closely moni-tors the implementa-tion process in order to ensure the compli-ance with our general guidelines, project specifi c covenants and that all targets are achieved as planned in the design process in a timely manner. Particular emphasis is placed on the moni-toring of procurement practices and social and environmental aspects.
Q. How do you Q. How do you evaluate the current condi-evaluate the current condi-tion of Tbilisi’s urban situ-tion of Tbilisi’s urban situ-ation, in terms of pollution, ation, in terms of pollution, infrastructure, etc?infrastructure, etc?
A. Tbilisi sits on a fairly com-plex landscape from the perspec-tive of urban development. The long shape of the capital, Mtk-vari and Vere rivers, number of hills and mountains, while con-tributing to the uniqueness and charm of the capital, at the same
time create natural obstacles to urban transport development and require more creative and sometimes expensive transport solutions. The urban migration trends through the last couple of decades, rapid growth in the ownership of motorized trans-port and the construction boom of the recent years have only added to these complexities. Traffi c jams, car accidents, the eating up of pedestrian space, pollution and noise have pro-liferated rapidly and the city is requiring multiply transport in-terventions if it is to accommo-date the increasing urban load and maintain its attractiveness. Some of these interventions have already been initiated by the local authorities including relocation of the rail system away from the city, moderniza-tion of the subway system, con-struction of additional roads, improvements in pedestrian crossing and better enforcement of traffi c rules.
ADB is currently providing a grant fi nanced technical assist-ance to Tbilisi City Hall to put together a transport develop-ment Master Plan for the capi-tal, which will propose a number of additional short and long run transport related interventions. The bulk of the study has already been done including detailed analysis of traffi c fl ows, surveys on origin-destination behaviour (around 12,000 people sur-veyed) etc. The Master Plan will be presented to the public within weeks. It will create a roadmap for further transport related in-terventions by the Government and interested donor organiza-tions including ADB. The high-lights of the plan include: con-struction of additional Bridge on Mtkvari River for traffi c decon-gestion, construction of a tunnel on Gorgasali Avenue aimed at redirecting the congested traf-fi c away from one of the major tourist landmarks of the city Abanotubani and bringing one more green area to the city cen-tre; Construction of the metro extension on the Vazha Pshavela avenue to promote greener and more effi cient transport as well as to reduce the pollution, devel-opment of an urban boulevard through the corridor to be freed by the relocating railway, intro-duction of a modern tramway as a greener and more effi cient transportation mode.
Q. Why is the largest sum Q. Why is the largest sum being spent on Transport ?being spent on Transport ?
A. Transport is a vital sector of the Georgian economy for very obvious reasons. Georgia sits on a major crossroad connecting
Europe and Asia through Black Sea ports, a well-developed rail system and the East-West highway. Regional and inter-re-gional trade fl ows through this corridor have been picking up very signifi cantly in recent years (save for the immediate after-math of the 2008 confl ict and the world economic crises) and are projected to continue steady ascendance. Today transport
is a signifi cant contributor to Georgia’s GDP and has the po-tential to serve as a fundamental driver of economic growth.
This inherent competitive-ness makes the development of the East-West corridor a primary task of the state, the soundness of which is widely acknowledged. In addition, do-nor assistance in the sector has two decades of history and the benefi ts of past assistance are obvious. This is why ADB is par-ticularly active in the sector.
Q. Do you advise the Q. Do you advise the Georgian Government on Georgian Government on spending (which concerns spending (which concerns your funding)?your funding)?
A. Optimal and result ori-ented utilization of assistance is always a priority. During the de-sign phase, ADB together with the Government carefully exam-ines the scope of each project/programme, its intended impact and the effi ciency of fi nancing and implementation arrange-ments under consideration.
In the process, ADB often extends its technical assist-ance through which we try to bring our knowledge products and sector expertise in order to facilitate the most optimal project design. Also, most of our current projects are part of larger sectoral programmes, which are backed up with Sec-tor Development Plans and Roadmaps developed together with the Government. Our in-dividual projects are analysed and approved in the context of these long term and more comprehensive frameworks. To sum up, the entire cycle of project selection, analysis, de-sign and implementation can be characterized by very close and meticulous teamwork between ADB and government agencies, where both parties are contribu-tors to the process.
Q. Are you going to fi -Q. Are you going to fi -nance Tourism develop-nance Tourism develop-ment in Georgia?ment in Georgia?
A. ADB recognizes that Tour-ism is one of the most promising sectors of the Georgian econo-my, which can have a very sig-nifi cant positive impact on eco-nomic growth and employment in the country. Most of ADB fi nanced projects in Georgia are expected to generate both direct and indirect positive impacts on tourism development.
ADB fi nanced full rehabilita-tion and expansion of Water Supply and Sanitation systems in Mestia will not only benefi t the local communities, but it will also facilitate hotel develop-ment in this historical town and strongly contribute to Mestia’s
attractiveness as an important tourism destination.
ADB fi nanced reha-bilitation of the main access road to Mestia will facilitate faster, more comfortable and safer transfor-mation both for local communities and for the tourists vacation-ing in Mestia.
Kobuleti and Ba-tumi bypass roads, which are currently under implementation will relieve the heav-ily congested traffi c in these resort towns by diverting it away from the touristy areas. Easier and safer road transportation as well as reduction in pollu-
tion and noise will only boost the tourism potential of the area.
ADB is also preparing to fi -nance the shoreline rehabilita-tion works in Batumi and Anak-lia in 2011-12 in order to protect the Black Sea coast from erosion in these resort areas and con-serve the existing urban space. The project will signifi cantly increase the attractiveness of these resorts.
ADB Loaned 700 million USD to ADB Loaned 700 million USD to Georgian Public and Private SectorsGeorgian Public and Private Sectors
Giorgi Kiziria, ADB Country coordinator in Georgia
“Today transport is a significant contributor to Georgia’s GDP and has the potential to serve as a fundamental driver of economic growth.”
HEADLINE NEWS & ANALYSIS 19FINANCIALFINCHANNEL.COM | MARCH 28. 2011
C M Y K
best georgian banks
The European Bank for Reconstruction and Development invested 71.9 million EUR in Georgia’s fi nancial sector in 2010, two fi fths of the portfolio is in the fi nancial sector. EBRD hopes to invest a similar amount to the 2010 fi gure and maybe even more in Georgia’s fi nancial sector according to Paul-Henri Forestier, EBRD Director for the Caucasus, Moldova & Belarus.
Since the beginning of its operations in Georgia, EBRD has committed over 1 bil-
lion EUR in approximately 129 projects in the fi nancial, corpo-rate, infrastructure and energy sectors.
The main projects for 2010 at EBRD were: Black Sea Transmission Line (80 million EUR), Tbilisi Railway Bypass (100 million EUR), Poti Port (8 million EUR), Enguri Hydro Plant Rehabilitation (20 mil-lion EUR), and Adjara Solid Waste Project (3 million EUR).
The key areas for EBRD in-clude industry, commerce and agribusiness, energy, fi nancial institutions and infrastructure.
In the fi nancial sector EBRD’s key priority is to sup-port the stability of the fi nan-cial banking sector in particu-lar. The Bank’s focus will be on ensuring adequate levels of capital and supporting the re-sumption of lending by existing clients in the fi nancial sector.
Moreover, the Bank will support rehabilitation, con-struction and expansion in-vestments in the power sector that will help Georgia achieve security of energy supply while facilitating trading of electricity in the region. Strong emphasis will be put on supporting the enterprise sector.
“Like many other emerging countries, Georgia has also suf-fered from the global fi nancial crisis. EBRD’s main priorities for Georgia, since the crisis, were, largely to support the fi nancial sector to remain liq-uid, with loans as well as with credit lines to be extended to the real sector of the economy. Developing the enterprises sec-tor remains the backbone of a healthy economy,” Forestier told The FINANCIAL.
“The Bank continuously fo-cuses on developing the private sector in Georgia addressing critical bottlenecks to local private sector investment and foreign direct investment. In the fi nancial sector, in addition to expanding its support to ex-isting and new partner banks in Georgia, EBRD will assist in developing the non-bank fi nancial sector with a specifi c focus on leasing, insurance and private pension schemes,” Forestier said.
To the question how would he evaluate the performance of the Georgian banking sector, Mr. Forestier said “Georgian banks have generally restored their confi dence in lending and currently have good liquidity.”
Q. Which banks are Q. Which banks are mainly fi nanced by EBRD mainly fi nanced by EBRD in Georgia and what in Georgia and what was the main decision in was the main decision in choosing these banks?choosing these banks?
A. We deal with the major-ity of the leading banks as well as with medium/small ones measured by assets, covering 85% of the whole banking in-dustry. We also work with two non-bank fi nancial institutions - Imedi L insurance company and TBC Leasing.
The Bank primarily focuses its investments on projects that meet the key criteria of sound banking, additionality and transition impact. EBRD also seeks to promote the develop-ment of fi nancial markets and contribute to fi nancial stability. A healthy, effi cient and stable fi nancial sector remains the cornerstone of a market econ-omy.
Q. In the fi nancial sec-Q. In the fi nancial sec-tor, EBRD will expand sup-tor, EBRD will expand sup-port to existing and new port to existing and new partner banks in Georgia, partner banks in Georgia, as well as developing the as well as developing the non-bank fi nancial sec-non-bank fi nancial sec-tor with a specifi c focus tor with a specifi c focus on leasing, insurance and on leasing, insurance and private pension schemes. private pension schemes. Currently, how would you Currently, how would you evaluate the development evaluate the development stage of the non-bank fi -stage of the non-bank fi -nancial sector?nancial sector?
A. A range of banks and spe-cialist institutions offer micro fi nance. Bank lending to the MSME sector has increased with the rapid growth of Pro-Credit Bank contributing to a signifi cant competitive pres-sure in this segment of the mar-ket. Nevertheless, only some fi nancial intermediaries have developed sustainable MSME lending, and there is still a big gap in further development of the Micro fi nance Organiza-tions in Georgia.
The insurance market re-mains relatively small (with a premia-to-GDP ratio of less than 1%), and the legislation and regulation fall short of the IAIS standards. The scale of private pension funds opera-tions is very limited. Leasing operations are being gradually
developed but from a very low base with only three leasing companies operating in the market.
EBRD will expand its support to developing the non-bank fi nancial sector with a specifi c
focus on leasing, insurance and private pension schemes.
Q. Georgia is the most Q. Georgia is the most anti-corrupt state in Eu-anti-corrupt state in Eu-rope, European Bank for rope, European Bank for Reconstruction and Devel-Reconstruction and Devel-opment (EBRD) Vice Pres-opment (EBRD) Vice Pres-ident Jan Fischer declared ident Jan Fischer declared in Kiev. In your opinion, in Kiev. In your opinion, what other factors might what other factors might be attractive for foreign be attractive for foreign investors?investors?
A. Recent developments of the country are as follows. The Government’s extensive re-form agenda, with its focus on improving the business envi-ronment, has already achieved important results since imple-mentation began in 2009. The World Bank’s Doing Business 2010 survey ranked Georgia 11th out of 183 countries by its composite ease-of-doing business measure, a further improvement on the country’s 16th position a year earlier. Its ratings in both paying taxes
and trading across borders exhibited especially large im-provements, refl ecting the progress with reforms in these areas. Georgia also moved up slightly in the Transparency In-ternational Corruption Percep-tion’s Index for 2009 to 66th globally, a level above any CIS country by a wide margin.
The Government has con-tinued to further simplify and streamline the tax system, building on the changes imple-mented in 2009. These elimi-nated the tax on dividends from publicly traded enterprises, on interest income from bank de-posits and on capital gains. The 2010 reforms, to be implement-ed in 2011, are set to introduce a number of tax breaks for micro and small businesses, includ-ing the elimination of profi t tax on small businesses, provided they submit relevant account-ing documentation. These re-forms should help reduce the size of the shadow economy. To further reduce corruption, the new tax code will establish a board of auditors to supervise the tax inspectors. At the same time, the previously foreseen decrease in income taxes will be delayed in order to satisfy budget revenue requirements.
The Government is creating a supportive environment for the development of the coun-try’s nascent information tech-nology (IT) sector.
IT use in Georgia is already growing rapidly, as evidenced by the almost 50% increase in
the number of broadband us-ers in 2009. By 2011 the au-thorities plan to implement a bill on the creation of virtual IT zones, with signifi cantly faster issuance of relevant licenses. However, the exemption of companies operating in the zones from all taxes and cus-toms duties may complicate tax administration.
The National Bank of Georgia (NBG) introduced new meas-ures and policy instruments in 2010 designed to increase the effectiveness of monetary policy in a heavily dollarised fi nancial system. Among these meas-ures, which the NBG hoped would also boost GEL lending, were guaranteed refi nancing instruments with variable in-terest rates and an expansion of the range of collateral, which can be used to tap central bank refi nancing.
The measures had a limited impact on reducing dollarisa-
tion, however. Ongoing efforts to build capacity to adopt a credible infl ation targeting re-gime should help build confi -dence in the ability of the NBG to maintain price stability and, consequently, in GEL. Com-bined with further strengthen-ing of prudential policies and deepening of the local capital market, these policies would help reduce dollarisation over time.
Q. In your opinion, Q. In your opinion, what strategies should what strategies should Georgia follow and which Georgia follow and which sectors should be further sectors should be further developed to make Geor-developed to make Geor-gia more economically at-gia more economically at-tractive for investors?tractive for investors?
A. The main challenge for Georgia is to attract private investment after the crisis. There is considerable uncer-tainty about the future pace of foreign direct investment (FDI) infl ows - a key driver of pre-crisis growth. Therefore, it is important for the authorities to focus on structural reforms to encourage domestic savings and investment.
Further reforms are required in the fi nancial sector to ensure continued recovery from the crisis and stable growth in the longer run. A credible shift of the monetary policy framework to infl ation targeting, further strengthening of prudential policies and deepening of the local capital market are the key issues. Over time, these poli-cies should help reduce dollari-sation of the banking system. Although the Government has pursued fi scal consolidation in 2010, the overall defi cit re-mains high and public debt has yet to stabilize.
It will be important for the Government to make a credible commitment to implementing a responsible fi scal policy in the future to support a recovery of market confi dence.
Q. EBRD is supporting Q. EBRD is supporting the rehabilitation and the rehabilitation and expansion of the electric-expansion of the electric-ity distribution network ity distribution network in Tbilisi with a 25 mil-in Tbilisi with a 25 mil-lion USD loan to Telasi. In lion USD loan to Telasi. In your opinion, what is the your opinion, what is the potential of energy sector potential of energy sector development and which development and which projects will be fi nanced projects will be fi nanced under the 25 million USD under the 25 million USD loan?loan?
A. EBRD extended 25 mil-lion USD to JSC Telasi to fi -nance the company’s invest-ment needs for 2010 and 2011. Telasi’s investment programme principally consists of the re-habilitation and expansion of its medium and low voltage network and the buildings and equipment at its substations as well as the introduction of a SCADA system (supervisory control and data acquisition) at medium voltage substations’ level to enable remote monitor-ing over the network. The main purpose of these investments is to improve the quality and reliability of supply and reduce losses in the distribution net-work.
Development of the energy sector in Georgia will offer Georgia an alternative source of electricity supply and sub-stantially contribute to secu-rity of supply. Georgia has huge potential for energy resources, mostly from renewable energy. The Government’s key strategic objectives also are: i) increase energy security; ii) increase the reliability and quality of elec-tricity supply in Georgia; iii) increase electricity trade in the Caucasus through the creation of an electricity hub for energy exchanges with neighboring countries (i.e. Turkey, Armenia and Azerbaijan).
EBRD Invested 71.9 million EUR EBRD Invested 71.9 million EUR in Georgia’s Financial Sector in 2010in Georgia’s Financial Sector in 2010
Henri Forestier, EBRD Director for the Caucasus, Moldova & Belarus
“It will be important for the Government to make a credible commitment to implementing a responsible fi scal policy in the future to support a recovery of market confi dence.”
The FINANCIAL“Solid economic growth (Fitch forecasts GDP to increase by 5% in 2011) provides quite a favourable backdrop for the development of the banking sector. Asset quality metrics should continue to improve as some old problem loans are recovered and banks increase issuance of new credit,” Natalia Smirnova, Associate Director and James Watson, Managing Director of Fitch Ratings said to The FINANCIAL.
“The main challenge faced by banks is likely to be an increase in competition, especially for high-quality borrowers which are relatively limited on the Georgian market. This could put some pressure on margins, and could also potentially in-crease risk appetite at some banks, which may seek growth in more risky segments,” Fitch Ratings directors told The FI-NANCIAL.
“The main chal-“The main chal-lenge faced by lenge faced by banks is likely to banks is likely to be an increase be an increase in competition, in competition, especially for especially for high-quality bor-high-quality bor-rowers which are rowers which are relatively limited relatively limited on the Georgian on the Georgian market.”market.”
According to Fitch Ratings the funding of further loan growth is also an important challenge. Although banks have accumulated signifi cant liquidity which can be partially reallocated into loan portfolios in 2011, the sector’s loans/de-posits ratio was a high 114% at end-2010, suggesting limited capacity for lending to grow too far ahead of customer bal-ances.
According to Fitch, “The gen-erally solid capital and liquid-ity positions of Georgian banks were important strengths that helped them weather the cri-sis”.
“At end-2010, notwithstand-ing strong growth during the year, the system’s regulatory capital adequacy ratio remained a relatively high 17.4%.
Fitch Ratings:Main Main Challenge to Challenge to be be increase in increase in competition competition The FINANCIAL
Furthermore, Basel capital ratios are usually markedly higher than regulato-ry ones for Georgian banks, mainly be-cause of the additional regulatory risk weighting applied to foreign currency lending. Banks also remain very liquid, with about one third of the system’s balance sheet held in liquid assets,Fitch Ratings, taking into account on-going loan growth, it is likely that both the capital and liquidity positions of Georgian banks will moderate slightly in 2011, but we are not expecting a critical deterioration in these metrics, given the current strong positions and quite stringent regulation.
According to Fitch Ratings the two largest banks, Bank of Georgia and TBC Bank, jointly account for around 60% of system assets and are both of high systemic importance. Bank of Georgia’s Long-term Issuer Default Rating (IDR) was upgraded to ‘B+’/Stable Outlook from ‘B’ in August 2010, refl ecting improvements in the Bank’s standalone credit profi le. TBC’s Long-term IDR, which is also ‘B+’/Stable, is driven by potential support from the Bank’s international fi nancial institution shareholders.
VTB Bank Georgia’s and Pro-Credit Bank Georgia’s ‘BB-’ IDRs are driven by potential support from their majority shareholders: Russian state-controlled VTB Bank and Ger-many’s ProCredit Holding AG. In the beginning of March 2011, we revised the Outlooks on these banks’ IDRs to Positive from Stable, following the revision of the Outlook on Georgia’s sovereign’s ratings to Positive.
The ‘B’ Long-term IDR of Liberty Bank is underpinned by potential support the Bank could receive from the Georgian authorities due to its important social function in distribut-ing pensions and social benefi ts in the country.
The ‘B-’ Long-term IDR of Basis-bank refl ects the stand-alone strength of the Bank. The rating was upgraded from ‘CCC’ in August 2010”.
In their interview with The FINANCIAL, Natalia Smirnova, As-sociate Director and James Watson, Man-aging Director of Fitch Ratings analysed the Georgian banking sec-tors, before and after the crisis period chal-lenges and outcomes.
Q. Which are the most active Q. Which are the most active banks in the Georgian banking banks in the Georgian banking sector currently? Which banks sector currently? Which banks would you name the most ac-would you name the most ac-tive in crediting corporate and tive in crediting corporate and physical clients?physical clients?
A. After the quite serious stress which Georgian banks underwent in 2008-2009, when new credit was very limited, in 2010 we observed a resumption in bank lending, with system loans growing by 21%. Within the sector the pace of growth varied from bank to bank, depending on how quickly banks recovered from the crisis and were able to adjust their strategies, and the extent to which the crisis impacted their risk appetites. Bank of Georgia and TBC both dem-onstrated above sector average loan growth in 9M10, while Liberty, KOR Standard and HSBC have all grown rapidly from low bases. This in par-ticular applies to Liberty, which has pursued aggressive growth, primarily in the retail sector.
Q. How would you evaluate Q. How would you evaluate the performance of the Geor-the performance of the Geor-gian banking sector in 2010?gian banking sector in 2010?
A. After two years of losses, 2010 was a profi table year for Georgian
banks. This was driven fi rst of all by reduced credit costs, which in 2008-2009 had weighed on the profi tabil-ity of the banking system. Revenue generation has also strengthened on the back of more active lending and still solid net interest margins.
Q. What were the main chal-Q. What were the main chal-lenges the banks had to face lenges the banks had to face after the post war and post after the post war and post crisis period?crisis period?
A. In Georgia, as in many banking systems globally, banks initially faced funding challenges and then subse-quently more deep-seated asset qual-ity problems. Georgian banks coped with the funding challenges in part due to generally quite strong liquidity positions pre-crisis, which helped them withstand deposit outfl ows in August 2008 and in the fi rst half of 2009. In addition, TBC and Bank of Georgia benefi ted from the ability to refi nance much of their foreign debt with longer-term facilities made available by international fi nancial institutions.
The extent of asset quality prob-lems varied from bank to bank in Georgia, but tended to be higher at those institutions which had lent most heavily to the real estate and construction sectors. Most banks had relatively little experience pre-crisis of dealing with such an asset quality downturn, and so often needed to retrain staff or import skills from shareholders or consultants to help manage loan the workout and recov-ery process.
Q. What are the major weak-Q. What are the major weak-nesses of the banking sector nesses of the banking sector currently?currently?
A. The Georgian banking sector remains highly dollarized, with more than 70% of loans provided in foreign
currency. This makes Georgian banks very vulnerable to exchange rate volatility and gives rise to potentially signifi cant additional credit risk.
More generally, the Georgian banking system continues to operate in what is still a relatively small and concentrated, low income emerging market economy.
Q. How competitive are capi-Q. How competitive are capi-tal ratios and fi nancial indica-tal ratios and fi nancial indica-tors of Georgia compared to tors of Georgia compared to other emerging markets?other emerging markets?
A. Capital ratios in the Georgian banking sector are higher than in most other emerging markets, which is positive for creditors, but from the perspective of equity investors can weigh on banks’ return on equity. In terms of other fi nancial indicators, Georgian banks’ net interest margin remains relatively high, which in part refl ects the still quite early stage of development of the market and the risk premium charged to lenders by banks.
Q. What is the potential of Q. What is the potential of Georgian banking sector de-Georgian banking sector de-velopment compared to other velopment compared to other emerging markets of the world emerging markets of the world and to neighbour countries like and to neighbour countries like Armenia, Azerbaijan, Kaza-Armenia, Azerbaijan, Kaza-khstan, Ukraine, Russia?khstan, Ukraine, Russia?
A. The level of Georgian banking sector penetration, as measured by its loans/GDP ratio, is signifi cantly lower than in larger CIS countries, such as Russia, Kazakhstan and Ukraine, but broadly in line with Armenia and Azerbaijan. This suggests signifi cant growth potential for Georgian banks in the medium term, however the quite narrow base of the Georgian economy and limited sources of long-term funding, in particular in local currency, are constraints.
Q. In your opinion, what was Q. In your opinion, what was a good lesson for Georgian a good lesson for Georgian banks to learn from the fi nan-banks to learn from the fi nan-cial crisis?cial crisis?
A. The crisis forced many banks to reconsider their assessment of credit risk and, to a lesser extent, refi nanc-ing and liquidity risk. However, the considerable international assistance received by the Georgian economy in general and some banks in particular limited the impact of the crisis, and hence perhaps also the degree to which the crisis will result in changes in risk management practices.
Q. Finding external fund-Q. Finding external fund-ing for further lending is still ing for further lending is still the case for Georgian banks. the case for Georgian banks. In your opinion, how should In your opinion, how should banks create more reserves?banks create more reserves?
A. Although refi nancing risks for the sector have reduced markedly as a result of funding made available by international fi nancial institutions, the sector’s overall dependence on wholesale borrowing, as refl ected in the loans/deposits ratio, remains high. Relatively low income and sav-ings levels are constraints on deposit growth, although very rapid deposit expansion in 2010 has helped to rebalance banks’ funding structures.
High Dollarization High Dollarization A. The high share of loans provided in foreign currency is a direct result of banks’ funding structures, which comprise mainly foreign currency de-posits and international borrowings. In the long-term, an increase in GEL deposit funding is likely to be depend-ent on a sustained period of moder-ate GEL infl ation and a signifi cant differential between the interest rates offered on local and foreign currency deposits.
Q. The high interest rates Q. The high interest rates on deposits make it attractive on deposits make it attractive for foreign investors to open for foreign investors to open deposits in the country. In your deposits in the country. In your opinion, in the long run will opinion, in the long run will it lead to increased volume of it lead to increased volume of deposits in the country?deposits in the country?
A Fitch does not expect non-resi-dent deposits to become a signifi cant source of funding for Georgian banks in the foreseeable future. Inter-est rates on other forms of foreign funding (e.g. bilateral and syndicated loans) are subject to very different dynamics to those on the local deposit market.
In Georgia, as in most other emerg-ing markets, deposit and loan rates increased markedly at the beginning of the crisis as banks sought to retain their customer funding and became more risk averse in respect to their lending. However, as the crisis has abated, so rates have returned to close to pre-crisis.
Q. The leading banks in Q. The leading banks in Georgia provide similar offers Georgia provide similar offers on deposits and loans. In your on deposits and loans. In your opinion, why are Georgian opinion, why are Georgian banks developing in the same banks developing in the same direction?direction?
A. The relatively close alignment of interest rates at different banks is essentially a result of competi-tion between them. Banks may offer somewhat higher or lower deposit rates than the market depending on their loan growth plans and liquid-ity positions, or may offer somewhat lower loan rates in an attempt to acquire new clients.
Q. In your opinion, how real Q. In your opinion, how real is it that Georgian banks will is it that Georgian banks will develop niche markets and develop niche markets and serve clients from niche mar-serve clients from niche mar-kets? (i.e. special services only kets? (i.e. special services only for children, for students)for children, for students)
A. Banks will continue to be in-novative in their attempts to design deposit and other products for particular customer groups. However, relatively low income groups, such as students and pensioners, are unlikely to constitute a signifi cant propor-tion of sector deposits or loans in the medium term.
Natalia Smirnova, Associate Director
“The Georgian banking system continues to operate in what is still a relatively small and concentrated, low income emerging market economy”
Fitch Ratings is operating in 150 countries with 50 offi ces worldwide. The company has been operating in CIS countries for 15 years already. Fitch cov-ers corporate, banking, insurance, international public fi nance and sovereign sectors. The company rates 249 issuers in the CIS region, within which 122 are fi nancial institutions. Fitch Ratings at present rates six of the 19 banks currently operating in Georgia: Bank of Georgia, TBC Bank, Liberty Bank, ProCredit Bank (Georgia), VTB Bank (Georgia) and Basisbank.
Fitch RatingsMain Challenge to be increase in competition Main Challenge to be increase in competition
Stathis Kyriakides CFA, Assistant Vice President - Analyst at Moody’s
Investors Service Cyprus Ltd
“Moody’s rates the two largest banks in Georgia (Bank of Georgia and TBC Bank) which combined account for a market share of above 50%. The two banks’ respective Bank Financial Strength Ratings (BFSR) are D-, their long- and short-term Global Local Currency (GLC) deposit ratings are Ba3/Not-Prime, and their respective long- and short-term foreign currency deposit ratings are at B1/Not-Prime (constrained by the sovereign ceiling for such deposits in the country).
In January 2011 Moody’s changed the outlook on the two banks’ BFSRs to stable from negative. This was driven by: expectations that credit conditions in the country will continue to stabilize; reduced pressures on the bank’s capitalization in light of improved profi tability and easing asset quality pressures; as well as easing political pressures both domestically and region-ally. At the same time the two banks’ foreign currency deposit ratings were upgraded to B1 from B3 in line with the ceiling assigned for such deposits in Georgia while their respective GLC de-posit ratings were affi rmed at Ba3/Not-Prime with a stable outlook “
“ A key challenge for Georgian banks in 2011 will be to ensure that as credit conditions recover, their loan under-writing criteria remain suffi ciently strict. Excessive credit growth could lead to loan quality pressures further down the line. After periods of re-trenchment, during which banks focus on addressing balance sheet problems, improving economic conditions often lead to a quick resumption of strong growth as banks seek to strengthen their franchise, potentially ahead of the competition. The challenge for Geor-gian banks would be to ensure that such growth is in line with their risk manage-ment capabilities and to continue to upgrade their competences maintaining them commensurate to the level of risk they undertake.
In addition given that, during down-cycles, loan quality deterioration tends to be more exaggerated in countries at Georgia’s stage of development, banks should ensure that they maintain their capitalization at high levels (particularly as rapid growth consumes capital).”
“The combination of prompt interna-tional aid and central bank action was suffi cient to address immediate liquid-ity and funding strains, arising from the run on deposits that ensued the military confl ict with Russia in August 2008.
In addition, Georgian banks subse-quently had to cope with the impact of the global credit crisis in late 2008 and the recession in 2009. The collective effect was damaging to local banks’ loan quality and substantial losses, both in 2008 and 2009, exerted pressure on solvency. Legacy loan quality problems remain, though pressures have started to ease off”.
“Overall improving economic condi-tions have benefi tted the banks. Lower loan loss provisioning charges and a resumption of growth, has allowed Moody’s rated banks to report good profi tability levels in 2010.
Moody’s ratings scale in descending Moody’s ratings scale in descending order of credit strength:order of credit strength:
Moody’s is an essential component Moody’s is an essential component of the global capital markets, providing of the global capital markets, providing credit ratings, research, tools and analy-credit ratings, research, tools and analy-sis that contribute to transparent and sis that contribute to transparent and integrated fi nancial markets. Moody’s integrated fi nancial markets. Moody’s Corporation is the parent company Corporation is the parent company of Moody’s Investors Service, which of Moody’s Investors Service, which provides credit ratings and research provides credit ratings and research covering debt instruments and securi-covering debt instruments and securi-ties, and Moody’s Analytics, which ties, and Moody’s Analytics, which offers leading-edge software, advisory offers leading-edge software, advisory services and research for credit analy-services and research for credit analy-sis, economic research and fi nancial sis, economic research and fi nancial risk management.risk management.
The Corporation, which reported The Corporation, which reported revenue of 2 billion USD in 2010, revenue of 2 billion USD in 2010, employs approximately 4,500 people employs approximately 4,500 people worldwide and maintains a presence in worldwide and maintains a presence in 26 countries.26 countries.
Continued from p. 19
HEADLINE NEWS & ANALYSIS 21FINANCIALFINCHANNEL.COM | MARCH 28. 2011
C M Y K
best georgian banks
It is the common percep-t is the common percep-tion that to be a bank tion that to be a bank employee means strictly employee means strictly defi ned working hours, defi ned working hours,
an early wake-up, strict dress an early wake-up, strict dress code and professional behaviour. code and professional behaviour. Sometimes such rules scare job Sometimes such rules scare job seekers away, except for those seekers away, except for those who enjoy living according to an who enjoy living according to an orderly regime. We tried to fi nd out orderly regime. We tried to fi nd out what the exact regulations are at what the exact regulations are at Georgian banks to help jobseekers Georgian banks to help jobseekers compare those to other companies compare those to other companies they might be working for. they might be working for.
As a rule operators at banks and As a rule operators at banks and some other staff members have some other staff members have limited access to the internet. So limited access to the internet. So if you have decided to work in a if you have decided to work in a banking institution you can forget banking institution you can forget about chatting online and using about chatting online and using social networks during work hours.social networks during work hours.
At KSB Bank employees can only At KSB Bank employees can only visit webpages which are related visit webpages which are related to their responsibilities,” Gvantsa to their responsibilities,” Gvantsa Gusharashvili, KSB Bank, told The Gusharashvili, KSB Bank, told The FINANCIAL.FINANCIAL.
Though TBC Bank workers still Though TBC Bank workers still have standard internet access at have standard internet access at the front desk and in the back of-the front desk and in the back of-fi ce as well, that provides mainly fi ce as well, that provides mainly email services.email services.
“Because of the needs of an “Because of the needs of an effective working process, we are effective working process, we are currently improving internet access currently improving internet access for all bank personnel,” said Natia for all bank personnel,” said Natia Gotsadze from TBC Bank.Gotsadze from TBC Bank.
With just a few slight differences, With just a few slight differences, the dress code in all Georgian the dress code in all Georgian banks is similar. First impres-banks is similar. First impres-sions count. No jeans, no beard, sions count. No jeans, no beard, no tattoos - the dress code is a very no tattoos - the dress code is a very important part of the inner regula-important part of the inner regula-tion of the banks. If you look and tion of the banks. If you look and behave like a highly trained and behave like a highly trained and well-groomed professional, you well-groomed professional, you will win the respect and loyalty of will win the respect and loyalty of valued clients.valued clients.
Women tellers at the front desk Women tellers at the front desk wear a jacket and a tie, or only tie wear a jacket and a tie, or only tie of a specifi c colour, which identifi es of a specifi c colour, which identifi es their company. Trousers and closed their company. Trousers and closed toe shoes are mandatory. Work-toe shoes are mandatory. Work-ers must follow a classic style. Any ers must follow a classic style. Any
visible tattoos on arms must be visible tattoos on arms must be covered by their shirt. Take out any covered by their shirt. Take out any visible body piercings. Ladies are visible body piercings. Ladies are not allowed to wear transparent, not allowed to wear transparent, sparkly, motley clothes or show sparkly, motley clothes or show any décolleté. As for men thick, any décolleté. As for men thick, knitted sweaters with logos and knitted sweaters with logos and high throats are not allowed. White high throats are not allowed. White socks, shorts, ‘skinny’ or colourful socks, shorts, ‘skinny’ or colourful trousers are also against the rules.trousers are also against the rules.
“Dress code control is the “Dress code control is the responsibility of the directors of responsibility of the directors of departments and branches. They departments and branches. They have the right to comment on em-have the right to comment on em-ployees’ attire so that it complies ployees’ attire so that it complies with the Bank’s standards. Em-with the Bank’s standards. Em-ployees of TBC Bank must wear ployees of TBC Bank must wear clothes corresponding to the clothes corresponding to the business environment at the front business environment at the front desk. There exist some depart-desk. There exist some depart-ments in the bank, like the back of-ments in the bank, like the back of-fi ce, where there isn’t a strict dress fi ce, where there isn’t a strict dress code,” stressed Gotsadze.code,” stressed Gotsadze.
Two years ago the rules were Two years ago the rules were the same for front desk and back the same for front desk and back offi ce workers, from Monday to offi ce workers, from Monday to Friday. As the staff of the back Friday. As the staff of the back offi ce have no contact with the cus-offi ce have no contact with the cus-tomers and meetings are very rare tomers and meetings are very rare with the personnel of other offi ces, with the personnel of other offi ces, the rules were changed.the rules were changed.
At KOR Standard Bank rules are At KOR Standard Bank rules are comparatively liberal.comparatively liberal.
“We have an exception for our “We have an exception for our employees on Saturday. They can employees on Saturday. They can wear more casual clothing, even wear more casual clothing, even jeans, on that day,” said Gvantsa jeans, on that day,” said Gvantsa Gusharashvili, KSB Bank.Gusharashvili, KSB Bank.
“It isn’t obligatory for male work-“It isn’t obligatory for male work-ers in our bank to be clean-shaven. ers in our bank to be clean-shaven. There are no restrictions regarding There are no restrictions regarding one’s beard or long hair, if both one’s beard or long hair, if both look nice and tidy. Although hair look nice and tidy. Although hair must be bound,” added Gusharsh-must be bound,” added Gusharsh-vili.vili.
“Each worker of the bank has to “Each worker of the bank has to obey the rules. We don’t make any obey the rules. We don’t make any exception for religious or ethnic exception for religious or ethnic minorities,” said Gotsadze.minorities,” said Gotsadze.
Be on time and of course sober - Be on time and of course sober - that’s an inevitable and inexcusable that’s an inevitable and inexcusable rule for each worker at the bank.rule for each worker at the bank.
“We strictly control the working “We strictly control the working hours of our employees. Being late hours of our employees. Being late is completely unacceptable and is completely unacceptable and our management have sanctions to our management have sanctions to eradicate such cases. The fi rst time eradicate such cases. The fi rst time we give just a warning to the em-we give just a warning to the em-
ployee. If this is repeated though ployee. If this is repeated though then we must fi re him/her from the then we must fi re him/her from the bank,” said Nino Bendeliani, VTB bank,” said Nino Bendeliani, VTB Bank of Georgia.Bank of Georgia.
“If the employee doesn’t come “If the employee doesn’t come on time, more than three times on time, more than three times a month, we cut off a signifi cant a month, we cut off a signifi cant amount of his salary,” Natia amount of his salary,” Natia Gotsadze, TBC Bank, told The Gotsadze, TBC Bank, told The FINANCIAL.FINANCIAL.
“Respecting working hours and “Respecting working hours and being on time are included in the being on time are included in the general discipline norms of the general discipline norms of the Bank. But we also understand if Bank. But we also understand if there are exceptional circumstanc-there are exceptional circumstanc-es for a worker being late to work,” es for a worker being late to work,” said Tekla Gurielize, Procredit said Tekla Gurielize, Procredit Bank of Georgia.Bank of Georgia.
Successive customer service is a Successive customer service is a complex process, with the manage-complex process, with the manage-ment leading, as, Giorgi Tsutski-ment leading, as, Giorgi Tsutski-ridze, Executive Director of Bank’s ridze, Executive Director of Bank’s Association says, Georgian Banks Association says, Georgian Banks are actually carrying out a rebrand-are actually carrying out a rebrand-ing policy. They try hard to offer ing policy. They try hard to offer their customers all positive ele-their customers all positive ele-ments in the level of their customer ments in the level of their customer service and don’t make customers service and don’t make customers wait a long time. Many banks have wait a long time. Many banks have guide assistants in every branch guide assistants in every branch ready waiting with a helpful smile.ready waiting with a helpful smile.
Workers at the front desk of TBC Workers at the front desk of TBC Bank can take a one hour break ac-Bank can take a one hour break ac-cording to their planned timetable. cording to their planned timetable. The other employees in the branch The other employees in the branch offi ces, as well as in the head offi ce offi ces, as well as in the head offi ce have a break from 14:00 to 15:00, have a break from 14:00 to 15:00, according to Gotsadze.according to Gotsadze.
“As for smoking, we don’t regu-“As for smoking, we don’t regu-late or have time restrictions on late or have time restrictions on this, a worker can smoke any time this, a worker can smoke any time he fi nds a couple of free minutes,” he fi nds a couple of free minutes,” said Gotsadze.said Gotsadze.
Neither KSB nor VTB Bank set Neither KSB nor VTB Bank set restrictions for coffee or smoking restrictions for coffee or smoking breaks.breaks.
“Coffee and smoking break are “Coffee and smoking break are neither regulated nor restricted. neither regulated nor restricted. We have special smoking zones at We have special smoking zones at the offi ces. Workers can arrange the offi ces. Workers can arrange smoking or coffee breaks according smoking or coffee breaks according to their work and free time,” noted to their work and free time,” noted Bendeliani, VTB Bank.Bendeliani, VTB Bank.
The management and executive The management and executive systems of Georgian banks con-systems of Georgian banks con-sider classic and decent dressing to sider classic and decent dressing to be adequate and no need in setting be adequate and no need in setting up any uniform style at the banks.up any uniform style at the banks.
What you Need to Know before Starting
Work at a BankBy NINA BURJANADZE
The FINANCIAL
Letter to EditorEUROPEAN UNIONDELEGATION TO GEORGIA
The Head of DelegationTbilisi, 24 March, 2011 PD/tm (2011) Mr Zviad PochkhuaEditor in ChiefThe Financial
Dear Mr Pochkhua,While reading your newspaper, I came across an interview with Mr Bendukidze, former Minister of Economy of Georgia and Chairman of the Board of Trustees at the Free University of Tbilisi.
I appreciate the interesting ideas developed in the interview with respect to the future of Georgia and its perspectives. As a friend of Georgia, I would wish to see a bright future for Geor-gia too. However, as Ambassador of the EU to Georgia (Head of Delegation of the European Union to Georgia), I would like to make a point on the aid which Mr. Bendukidze would deem “a poison pill” and list a few examples below, that give an impres-sion on the nature of the aid:
With the grant funding of over € 10 million from the European Union, three turbines of the Enguri hydro power plant (HPP) were rehabilitated during 2006-2009. In 2011, a new grant amounting to €5 million was allocated for the rehabilitation of the Enguri/Vardnili HPPs. The grant has facilitated the EBRD loan of Euro 40 million to improve power water operational safety and enhance the environmental benefi ts of the Enguri HPP and downstream Vardnili HPP cascade.
To help generating additional revenues from the rehabilitated Enguri/Vardnili HPPs, the European Union has granted fur-ther € 8 million for the construction of the Black Sea energy transmission line. When completed, the line will enhance the energy security of Georgia and allow for additional generation of electricity to be exported to Turkey. The grant has facilitated the EIB loan of Euro 80 million to fi nance the extension and upgrading of Georgia’s high voltage transmission network and its interconnection with the electricity grid in neighbouring Turkey
Following the 2008 Russia-Georgia war, the total of € 61.5 million was granted to Georgia for 2008-2010 as direct budget support to improve living conditions of all Internally Displaced Persons (in fact, with only €1 million for Technical Assistance). Additional € 43, 5 million was granted for 2010-2013 for fur-ther improvement of living conditions of all IDPs.
I would refrain from calling this kind of help “poisonous”. I very much hope that Mr. Bendukidze would have shared my opinion had he known the above mentioned facts.
Yours respectfully,
Philip DimitrovAmbassador
The FINANCIAL -- Research by Barclays has found that 84 per cent of homeowners could be missing out on the opportunity to shave years off their mortgage by overpaying by even small amounts.
The lender is urging those home-owners who are not overpaying to start if they can afford to whilst inter-est rates – and many tracker mortgage monthly repayments - are still low.
Research conducted with over 1,000 borrowers found that only 10 per cent of homeowners said they are currently overpaying on their mort-gage, while just a further 6 per cent said they planned to start overpay-ing this year. It also found that 24 per cent said they aim to pay off their mortgage early, with over half of these (56 per cent) saying they hope to re-duce their mortgage term to 15 years or under.
The research found the ‘average’ overpayment is currently £200.82, which on an average mortgage of £150,000 over 25 years could see the term reduced by 7 years and 3 months. Even as little as £50 can have a huge impact – an extra £50 per month on the same typical mortgage would re-duce the term by 2 years 4 months
Andy Gray, head of mortgages at Barclays, added: “We’ve seen just a modest increase in the amount bor-rowers are overpaying on their mort-gage in the fi rst two months of this
year compared to the same period last year. We are still experiencing low in-terest rates and mortgage affordabil-ity is at its best levels for more than a decade so we would urge borrowers who can afford it, to start overpaying now, as putting an extra £100 to their mortgage each month will pay off their mortgage four years earlier and reduce the amount of interest that is paid. Most mortgages allow a gener-ous 10 per cent overpayments per year so rounding your repayments up to a few pounds more a month is a really good habit to get into if you can afford it and will reap its rewards when you are mortgage free years earlier than planned!”
“Even with the reality that interest rates will start to rise at some point, many borrowers are likely to be able to afford a little more than they think. A homeowner on a typical £150,000 mortgage tracking at 2.49 above base rate would see their monthly mort-gage payments increase by around £20 a month for each 0.25 increase in base rate. Borrowers will therefore benefi t overpaying by as little as £50.
“I’d urge all homeowners to review their current mortgage arrangements to ensure their repayments remain af-fordable throughout 2011 and beyond and to ensure they have a contingency plan when interest rates start to in-crease. This could be as simple as re-mortgaging.”
8 in 10 homeowners in UK missing out on an early mortgage fi nish
On 23-24th of March in Holiday Inn Vestel or-ganized trainings for distribution network’s
managers and consultants with over 100 attendants.
On 23rd of March fi rst part of the meeting was successfully completed. Before the meet-ing started distribution network representatives from different countries (Georgia, Azerbaijan, and Kazakhstan) had a chance to examine exhibited Vestel’s newest household appliances and other technologies. Eve-rybody took their chances to examine Vestel’s hi-tech pieces of art: Television sets and refrig-erators, gas-ovens and home cinema Special attention was paid to Vestel’s newest 55’’ 3d television set and MAESTRO RE-FRIGERATOR which’s world’s largest MP3 Player. They were stealing everyone eyes in the conference room.
At the same time near the en-trance interviews were record-ed. First to talk to the journalists was Vestel’s durable products marketing co. president Eren Ataman. He talked about the event and company’s plans for the future. CEO of Matex Geor-gia, offi cial distributor of Vestel in Georgia CENGЭZ MATARACI was also attending the event.
Worth noticing was the friend-ly atmosphere in the room, the managers and consultants of distribution networks from dif-ferent cities, towns and even countries were chatting friendly, discussing Vestel’s products and sharing their sale experiences.
In a few minutes deputy di-rector of Matex Georgia went on a stage and greeted them soon to introduce fi rst speaker Eren Ataman.
Eren Ataman greeted the au-dience in Georgian language
which caused laud applauses. He briefl y described how the training would go during these two days, on the fi rst there would be introduction and detailed description of Vestel production process and its new products, as for the sales trainings it would take place the next day. He expressed his hopes that these trainings would help to further improve the distribution network representative’s productivity.
At the end of his speech Eren Ataman reminded the attend-ing audience that they are not his guests but his business part-ners and they share the same success.
The audience saw Eren Ata-man of with loud applauses and cheers soon to greet the follow-ing speaker Volkan Ofl az, whom they liked straight away after he too greeted them friendly in
Georgian. Volkan Ofl az started his
speech by reviewing the basic facts about Vestel, about its paramount success in this little time and expressed his hope that Vestel will continue to fur-ther develop with this quick temps. He
showed the attending audi-ence in how many countries Vestel has its shops and offi ces and how impressive its sales fi g-ures are.
Next was the short video about Vestel city and its mas-sive factories, you could see how automatized the produc-tion is and how synchronically the factories work.
After this he started to talk about the productivity of Vest-el’s factories, they plan to pro-duce 9 million television sets this year, which is a gigantic fi gure
only 3-4 companies in the world will be able to keep up with. Up till present Vestel has produced more than 100 million television sets.
After Volkan Ofl az left the trib-une 4 more speakers took his place one after the other, they were talking about specifi c lines of production and their specifi -cations, technical details and ways how to keep all this infor-mation in active memory to be able to inform customers fully when necessary.
Audience was actively writing down notes and asking ques-tions about Vestel’s current and possible future products.
Comments were made that Vestel is working on a new 3D television set which can be watched without special glass-es!
The evening ended with raf-
fl e for participants and happy winners will be going home with their new Vestel televisions, gas-ovens, washing machines, vac-uum cleaners and micro-waves.
This is how productively the fi rst day of Vestel training ended in Holliday Inn and participants can’t wait to see how tomor-rows sales training will go…
Short information about Vestel:Short information about Vestel:Vestel is Turkey’s largest ex-Vestel is Turkey’s largest ex-porter of electronics and white porter of electronics and white goods company which ownes goods company which ownes 21% electronics market share in 21% electronics market share in Europe.Europe.Vestel is also one of World’s larg-Vestel is also one of World’s larg-est electronics and white goods est electronics and white goods company, which alone ac-company, which alone ac-counts for 83% of television set counts for 83% of television set production in Turkey. production in Turkey. Vestel group is comprised of 24 Vestel group is comprised of 24 companies, operating in manu-companies, operating in manu-facturing, technology develop-facturing, technology develop-ment, marketing and distribution ment, marketing and distribution fi elds in the consumer electron-fi elds in the consumer electron-ics, IT, digital technologies, and ics, IT, digital technologies, and household appliances, with 3.7 household appliances, with 3.7 billion turnovers. billion turnovers. Vestel together with its own Vestel together with its own subsidiary brands such as Tech-subsidiary brands such as Tech-wood and Finlux, has a signifi -wood and Finlux, has a signifi -cant share in the European mar-cant share in the European mar-ket of consumer electronics and ket of consumer electronics and home appliances, in particular home appliances, in particular TV sets. Vestel also has a sub-TV sets. Vestel also has a sub-sidiary brand Vestfrost, which is sidiary brand Vestfrost, which is popular in the Nordic countries.popular in the Nordic countries.On Georgian market Vestel en-On Georgian market Vestel en-tered in 2004 year. Today Vestel tered in 2004 year. Today Vestel has 20 showroom and 60 sales has 20 showroom and 60 sales point over the country: in Tbilisi, point over the country: in Tbilisi, Rustavi, Kutaisi, Batumi and Kob-Rustavi, Kutaisi, Batumi and Kob-uleti. During the year Company uleti. During the year Company plans to open 4 more show plans to open 4 more show rooms. Vestel also planned to rooms. Vestel also planned to open 1000 m2 concept show-open 1000 m2 concept show-room in Tbilisi.room in Tbilisi.
Advertisement
VESTEL-BIG FOREIGN INVESTOR’S TRAINING
Adv
ertis
er: R
adio
Com
mer
sant
. Con
tact
FIN
AN
CIA
L A
d D
ep a
t mar
ketin
g@fi n
chan
nel.c
om
PERSONAL RADIOOF BUSINESS
GEORGIAN GETTING PREPARED
By NINA BURJANADZE The FINANCIAL
What threats could come from the radiation emerging
from the Fukushima nuclear power plant of Japan? Could the ra-diation reach Georgia and how ready is the state to resist such a disaster? Some experts believe the threat is real and we should be prepared for it.
The main way of ra-dioactive waste spread-ing to other continents is by wind. Except for wind, atmospheric sediments such as rain can pour condensed emanation into the ground. Theoretically there is no threat that radiation could reach Georgia, scientists and experts believe. Geor-gia is 7,000-8,000 thousand kilometres away from Japan. So wind could only spread an insignifi cant amount of radioactive molecules to Georgia.
Besides, atmospheric sedi-ment comes to Georgia mostly from the North Caucasus and Black Sea.
The threat is not so much in that, but in the goods we im-port from eastern countries including Japan. Tea products are one of the risk factors.
“Tea bushes take in an especially high quantity of radioactive waste from na-
ture,” said Liana Jervalidze, Researcher and Analyst on the Caspian Area Energy and Environment Policy.
“We import tea and some other agricultural products from China. The crop taken this year isn’t dangerous. Plu-ral crops which will be sewn in the coming year, could take high quantitative radioactive waste from the ground. So
from 2013 more con-trol will be necessary while importing agri-cultural products from eastern countries,” said Javelidze.
Japan produced cars are another risk factor. 25% of the Georgian auto market is occu-pied by Japan pro-duced cars from over-seas import. Japanese cars amounted to 22% of the total number of imported cars in 2010, i.e.10,038 units or 68 million USD worth according to the na-tional statistics offi ce of Georgia. In January of 2011, the number of cars imported from Ja-pan amounted to over 1,000 units, (that of 6 million USD worth).
Read full report on your mobile phone or on fi nchannel.com
Radiation could Halt the Import of Cars and Agriculture Products from Japan, China
HEADLINE NEWS & ANALYSIS 23FINANCIALFINCHANNEL.COM | MARCH 28. 2011
C M Y K
best georgian banks
Q. In your opinion, Q. In your opinion, how attractive is the how attractive is the Georgian banking sec-Georgian banking sec-tor for potential inves-tor for potential inves-tors? tors?
A. As of 31 December, 2010, banks with foreign capital participation ac-counted for 94.1% of the sys-tem’s total assets and 91.6% of the system’s total capital. Strategic investors, includ-ing European and regional banking institutions, as well as IFIs are well-represented in the banking system of Georgia. The country’s two largest banks have foreign shareholders, Bank of Geor-gia, which is listed on the London Stock Exchange, and TBC Bank, which is owned by IFIs (EBRD, IFC and DEG). Other foreign eq-uity holders in the Georgian banking sector are interna-tional and regional strategic investors, such as Procredit Group, SociétéGénérale, Liberty Investments Hold-ing, HSBC, Bank VTB, Dhabi Group, PrivatBank, BTA Bank, International Bank of Azerbaijan, Halyk Bank of Kazakhstan and Ziraat Bank and others. Banks, which are majority-owned by local investors, are Cartu Bank, Basis Bank, Bank Constanta and Progress Bank. Over-all, increasing international ownership has been a sup-porting factor in shaping a liberal, competitive and re-silient local banking market.
So, I would say that the market is pretty attractive, but at the same time very competitive.
Q. Annual infl ation Q. Annual infl ation reached 12.3% in Janu-reached 12.3% in Janu-ary, 2011. The men-ary, 2011. The men-tioned infl ation exceeds tioned infl ation exceeds theNBG’s target level. theNBG’s target level. What tools does the NBG What tools does the NBG use for dealing with in-use for dealing with in-fl ationary pressure?fl ationary pressure?
A. NBG’s target is 6%an-nual infl ation in a medium term.It is worth mentioning here that 6% infl ation target does not mean thatin the short tern infl ation will not deviate from the target lev-el. Due to the lag in the im-pact of the monetary policy instruments, the NBG con-siders and targets forecasted infl ation rather than current changes in the price level.
On the back of rising ex-pected infl ation, the NBG started to tighten monetary policy in June 2010, when infl ation was still low. The NBG employed several mon-etary policy tools to target infl ation: interest rates, minimum reserve require-mentsand open market op-erations. In line with Basel III stance on the importance of macroprudential policy, the NBG tightened liquid-ity and capital adequacy re-quirements.
NBG employs a set of strat-egies for different underlying causes of infl ationary pres-sures as some of the anti-infl ationary measures may, under certain scenarios,have counterproductive impact.
More than 40% of Geor-gian CPI basket is food, therefore,the increase of food prices due bad harvest, domestically and worldwide, has larger effect on Georgian CPI compared to the coun-tries where share of food is lower. It should be men-tioned that some countries use so called core infl ation as an infl ation target, which excludesfood and energy prices.
Central banks do not react to increased prices due to supply shock, if it does not infl uence infl ationexpecta-tions. The response to such types of shocks means to re-duce crediting economy and decrease its growth rate, and when the external shock is
over, then to move to expan-sionary policy. If the shock has a short-term character, the action of the central bank will increase the vola-tility in the economy, includ-ing unnecessary fl uctuations in employment.
To sum up, NBG has pre-emptively responded to a probable demand-side in-crease of infl ation. As a re-sult, the share of non-exog-enous factors in the 12.3% infl ation rate is quite low – less than 3 percentage points.As for other factors causing increase in price level, they are of a temporary nature, and the NBG will not react to themfurther unless the infl ation expectations increase. Consequently, we pay relevant attention to-build the NBG credibility further, which is the foun-dation for the right infl ation expectations. As I have men-tioned, if the infl ation expec-tations do not increase, NBG will not need totighten mon-etary policy and price stabil-ity willbe achieved with less social costs.
Since adopting the infl a-tion targeting regime, the NBG has much more in-struments and infl uence on prices than it had under the monetary targeting regime. NBG is ready to use all of its available tools asnecessary.
Q. In February, the Q. In February, the GEL depreciation GEL depreciation against the USD re-against the USD re-versed, and since then versed, and since then Lari has been appreci-Lari has been appreci-ating. Did this happen ating. Did this happen because of the NBG in-because of the NBG in-tervention?tervention?
A. Georgian currency is freely fl oating and, conse-quently, NBG interventions in theforeign exchange mar-ket are minimal. Since the beginning of the year, NBG intervened only sixtimes,
three times on the sale side and three times on the pur-chase side.
The exchange rate is de-fi ned by the foreign exchange market, which involves many participants, includ-ing anyone who converts its currency. The market forces guarantees that exchange rate is in the equilibrium, which, in turn, is important for economic growth and macroeconomic stability.
Moreover, the Georgian currency hasbecome more fl exible since March 2009, when NBG switched to a modern intervention method - foreign exchange auction. Since then, the short term fl uctuations have increased, which guarantee the major
macroeconomic function of the exchange rate – shock absorption. As a result, GEL isstable in the long run, with-out NBG interventions.
Q. The main initiative Q. The main initiative of NBG was Larization of NBG was Larization in 2010. However, the in 2010. However, the share of GEL has not share of GEL has not changed signifi cantly. changed signifi cantly. In your opinion, what In your opinion, what steps should be under-steps should be under-taken to increase the taken to increase the share of GEL in deposits share of GEL in deposits as well as loans?as well as loans?
A. Larization is not aman-datory process, butan op-portunity for individuals to take loans and open deposits in the desired currency. If an individual gets itssalary in GEL, it is more convenient for him/herto get a loan in thelocal currency. In such
a way, the individualwill be protected from exchange rate risk. High dollarization carries many problems for the country’s economy. The goal of the NBG is to make long term and low interest GEL loansmore accessible. Larization is a long term goal of NBG, as it is impossible to decrease dollarizationin the short term.
To decrease dollarization, NBG is working in several directions, such as thesup-port of GEL money market development, incentivesfor commercial banks to fi nd resources on local markets. NBG aims to stimulate com-mercial banks with market methods, so that they ac-tively work in local markets
to bring in more deposits in the national currency and be less dependent on more risky sources for fi nancing credit activities, such as loans from external sector or deposits in a foreign currency.
The development of the GEL market should be noted separately. The developed money market creates the opportunity to bring capi-tal into the local market for commercial banks, supports the reduction of depend-ency on external sources and,hence, the decrease of dollarization. In 2010, there was signifi cant increase in the GEL money market; however, the market is still atthe early stage and we continue reforms for farther development.
Our approach is forLari-zation to make this as an irreversible process. The reforms conducted by NBG guarantee creation of a fa-vourable environment for Larization, bringingthe de-sirable outcome in the near future.
Q. What is the attitude Q. What is the attitude of NBG towards adver-of NBG towards adver-tising transparency? tising transparency? What outcomes did NBG What outcomes did NBG activities bring from activities bring from this side?this side?
A. One of the NBG’s key priorities is to ensure maximum transparency of fi nancial institutions’ com-munication and interaction with customers.In 2009, the NBG drafted an action plan with the purpose of gradual strengthening of consumers’ rights at the fi nancial sec-tor. Within the framework of the action plan, the NBG has recently approved The Rule on the Disclosure of Information. The rule regu-lates and defi nes disclosure requirements in the course of contractual and subse-quent relations. In accord-ance with the provisions of the rule, banks have to dis-closeeffective interest rates including all fi nance charg-es, the rights of parties to
amend important terms of the contract and other mate-rial termsof a contract with a consumer. It is the NBG’s medium term plan to amend the rule to defi ne disclosure requirementsduring the client acquisition process, including advertising and advisory practices. A newly formed consumer protec-tion division will monitor the protection of consumer rights, collect and publish statistics in this area, answer calls on consumer hot-line and provide recommenda-tions. Depending on the problems identifi ed, the di-vision will also facilitate and promote relevant legislative changes.
Q. How protected and Q. How protected and
confi dential isinforma-confi dential isinforma-tion about client held at tion about client held at thebank?thebank?
A. The Law of Georgia on The Activities of Commercial Banks defi nes bank secrecy principles and rules. Specifi -cally, Art. 17 of the law states that it is prohibited to dis-close or reveal confi dential information. The defi nition of such confi dential infor-mation includes information available at the bank about client’s accounts and ac-count balances. Therefore, commercial bank is respon-sible for confi dentiality and non-disclosure of this sen-sitive information with the exception requiring banks to disclose such information upon the delivery of relevant court decision.
Q. What was the total Q. What was the total fi nancial aid received fi nancial aid received by the NBG in the last by the NBG in the last two years for develop-two years for develop-ing the banking sec-ing the banking sec-tor, and what activities tor, and what activities were conducted within were conducted within its framework?its framework?
A. NBG is a long-term partner of numerous inter-national fi nancial organiza-tions and donor institutions. Over the course of the past several years, a number of important initiatives aimed at strengthening prudential regulation have been imple-mented with the help of our international partners. Some of these initiatives are assist-ance in developing mecha-nisms for hedging bank’s OCPs and stress testing (In-ternational Monetary Fund), assistance in the assessment of banks’ and non-bank in-stitutions’ investments and acquisitions (World Bank), development of the policy for capital adequacy charge for interest rate and equity risks (World Bank), implemen-tation of the consolidated supervision (Asian Develop-ment Bank), IFRS transition (Asian Development Bank), enhancement of risk based supervision (Asian Develop-ment Bank).
Another initiative that we would like to highlight was implemented with the help of the World Bank in 2010. The aim was to bring region-al supervisors together for a workshop to discuss post-crisis prudential responses and their effi ciency. Sharing experience with our regional colleagues and partners pro-moted exchange of informa-tion and improved under-standing of best practices in supervisory responses to banking shocks.
NBG received signifi cant fi nancing from the USAID-and technical assistance from the World Bankfor im-plementing modern inter-bank paymentssystem.
With the initiative of NBG and fi nancial assistance of ATTF and the Luxembour-gish Government experts were invited toconductseries of seminars in the risk man-agement and Basel II imple-mentation fi elds.
We gratefully appreciate support from our interna-tional partners.
“Banking Sector will Sustain and Support Economic Growth in 2011,” NBGContinued from p. 2
In an emerging market, such as Georgia, rapid accumulation of domestic capital can only be achieved at the expense of consumption and quality of living. Consequently, many fast growing emerging markets access external sources of funding to compensate for low domestic savings rate and accelerate the growth of the economy.
If the inflation expectations do not increase, NBG will not need tighten monetary policy and price stability will be achieved with less social costs
GEORGIAN HOUSES MISSING CONTEMPORARY ELEMENTS
By NINA BURJANADZE The FINANCIAL
“Almost 90% of the houses built recently in Georgia are 2 story classical constructions with a cellar and mansard,” said Zurab Dvalishvili, Architect-Designer of Building Company Felix. “In comparison to a triangle roof, which is common in our country, modern architecture dictates the trend towards fl at cover and large vitrage.”
“Very rarely, rich people in Tbilisi ask for contemporary con-
structions. Normally, we get or-ders for typical classical buildings with gravures, carvings, a small size vitrage and balconies for each room separately. At the beginning of the projecting, customers often plan a large vitrage, which is ex-pensive enough. After estimation of the expenses customers then make the decision to save money. Sometimes the decision comes to have a large terrace on the fi rst fl oor,” said Dvalishvili.
Read full report on your mobile phone or on fi nchannel.com
THE UK BUSINESSES RECOMMENDED TO INVEST IN GEORGIA
By KOKA KALANDADZE The FINANCIAL
Restoring investor con-fi dence still remains the primary job of the Government of Georgia,
now the focus is on the United Kingdom. As well as 30 large Brit-ish companies, like BP and HSBC which successfully operate on the Georgian market, there are plenty of others who might be willing to expand to Georgia, an invest-ment-driven economy.
For this purpose Nigel Peters, Director of the Central Asia & Trans Caucasus Business Infor-mation Group (CATBIG) visited Georgia last week. Having had a good overview of the country’s business environment, he’ll be returning to the UK presenting investment opportunities to over 800 companies (members of CATBIG) interested in expanding in the region.
Read full interview on your mobile phone or on fi nchannel.com
Advertiser: Vellagio. Contact FINANCIAL Ad Dep at marketing@fi nchannel.com
HEADLINE NEWS & ANALYSIS 25FINANCIALFINCHANNEL.COM | MARCH 28. 2011
C M Y K
financial news on mobile
FROM REAL TO DIGITAL WORLDPoint and shoot your camera phone at a mobile code to connect directly to the FINANCIAL article on mobile website.All you need is a code reader for your camera phone and you are in on the fun.
Applization in Georgia
Kakha Bendukidze: Poison Pill for Georgia
Art War
Facebook Harming Your Life and Career
Nearly 18 million Most Popular websites in Georgia
New Destinations from Lufthansa
Making Georgian Business International
Why and Where ? Invest or Not in Georgia?
How to Make Tbilisi Greener?
Germans more eager than ever to travel
Fitch Ratings of Georgian Banks
Scan code to read the story on your mobile phone
NOKIA READERIf you have a Nokia N82, N93, N93i, N95, N95 8GB, E66, E71, E90 or 6220 Classic (APAC variants) you will fi nd the Nokia Barcode Reader pre-installed on your device, ready to scan mobile codes around you. For Nokia N78, 6210 Navigator, N96 and 6220 Classic (non-APAC variants) you can download the application from Nokia website for free.
IPHONE QR READERIf you a iPhone, feel free to browse on iTunes a free QR reader application. It takes 3 minutes to download.
TBILISI ATMSVazisubaniVazisubani III dstr., II Blk.Sanzona50, Guramishvili Ave. Nikora StoreVake11, Chavchavadze Ave. Vake Branch1, Tamarashvili St.Pharmacy “36.6”34, Chavchavadze Ave. Trading Center “Pixel”7, Kipshidze St. 41, Abashidze St. Vake Service Center #129, Chavchavazde Ave. TBC Bank Branch59, Paliashvili St. “Simba” Supermarket50, Chavchavadze Ave. 15, Phaliashvili St. Aversi PharmacyVera7, Kostava St. 36, Kostava St. Cinema “Amirani”8/1, Akhvlediani Ave18, Melikishvili St. 60, Barnovi St. “Fresh Market”31, Melikishvili St. TBC Bank branch Mtatsminda13, Rustaveli Ave. Hotel «Tbilisi Marriot»11, Rkinis Rigi Acura Billiard Room5, Rustaveli Ave. Rustaveli Cinema4, Freedom Square22, Leselidze St. TBC Bank branch52, Rustaveli Ave. TBC Bank branch44, Rustaveli Ave. TBC Bank branch1, Rustaveli Ave. TBC Bank branchAvlabari84, K. Tsamebuli Ave. 2, K. Tsamebuli Ave. TBC Bank branchNavtlugi2, Cholokashvili St. “36.6” PharmacyVarketili34a, Kakheti Highway 44, Javakheti St. (Varketili Metro)Varketili 3, 4th m/r. Javakheti St. TBC Bank branchIsani-Samgori39a, Moscow Ave. 169, Khmelnitski St. Supermaket“Isani” subway station 67, K.Tsamebuli Ave. TBC Bank branchSaburtalo40, Vazha Pshavela Ave. ESM Tbilisi67, Vazha Pshavela Ave. «Nikora» Shop68, Kostava St. Public Television Building22, Bakhtrioni St. 53, Saburtalo St. Nikora store12, Al. Kazbegi Ave. At Saburtalo Branch74, Kostava st. Shop “Caesar”Z. Zhvania Sq., 45, Gamsakhurdia Ave. “PSP” Pharmacy1, Nutsubidze St.52, Vazha-Pshavela Ave. Mobi Shop Riverside named after H. Aliev At Wissol gas station Turn at 4th Plateau of Nutsubidze 179, Nutsubidze St. “PSP” Pharmacy26, Kazbegi Ave. Shop “Planeta Z”Vazha-Pshavela V Blk, 4 Bld. 29, Gamsakhurdia Ave. Shop “Okaidi”6, Shartava St. 4, Gamsakhurdia Ave. 11, Vazha-Pshavela Ave TBC Bank Branch11, Mitskevichi St. Supermarket29b, Kazbegi Ave. 73, Vazha-Pshavela Ave. TBC Bank branch 11/5, Dolidze St. Supermartket “Mango”Chugureti39, Chitaia St. Aversi Pharmacy7, Marjanishvili St. Marjanishvili branch19 Tsabadze St. Trade center «Pasazhi»8, Tsabadze St. Trade center «Kidobani»4, Khetagurov St. Humana Pharmacy16, Marjanishvili St. TBC Bank branch4, Chubinashvili St. Aversi PharmacyDidube73a, Tsereteli Ave. At #2 Didube Branch114, A. Tsereteli Ave. «Coca-Cola»117, Tsereteli Ave. At Didube Branch82, Tamar Mepe Ave. “MedService” Pharmacy1, Tsereteli Ave. Trading Center “Panda”7, Tamar Mepe Ave. TBC Bank branch138, Agmashenebeli Ave.
TBC Bank branch12, Kereselidze St. “Megaline” Trading CenterDigomiDigomi District 3/2 Digomi District II BLK. Building 7 Digomi District, 3rd blk. D. Agmashenebeli Alley “Lukoil” Gas stationDidi DigomiEntrance of Didi Digomi Trade center GOODWILL12th Km, Agmashenebeli Alley. Shop “Chemi Sakhli”Nadzaladevi106, Ts. Dadiani Ave. Nadzaledevi Branch321, Ts. Dadiani Ave. Aversi Pharmacy144, Ts. Dadiani Ave. SupermarketTemkaTemka, 10th Block, BLD. 2. GldaniGldani District 1st blk. Supermarket “Bingo”Akhmeteli Metro Trading Center “Mariami”Mukhiani Settlement, Plot 1/6 TBC Bank branchMukhianiMukhiani III MKR, Dumbadze Ave., BLK.5a Mukhiani II M/R, Noneshvili St., BLk. 5 “Red A” PharmacyAvchala3, Sarajishvili St. “Alfa Express”Ortachala39, V. Gorgasali St. 28, Gorgasali St. AirportTbilisi International Airport
REGIONAL ATMSSamtredia5, Chavchavadze S. Lagodekhi1, Cholokashvili St. BekoZestaphoni39, Agmashenebeli St. Natakhtari Natakhtari BreweryTsnori2, Stalin St. Zugdidi32(30) Z. Gamsakhurdia Ave. TBC Bank branchGori13, Stalin Ave. TBC Bank branchBakuriani26, Agmashenebeli St. Pharmacy “Red A”Gudauri Bar “Gagieti”Sighnaghi1, Lolashvili St. TBC Bank BranchAgara1, Cholokashvili St. Mtskheta11a, Samkhedro St. Shop “Nikora”Kobuleti500 a, Agmashenebeli St. Rustavi14, Megobroba Ave. Rustavi Branch19, Rustavi Highway, bld. 2 Aversi PharmacyM.I.A. Service Agency 12/14, Meskhishvili St. Supermartket15, Kostava St. “Aversi” PharmacyTelavi27, Rustaveli St. Telavi Branch3, K. Tsamebuli St. Shop “Limbo”Borjomi121, Rustaveli St. TBC Bank branchKutaisi59, Tamar Mepe St. 21a, Chavchavadze Ave. 98, Youth Ave. 3, Automsheni St. 47/1-3 Agmashenebeli Ave. and Dumbadze St. crossroads 1, Nikea St. “Nikeos” Supermarket35/1a, Paliashvili and Columbia Mis-souri St. TBC Bank branch14, Grishashvili St. Pharmacy62, Chavchavadze Ave. TBC Bank branchBatumi44, Chavchavadze Ave. Nikora Store37, Zubalashvili St. TBC Bank branch78/80 Javakhishvili St. 63, M. Abashidze St. 14a, Inasaridze St. 30, Agmashenebeli St. 57/59, Era St. TBC Bank branch10, Rustaveli St. TBC Bank branchKhelvachauri21a, Agmashenebeli St. Poti22, D.Agmashenebeli St. 13 Lagrange St. Nikoladze Square. 18, Samegrelo St. 15/3 Gegidze St. TBC Bank branch
BANK OF GEORGIATBILISIMtatsminda-Krtsanisi3 Pushkin Str.4 Leselidze Str. 38 Tabukashvili Str.7 Pushkin Str. 1 Vekua Str. 3 Pushkin Str.Vake-Saburtalo24 Kostava Str.29 Vazha-Pshavela Ave.7 Kipshidze Str.14 Gamsakhurdia Ave.22 Bakhtrioni Str.72/12 I.Abashidze Str.70 Kostava Str.Sheraton Metheki Palace10 Melikishvili Ave.62 Chavchavadze Ave.Mtatsminda-Krtsanisi8 Rustaveli Ave. (Parliament)38 Tabukashvili Str.19 Rustaveli Ave.4 Freedom Square (Courtyard Marriott)Metro Station “Tavisuplebis Moedani”Metro Station “Rustaveli”3 Vekua Str. (Populi City)37 Gorgasali Str. OrtachalaRadisson SAS Iveria HotelIsani-Samgori10 Ketevan Tsamebuli Ave.80 Ketevan Tsamebuli Ave.7 Kalaubani Str.AirportMetro Station “Avlabari”Metro Station “300 Aragveli”Metro Station “Samgori 1”Metro Station “Samgori 2”Metro Station “Varketili”Metro Station “Isani” Temqa Block 10, Bulding 2544 Moskovi Ave.Vazis ubani block 4 (“Populi”)Vake-Saburtalo41 Vazha-Pshavela Ave.23 Chavchavadze Ave.70 Kostava Str.16 Gamsakhurdia Ave.7 Petritsi Str.Melikishvili Str. 10Gldani-Nadzaladevi39 Tsotne Dadiani Str.5 Tornike Eristavi Str. (“Electroplast”)Shopping Mall “Mariami”, GldaniMetro Station “Akhmeteli” Metro Station “Grmagele”Metro Station “Nadzaladevi” Metro Station “Sarajishvili” Metro Station “Guramishvili” Mukhiani, Block 4, Bulding 434 Tsotne Dadiani Str., Bulding 8
Metro Station “Elektrodepo”Vake-Saburtalo1a Bulachauri Str.Metro Station “Politeknikuri Instituti 1”Metro Station “Politeknikuri Instituti 2” Metro Station “Vazha-Pshavela”Metro Station “Sameditsino Instituti 1”Metro Station “Sameditsino Instituti 2”Didube-Chugureti99 Tsereteli Ave.18 Tamar mefi s Ave.60 Tsereteli Ave.83/23 Davit Agmashenebeli Ave.142 Davit Agmashenebeli Ave.19 Tsabadze Str. (“Pasazhi”)12 Kereselidze Str. 1st turn (“Megaline”)137 Tsinamdzgvrishvili Str.127 Davit Agmashenebeli Ave.Metro Station “Vagzlis Moedani”Metro Station “Vagzlis Moedani 3”Metro Station “Tsereteli” Metro Station “Didube”Metro Station “Marjanishvili”3 Vagzali Str.Gldani-NadzaladeviGladni 1 Vekua Str., Block “a” 38 Guramishvili Ave.Batumi58 Memed Abashidze Str. 18 Zubalashvili Str.11 Ninoshvili Str. (Hotel “Intourist Palace”)Ozurgeti18 Guria Str.Zugdidi90 Rustaveli Str.54 Kostava Str.Poti30 Davit Agmashenebeli Str.2 Parnavaz Mepe Str.Kutaisi17 Tsminda Nino Str.1 Tsereteli Str.56 Chavchavadze Str.124 Rustaveli Str. Tskaltubo11 Avaliani Str.Tkibuli55 Gamsakhurdia Str. Terjola4 Shotadze Str. Chiatura16 Ninoshvili Str.Gori14 Stalini Str.Bakuriani1 Mta Str.Khashuri2 Dzneladze Str.Akhaltsikhe25 Kostava Str. Rustavi8 Baratashvili Str.10 Megobroba Str.23 Kostava Str.Tetritskaro37 Tamar Mepe Str.Tsalka71 Kostava Str.Marneuli65 Rustaveli Str.Gardabani76 Davit Agmashenebeli Str.Bolnisi110 Sulkhan-Saba Str.Gurjaani12 Noneshvili Str.Zestaponi59 Agmashenebli Str.Senaki78 Chavchavadze Str.Kvareli34 Chavchavadze Str.Kobuleti1 Ninoshvili Str.Akhalkalaki35 Nalbandiani Str.Telavi6 Chavchavadze Str.Kaspi78 Stalini Str.BatumiAirport21 Agmashenebi Str.Signagi15 9 Aprili Str.PotiKokaia Alley 1 Str.(Customs “Dasavleti”)Gori3 Stalini Str. (Populi)Kutaisi143 Rustaveli Str. (Populi)Khelvachauri82 Agmashenebi Str.Sagarejo17 Agmashenebeli Str. Batumi10 khimshishvili Str. (Hotel “Marina”)Borjomi1 Rustaveli squareSamtredia21 Javakhishvili Str. Khulo16 Abashidze Str Batumi3 Settlement TamariTskneti3 Rustaveli Str.Mtskheta12 Samkhedro Str.Lanchkhuti101 Zhordania Str.Sachkhere4 Agmashenebeli Str.Keda13 Tbel Abuseridzis Str.Batumi58 Memed Abashidze Str. GardabaniMartkopi (Vaziani)Gori43 Samephos Str.Kaspi2 Farnavazis Str. “Kaspicementi”Rustavi70 Mshenebelta Str. “Rustavcementi”TbilisiKakheti Highway 112 km. (Lilo)Holiday Inn HotelBatumiRustaveli Str. 28 “Batumi Sheraton”RustaviTsiteli Khidi Highway 21 km
BANK REPUBLICTBILISICentral Branch2 Grigol Abashidze str.24 hour Chavchavadze SC (#1 SC of Central Branch)13 Chavchavadze ave,24 Hour Airport SC(#2 SC of Central Branch)Tbilisi International Airport
VIP SC33 Paliashvili str.Didube SC(# 4 Central Branch SC) 10th building, Tsereteli Ave. Pekini SC(#5 Central Branch SC)28 Pekini Ave.Isani SC(#7 Central Banch SC) 6/2 Navtlughi str.Aghmashenebeli SC (#8 Central Branch SC)112 Aghmashenebeli Ave.Vaja- Pshavela SC(#13 Central Branch SC)71 Vaja-Pshavela Ave.Digomi SC(#17 Central Branch SC)Ib block, I Micro District, Dighomi Tel: +(995 32) 518515Digomi SC ( Building of city Court of Tbilisi) (#16 Central Branch SC)VI km David Aghmashenebeli alley Sanzona SC(#18 Central Branch SC)34 Guramishvili Ave. Ortachala SC(#20 Central Branch SC) 37 Gorgasali str.Mukhiani SC(#21 Central Branch SC)8b Block,IVa Micro districtDadiani SC (#24 Central Branch SC)34 Dadiani Ave.Delisi Branch47 A.Kazbegi Ave. Tamar Mepe SCTbilisi, 10 Tamar Mepe Ave.Gldani Branch20 Khizanishvili str. #1 Gldani Branch SC (Ghudushauri Clinic) 18/20 Lubliana str. #3 Gldani Branch SC (Police Offi ce) 8 Gulua str.Varketili SC (#23 Central Branch SC)29/31 Aerodrome Settlement
REGIONS22. Rustavi SC(#10 Central Branch SC)20 Megobroba Ave.Rustavi SC#6 Gldani Branch SC (Police Offi ce)21 Mshenebelta str. Telavi SC (#14 Central Branch SC) 4 Marjanishvili str. Sighnaghi SC ( #15 Central Branch SC )1Tamar Mepe str. Kvareli SC (#22 Central Branch SC)13 RusTaveli str. Zestaphoni SC(#19 Central Branch SC)#59 Aghmashenebeli str.Kutaisi Branch 6 Grishashvili str. #2 Kutaisi Branch SC 19b, Sulkhan Saba str. KutaisiSamtredia Branch 2 Razmadze str. Zugdidi Branch34 Zviad Gamsaxurdia Ave. #1 Zugdidi SC (Police Offi ce) 1 Parizis Komuna Str. Poti SC #9 Central Branch SC 50 Aghmashenebeli str. Batumi Branch#6 Kutaisi str.Batumi Branch 24 hour SC#4 Batumi Branch SC # 24 GogebashviliBatumi Aiport SC#2 Batumi Branch SCBatumi International Airport Central Branch #11 S/C Freedom Square2 leonidze st.Central Branch #25 S/C Gori 14 Chavchavadze st.Vake2 Gr.Abashidze Str.13 Chavchavadze Ave.33A Paliashvili Str.1 Chavchavadze Ave.49b Chavchavadze Ave.50 Chavchavadze Ave.2 Mosashvili Str.Mrgvali BagiMtatsminda27 Kostava Str.38 Kostava Str.32 Br/Zubalashvili Str.20 Rustaveli str. 31 Rustaveli Ave.9 Pushkini Str.20 Gogebashvili Str.8/10 Erekle II Str.14 Shardeni Str.2, Leonidze Str. 4 – 9aprili st.24 Gorgasali Str.24 Gorgasali Str.37 Gorgasali Str.8 Gulua str. Saburtalo 75 Kostava Ave.16 Kazbegi Ave.47a Kazbegi Ave.2 Gamsakhurdia Ave. 23-25 Gamsakhurdia Ave. 28 Gamsakhurdia Ave45 Gamsakhurdia Ave.6 Shartava Str.19 Nutsubidze Str.179 Nutsubidze Str.13 Bakhtrioni Str.11 Dolidze str. Building 4/5 34 Vaja Pshavela Ave. 48 Vaja Pshavela Ave.71 Vaja Pshavela Ave.72 Vaja Pshavela Ave.Building 1, Block of fl ats 7, Vaja Pshavela ave.Kavtaradze str.
BRANCH NETWORKTbilisiHead offi ce 37, D. Uznadze Street, 0102Central Branch 14, G. Chanturia Street, 0108Isani Service Center 12, K. Tsamebuli Avenue, 0103Didube Branch 147, D. Agmashenebeli Avenue, 0112Rustaveli Branch 16/18, Rustaveli Avenue, 0108Vake Branch 10, I. Chavchavadze Avenue, 0179Saburtalo Branch 21, Vazha-Pshavela Avenue, 0160Pawn-Centre16-18, Tamar Mepe Avenue, 0112RegionsPoti Branch 13, Rustaveli Square, 4400Operational Division of Poti Branch 30, Alley of 9th April, 4400Ozurgeti Branch 8, Eristavi Street, 3500 Kutaisi Branch 35, Z. Paliashvili Street, 4600Gori Branch 49, Samepo Street, 1400Rustavi Branch 3, Megobroba Avenue, 3700Marneuli Branch 74, Sh. Rustaveli Street, 3000Telavi Branch 3, G. Saakadze Square, 2200Batumi Branch 21, L. Asatiani Street, 6000
ATM NETWORKTbilisi37, D. Uznadze Street VTB Bank (Georgia) Head Offi ce14, G. Chanturia Street VTB Bank (Georgia) Central Branch5, Jikia Street Magti16/18, Rustaveli Avenue VTB Bank (Georgia) Rustaveli Branch54, Chavchavadze Avenue Pharmacy “Aversi”10, Chavchavadze Avenue VTB Bank (Georgia) Vake Branch2, University Street Finance Police Building
21, Vazha-Pshavela Avenue VTB Bank (Georgia) Saburtalo Branch33, M. Kostava, I Turning Ltd “Tbilisi Water”3, Gotua StreetLtd “Geocell”16/18, Tamar Mepe AvenueVTB Bank (Georgia) Pawn-Centre4, K. Leselidze Street 15, Tamar Mepe AvenueRailway Department76, A. Tsereteli Avenue Pharmacy “Crystal”3, Vani Street JSC “Telasi”147, D. Agmashenebeli Avenue VTB Bank (Georgia) Didube Branch5, KhizanishviliStreet Metro Akhmeteli nearby territory12, K. Tsamebuli AvenueVTB Bank (Georgia) Isani Service Center20, Telavi Street Sheraton Metekhi Palace42, Al. Kazbegi Avenue Abkhazian Government Building8, Tsabadze Street Shopping Center “Kidobani”6, Gorgasali Street Ltd “Beeline”6/2, Navtlughi Street 9, Tsinandali Street 48a, Bogdan Khmelnitsky Street19, Gamrekeli Street143, Ak. Tsereteli Avenue23, Peking Street78, Nutsubidze StreetD.Agmashenebeli AlleyRegions113, Chavchavadze Street, Batumi 21, L. Asatiani Street, Batumi Tskhinvali Highway, Gori49, Samepo Street, Gori 13, Noneshvili Street, Gurjaani Village Zhinvali 3, G. Saakadze Square, Telavi 74, Rustaveli Street, Marneuli 8, Eristavi Street, Ozurgeti 1, Kostava Street, Ozurgeti 3, Megobroba Avenue, Rustavi 2, Mshvidoba Street, Rustavi 18, Megobroba Avenue, Rustavi5, Tabidze Street, Poti13, Rustaveli Encirclement, Poti30, Alley of 9th April, Poti 64, Chavchavadze Avenue, Kutaisi
MISSION & VISION: The MissionBank Constanta is a full-service bank providing easily accessible and high quality fi nancial services with special focus on micro and small entrepreneurs. We believe that by offering adequately tailored banking services we support increasing living standards of the costumers, thus creating lasting social value for communities in which we operate.The VisionOur vision is to become the bank of the fi rst choice for micro, small and medium businesses, provide our customers with cost effective high quality and customer oriented banking services in order to support them develop their businesses, create additional jobs, improve living standards and provide their families with better future.• Int. rating & awards: M-CRIL (MicroRating International) has granted A- international rating to the bank for year 2009.• Number of branches: Total: 21Tbilisi: 6Regions: 15• Customer groups: Small and medium businesses
LATEST DEVELOPMENTS: Changes in shareholders:“OikoCredit”, one of the world’s largest sources of private funding to the microfi nance sector, has been added to the Bank Constanta shareholder’s list in 2010.
CHANGES IN MANAGEMENT: Board of Directors December 2010• Operations Director George Gachava moved to the position of Chief Risk Offi cer.DepartmentsMarch 2010• Iza Tsiklauri was appointed to the position of Head of internal Audit Department.May 2010• Tamar Razmadze Head of Sales and Marketing Department left the Bank.July 2010• Sales and Marketing Department was Restructured into two separate departments: Sales department and Marketing Department.• George Gogua was appointed to the position of Head of Marketing Department.• Melania Kutchukhidze was appointed to the position of Head of Sales Department.August 2010• Credit Risk Management Division was formed as Credit Risk Management Department. Natia Pkhakadze, former Kutaisi Branch Manager, was appointed to the position of head of Credit Risk Management Department. • Received awards and participation: o MFC Membership Certifi cateo Mix Market - Award Certifi cate (2) o USAID Certifi cate of Recognitiono MFC Certifi cate• New services or products offered: • In April 2011 we have launched a new rural project and are ready to assist farmers. The project is aimed at development of rural sector
and it enables farmers to buy by installment payments chemicals, pesticides, herbicides, fertilizers and other products of vital importance for any farmer. Besides, Bank Constanta is fl exible to offer our customers grace periods up to 7 months, which means that a farmer will not pay for the above products before realization of his harvest.It is worth of mentioning that this banking product is brand new for Georgia’s banking sector and there is no analogue of installment payments of such a type. And this is one more proof that our strategy is to provide the market with customer oriented banking products.• Plastic cards – from June 2011• ATMs – from May 2011• Public campaigns and charity: Tree-planting Action in Tserovani By “Bank Constanta” – December 2010Supporting Georgian Folk Music – Art Gene 2010 – June/July 2010Member of Smart Campaign
PRODUCTS, SERVICES AND RATES Deposits and payment:We have already launched our new depository system with the highest interest rate – 17% p.a.. Currently all our branches welcome consumers to open Term, Cumulative, On-call and Child DepositsLoans:Mortgage loans, consumer loans, credit cards etcCurrently there are 9 different types of loans provided by Bank Constanta. The loans are primarily available for small and medium business owners and entrepreneurs.
THE TYPES OF LOANS ARE:• Mini Loans;• Express Loans;• Business Loans;• Agricultural Loans;• Seasonal Loans;• SME Loan• Employee overdraft• Pawn Shop Loan• Mini Loans:Mini loan is ideal as for regular business owners also for entrepreneurs involved in agricultural and touristic business activities. This type of loan is intended to increase working capital, purchase fi xed assets and further expand borrower’s business. It is also possible to receive consumer loan based on the revenues generated from the active business.The loan is disbursed with a third-party guarantee. The amount varies from 60 to 1200 USD and from 100 to 2000 GEL. Annual interest rates vary from 36% to 48% depended on amount and risk analysis.For Mini Loan minimum 3 month working experience is required.• Express Loans:This type of loan is ideal for small business owners*, who are short in time and need unsecured money resources to expand their business activities. Express loans are intended to increase working capital, purchase fi xed assets and further expand borrower’s business. It is also possible to receive consumer loan based on the revenues generated from the active business.The loan is disbursed with a third-party guarantee. The amount varies from 1201 to 10000 USD. Under certain circumstances 3-month grace period may also apply. Express loans are confi rmed within 1 business day. Annual interest rates vary from 24% to 48% depended on amount and risk analysis.
*Minimum 6 months of business experience is required.• Business Loans:Business owners* searching for the ways to increase working capital, purchase fi xed assets and further expand their business activities can fi nd this type of loan very helpful. The amount varies from 1201 to 30000 USD and can be borrowed for 60 months. Business loans are secured loans, which mean the lender will take a security interest in borrower’s property. Under certain circumstances 6-month grace period may also apply. Business loans are confi rmed within 3-5 days. Annual interest rates vary from 16% to 48% depended on amount and risk analysis.*Minimum 6 months of business experience is required.• Agricultural Loans:This type of loan is designed for those having business in agricultural sector*. By using Agricultural loan, borrowers can purchase agricultural equipment/machinery, all other necessary materials and/or expand their business activities. The loan amount varies from 600 to 30000 USD. Agricultural loans can be borrowed for 60 months and are usually confi rmed within 3-5 days. Annual interest rates vary from 23% to 48% depended on amount and risk analysis.*Minimum 6 months of business experience is required.• Seasonal Loans:For those operating their businesses in the sector of tourism* and wishing to expand their activities. Seasonal loan enables customers to enjoy fl exible payment option and notable grace period. Seasonal loans are intended to increase working capital, purchase fi xed assets and further expand borrower’s business. It is also possible to receive consumer loan based on the revenues generated from the active business. Seasonal loans are confi rmed within 3-5 days. Annual interest rates vary from 18% to 48% depended on amount and risk analysis.*Minimum 6 months of business experience is required.• SME Loan:SME Loan is intended to stable, high turnover businesses that are searching for the ways to increase working capital, purchase fi xed assets and further expand their business activities. The amount varies from 30000 to 200000 USD and can be borrowed for 60 months. SME loans are secured loans, which mean the lender will take a security interest in borrower’s property. These types of loans are confi rmed within 3-5 days. Annual interest rates vary from 15% to 48% depended on amount and risk analysis.• Employee overdraftEmployee Overdraft is intended for Bank Constanta staff only. Maximum amount of overdraft is limited to 90% of employee’s monthly net salary. Interest rate is accrued on monthly bases and represents 24%. Maturity of overdraft depends on duration of employee’s contract with employer. These types of loans are confi rmed within 1day.• Pawn Shop LoanPawn Shop Loan is consumer type of loan that has fast disbursement period and strong collateral such as jewelry and gold. The amount varies from 50 to 1000 USD (100 – 2000 Gel) and can be borrowed for 6 months. Annual interest rates vary from 36% to 42%.• Banking GuaranteesBank approves a guarantee to ensure compliance with the obligations specifi ed by the contract. The terms of guarantee are the following: Amount $ 60 - $ 200 000 up to 60 months; Interest rate vary from 4% to 7%; Guarantees are approved within 3 to 5 days.
Jsc Bank Constanta Bank: JSC "Bank Constanta"Date: 31-Dec-10
Income Statement
N GEL FX Total
Interest Income1 Interest Income from Bank's "Nostro" and Deposit Accounts 83 505 24 549 108 0532 Interest Income from Loans 2 615 873 14 525 097 17 140 9702,1 from the Interbank Loans 0 0 02,2 from the Retail or Service Sector Loans 221 652 7 174 251 7 395 9032,3 from the Energy Sector Loans 0 0 02,4 from the Agriculture and Forestry Sector Loans 11 210 236 497 247 7062,5 from the Construction Sector Loans 0 16 992 16 9922,6 from the Mining and Mineral Processing Sector Loans 3 199 87 737 90 9372,7 from the Transportation or Communications Sector Loans 79 44 642 44 7212,8 from Individuals Loans 2 376 684 6 942 532 9 319 2162,9 from Other Sectors Loans 3 049 22 445 25 4953 Interest and Discount Income from Securities 0 0 04 Other Interest Income 1 621 0 1 6215 Total Interest Income 2 700 999 14 549 646 17 250 645
Interest Expense6 Interest Paid on Demand Deposits 312 314 6267 Interest Paid on Time Deposits 0 0 08 Interest Paid on Banks Deposits 0 12 359 12 3599 Interest Paid on Own Debt Securities 0 0 010 Interest Paid on Other Borrowings 58 760 5 307 298 5 366 05811 Other Interest Expenses 0 0 012 Total Interest Expense 59 071 5 319 972 5 379 04313 Net Interest Income 2 641 928 9 229 674 11 871 602
Non-Interest Income14 Net Fee and Commission Income 359 332 1 262 525 1 621 85814,1 Fee and Commission Income 792 111 1 483 052 2 275 16314,2 Fee and Commission Expense 432 779 220 526 653 30515 Dividend Income 0 0 016 Gain (Loss) from Dealing Securities 0 0 017 Gain (Loss) from Investment Securities 0 0 018 Gain (Loss) from Foreign Exchange Trading 495 147 0 495 14719 Gain (Loss) from Foreign Exchange Translation -242 525 0 -242 52520 Gain (Loss) on Sales of Fixed Assets -224 0 -22421 Non-Interest Income from other Banking Operations 14 687 0 14 68722 Other Non-Interest Income 658 055 1 106 019 1 764 07523 Total Non-Interest Income 1 284 472 2 368 545 3 653 017
Non-Interest Expenses24 Non-Interest Expenses from other Banking Operations 1 366 106 0 1 366 10625 Bank Development, Consultation and Marketing Expenses 553 864 108 473 662 33726 Personnel Expenses 6 882 910 0 6 882 91027 Operating Costs of Fixed Assets 130 689 0 130 68928 Depreciation Expense 1 258 605 0 1 258 60529 Other Non-Interest Expenses 2 180 020 0 2 180 02030 Total Non-Interest Expenses 12 372 194 108 473 12 480 66731 Net Non-Interest Income -11 087 722 2 260 072 -8 827 650
32 Net Income before Provisions -8 445 794 11 489 746 3 043 952
33 Loan Loss Reserve 627 003 X 627 00334 Provision for Possible Losses on Investments and Securities 0 X 035 Provision for Possible Losses on Other Assets 73 678 X 73 67836 Total Provisions for Possible Losses 700 680 0 700 680
37 Net Income before Taxes and Extraordinary Items -9 146 475 11 489 746 2 343 27138 Taxation -41 270 -41 27039 Net Income after Taxation -9 105 204 11 489 746 2 384 54240 Extraordinary Items 041 Net Income -9 105 204 11 489 746 2 384 542
Reporting Period
Bank: JSC "Bank Constanta"Date: 31-Dec-10
Balance Sheet
N ASSETS GEL FX Total
1 Cash 589 467 1 938 890 2 528 3582 Due from NBG 193 756 3 022 808 3 216 5643 Due from Banks 88 535 1 739 157 1 827 6914 Dealing Securities 0 0 05 Investment Securities 0 0 06,1 Loans 10 921 143 58 100 860 69 022 0046,2 Less: Loan Loss Reserves -233 358 -1 591 979 -1 825 3376 Net Loans 10 687 785 56 508 881 67 196 6667 Accrued Interest and Dividends Receivable 257 841 836 940 1 094 7818 Other Real Estate Owned & Repossessed Assets 152 556 X 152 5569 Equity Investments 114 000 0 114 00010 Fixed Assets and Intangible Assets 8 041 930 X 8 041 93011 Other Assets 456 992 557 995 1 014 98812 TOTAL ASSETS 20 582 862 64 604 671 85 187 533
LIABILITIES13 Due to Banks 0 0 014 Current (Accounts) Deposits 524 027 1 413 069 1 937 09515 Demand Deposits 0 0 016 Time Deposits 0 0 017 Own Debt Securities 018 Borrowings 2 566 628 63 647 385 66 214 01319 Accrued Interest and Dividends Payable 58 760 1 204 821 1 263 58120 Other Liabilities 224 544 12 716 237 26021 Subordinated Debentures 0 0 022 Total Liabilities 3 373 958 66 277 991 69 651 949
EQUITY CAPITAL23 Common Stock 17 405 850 X 17 405 85024 Preferred Stock 0 X 025 Less: Repurchased Shares 0 X 026 Share Premium 0 X 027 General Reserves 0 X 028 Retained Earnings -1 870 266 X -1 870 26629 Asset Revaluation Reserves 0 X 030 Total Equty Capital 15 535 584 X 15 535 58431 TOTAL LIABILITIES AND EQUITY CAPITAL 18 909 542 66 277 991 85 187 533
SHAREHOLDERS: TBC Bank’s shares are held by six major financial institutions: IFC, DEG, EBRD, FMO, JP Morgan, Ashmore and Georgian individuals: Mamuka Khazaradze (Chairman)Badri JaparidzeDavid KhazaradzeSteffen Suhany (DEG)Mike HeskethEmile GrootEric Rajendra
MISSION & VISION: TBC BANK’S VISION TBC Bank is a leading company in the region. It is distinguished by outstanding client services, constant innovations and aspiration to develop furtherThe success of the Bank is thanks to well developed and diverse service channels, effective sales systems and the high quality of its servicesThe Bank is known for its outstanding treatment of its employees. It creates an ideal environment for result-oriented and motivated professionals and places high value on the principles of teamworkThe Bank works towards ensuring the preservation and strengthening of national cultural values, thus additionally contributing to the development of society
TBC BANK’S MANAGEMENT MISSIONIn order to enable TBC Bank’s management and staff to create the bank determined by the vision, mission of the management in the process of their daily activity is:To ensure a high level of client satisfaction and a sustainable increase in the company’s value.
INT. RATING & AWARDS: BANKER’s AWARD: Bank of the year 2002, 2003, 2004 ,2005, 2010
Global Finance: Best Bank 2005, 2006, 2007Deutsche Bank’s STP Excellence Awards 2006,2007,2008,2009ISO 9001:2000 Certificate for Quality IISO 9001:2008 Certificate for QualityB.I.D Awards International Star for Quality 2007EBRD Award: Most Active Issuing Bank in Georgia in 2009 • TBC Bank’s Ratings • FitchRatings: B and B• Moody’s: B1 and Ba3
NUMBER OF BRANCHES: 37 branches and 7 service center
CUSTOMER GROUPS: Corporate and Retail Latest developments:
CHANGES IN SHAREHOLDERS:No Changes
CHANGES IN MANAGEMENT: New member of the management team - George Shagidze (Deputy General Director)
RECEIVED AWARDS AND PARTICIPATION:• On 3rd December 2010 annual bank rankings were announced by Financial Times Group in London. For the fi fth time TBC Bank was named as the Best Bank in Georgia among the biggest fi nancial institutions;• European Bank for Reconstruction and Development (EBRD) named TBC Bank as the most active bank in trade fi nance; • International rating agency FithRatings confi rmed the ratings of TBC Bank B + and B;• Moody’s Investors Service has upgraded by two notches to B1 from B3 the long-term foreign currency deposit rating of TBC Bank (TBC). At the same time, Moody’s has affi rmed the bank’s D bank fi nancial strength rating (BFSR), which maps to a Ba3 baseline credit assessment (BCA), and has changed its outlook to stable. Similarly, the bank’s Ba3 long-term global local currency (GLC) deposit rating was confi rmed with a stable outlook.
• NEW BRANCHES:TBC Bank’s new service centreOne more new service centre opened its doors in Tbilisi Central (2 Vagzali Square). It will serve customers 7 days a week and offer them a full spectrum of banking services. Currently 36 branches and 7 service centers of TBC Bank operate in Georgia.The Construction of Business Centre in Kutaisi is fi nishedOn December 29 TBC Business Centre was opened in Kutaisi. President of Georgia, Management of TBC Bank and government offi cials attended the opening ceremony.The investment made by TBC Bank for the construction of business centre consituted GEL 14 million. This is one more large-scale project implemented by TBC Bank by which the bank made a New Year present to the residents of Kutaisi. TBC Business Centre is situated on the central square of Kutaisi and represents a unique architectural building. The total space of the building is 11000 square meters. In the future a new branch of TBC Bank and a business centre will be placed here. A business centre will serve tens of companies.
NEW SERVICES OR PRODUCTS OFFERED: Deposit “My Goal” for YOUR GOALS!With the deposit “My Goal” TBC Bank offered customers one more opportunity to fullfi l their wishes. This deposit is a kind of “cash-box” which will help you to accumulate money through monthly savings for a particular purpose and to increase it by accrued interest. Initial minimum deposit is not required to open the deposit and each consecutive minimum deposit is 10 GEL/USD/EUR/GBP. No cap limits are set for the deposit. In addition, each depositor can select a name for the deposit according to the purpose he/she is saving money, i.e. My Car, My Appartment, My Computer and etc. SMART CLUB for TBC Bank’s loyal customersBonus and present just for being our client – this is the main
idea of TBC Bank’s SMART CLUB. From now on SMART CLUB will unite TBC Bank’s loyal customers and offer them the most unique and innovative service in Georgian banking sector. More precisely, the members of the club will receive various presents from the bank without making any additional and signifi cant efforts – they will be awarded SMART points just for using our services which afterwards can be exchanged for presents at our partner stores and service providers.As a result, each purchase made with our bank card, each saving or loan will bring new, additional benefi t to our customers. By awarding points TBC Bank expresses its gratitude to loyal customers and gives them additional benefi ts for using TBC Bank’s services. For additional information please visit special SMART CLUB website www.SmartClub.geTBC Bank’s Smart Club is the most large-scale social media project in Georgia. The number of fans of Smart Club page on Facebook signifi cantly increases every day and now cover 25% of the Georgian Facebook users. TBC Platinum _ Three Bank Products in One CardTBC Bank created an exclusively designed Visa credit card equipped with microchip for its VIP clients. TBC Platinum includes three different banking products: high class Visa credit card, savings account and current account.Its unique features distinguish TBC Platinum from standard credit cards: every month interest rate is accrued on the positive balance of the card: annual 6% in GEL, annual 5% in USD, and annual 4% in EUR. Additionally, upon the purchase of the card, cardholder becomes a member of Visa Platinum Club. The membership enables the client to enjoy many discounts and privileges around the world in the following areas: hotels and resorts, airline companies, travel, recreational spa centres and many more.
PUBLIC CAMPAIGNS AND CHARITY: 800 000 GEL FOR CHARITYIn 2010 TBC Bank implemented signifi cant projects in the social, cultural and public spheres, launching a number of long-term projects and actively continuing the implementation of projects begun in previous years.General information about TBC Bank’s charitable activities:
PRODUCTS, SERVICES AND RATES Please see web site: www.tbcbank.ge
JSC TBC Bank
Photo: Irakli Kvizhinadze
HEADLINE NEWS & ANALYSIS 29FINANCIALFINCHANNEL.COM | MARCH 28. 2011
C M Y K
best georgian banks
SHAREHOLDERS: • Societe Generale Group – 80%; EBRD – 10%; Lasha Papashvili – 10%• Mission & vision: Bank Republic-Societe Generale Group is one of the most successful fi nancial institutions. The Bank is on one of the leading positions in the corporate and retail banking market of the country. Long-term growth strategy of the bank relies on its fundamental values: professionalism, innovation and team spirit. As a member of the Societe Generale Group, Bank Republic creates more value for the clients by drawing on the combined resources and expertise of the Group. Leading the socially responsible business, the strategic direction of Bank Republic is: the easy access to the banking solutions, the best and innovative products and superior quality of service. • Ambitions 2015 – new strategy; new approach thus aimed at development of Bank Republic as the Most Desirable Bank envisaging more perfection of the:• Client relationship• Transformation of operating model• Management values and employees’ development• Content and modes of communication.• Int. rating & awards: AA- by Fitch - (this is the SG HO rating which is applicable to subsidiaries as well)• Number of branches: 49• Customer groups: Bank Republic is leading the universal business model and offers the best banking solutions and superior quality of service to both physical and legal entities.
LATEST DEVELOPMENTS: • Changes in shareholders: • No changes• Changes in management: • In Dec 2010, new CEO – Christian Carmagnolle has been appointed in BR, substituting the formed CEO – Gilbert Hie.• Received awards and participation:• One of the Leading Newspapers Georgian Times and Research company GORBI held the annual ceremony of awarding ”Best Businessmen and Company” of the year. BR was awarded in the nomination “International Recognition” and “Stable Activity”. • Public Relations Agency PROFILE awarded Bank Republic with the nomination of “Trust and Reputation”. BR was granted the medal and diploma.• BR was named as the number 1 stable Bank by the survey results made by Information Agency GBC News (Georgian Business Consulting). • Recently survey on “Which Bank You Trust” was conducted among journalists. Survey revealed BR’s position being on the second place among its competitors.• BR was awarded the Golden Brand nomination for “the Bank with the highest social responsibility” three consecutive years (2008, 2009, and 2010) by Financial and Global Idea on Annual Awarding ceremony. • New branches: No• Public campaigns and charity: Alongside the sponsorship
activities Bank Republic is socially responsible for charity issues as well. In Georgia charity is a bit like tradition versus modernist views and effi ciency. BR together with charity fund Tsiskari executes various charity projects. Core directions of fi nancing are to assist the needy families, orphanages, renovation and reconstruction of churches, monasteries and old national heritages. Foundation provides support to well-known pubic fi gures, professors, actors, etc. in the respect of providing with various types of fi nancial support.Charity activities undertaken
by BR and foundation Tsiskari convey Bank’s major approach towards the society and country as a whole.Besides, every year, within all the subsidiaries of SG, special Citizen Commitment Week is implemented covering various solidarity projects undertaken by each subsidiary. Bank Republic every year conducts the CCW and implemented various solidarity actions such as: blood donation – by participation of staff; exhibition of masterpieces of orphans and needy children; Participation in marathons against breast cancer; support of disabled people, etc.
PRODUCTS, SERVICES AND RATES Retail Banking:
DEPOSITS AND PAYMENT:DEPOSITSMegobari Deposit An account with no maturity and unlimited frequency of amount deposited or withdrawn. High interest is earned on untouched balance during the month. Interest is also earned on variable amounts. Withdrawals possible with banking card. On-Call Deposit An account with unlimited term. No limitations to the frequency of amount deposited or withdrawn. Interest rate is relatively low
compared to other savings.Child DepositA long term, fi xed maturity savings deposit, designed to save money for child’s education or any other purposes. Interest rate is fi xed for the fi rst two years of the deposit term and may vary thereon. Time DepositTime Deposit allows placing funds in a fi xed amount for a fi xed period of time during which high fi xed interest is accrued. Compared to other deposits, Time Deposit offers highest interest rates. Privileged Term DepositPrivileged Term Deposit allows placing funds for a fi xed period of time during
which high fi xed interest is accrued. As a special fl exibility, customer is allowed to make additional installments to the depositConvertible DepositA fi xed term deposit which gives an opportunity to exchange the full amount of the deposit from its original currency of denomination to a different one without losing already generated interest income. After the conversion, deposit continues its existence in new currency Flexible DepositFlexible Deposit provides customer with an opportunity to deposit funds for a fi xed period of time and withdraw up to 30% of deposited amount without canceling the deposit agreement, Cumulative Deposit A fi xed term deposit, which gives customer an opportunity to accumulate funds through monthly savings for a desired purpose. Current AccountA base account for relationship with clients. Following operations possible: local and international money transfers, currency exchange, cash transactions. Debit CardsVisa Electron The cheapest and the most widespread debit card in BR. Primarily used for payroll programs and other standard clients. Visa Classic Compared to Visa Electron provides customers with more advantages: relatively high transaction and withdrawal limits, internet
operations. Visa Gold A privileged card offered to special customers; provides a wide network of Visa International discounts at various merchants worldwide. High transaction and withdrawal limits. Interest bearing accountVisa Platinum The most prestigious cards issued by BR, designed for very important existing or potential clients. Provides a wide network of Visa International discounts at various merchants worldwide. High transaction and withdrawal limits. Interest bearing account
LOANS, CREDIT CARDS:Credit CardsCredit Card - Dream CardA revolving credit card giving opportunity to use credit limit under condition of making periodic repayments. Release from interest payment if outstanding limit is repaid within 55 days.LoansMortgage Loan - My Nook A mortgage loan aimed at purchase, construction or renovation of private real estate. Duration - up to 25 years. Auto Loan Formula 1 A loan determined for purchase of a new vehicle or a used private vehicle. Duration - up to 7 yearsConsumer Finance LoanA loan aimed at acquisition of merchandize or services at bank’s partner merchants. Available at merchant’s premises or at bank’s branches. Duration - up to 1 year.Consumer Finance Auto LoanA loan aimed at acquisition of new vehicles at bank’s partner auto dealers. Duration up to 7 years. Comfort LoanA loan issued for fi nancing customer’s personal affairs such as: traveling, education, purchase of home furniture and fi xtures, consumer electronics or other personal items/purposes. Duration up to 7 years.
Payroll LoansAn unsecured loan that provides BR payroll customers with more fl exible loan conditions compared to other consumer loans. Duration up to 36 years. Deposit Backed LoanA loan issued under guarantee of deposit placed with the bank. Duration - up to deposit maturity. Annual interest rate + 4 to deposit interest rateOverdraft A short-term, maximum 1 year non-purpose loan, which enables customer to overdraw account and to bridge a temporary lack of fi nancial funds.
BANKING: Call Center:24 hour service, Inbound and outbound calls, consultation on banking products and services, account information, banking cards help desk
INTERACTIVE VOICE RESPONSE (IVR): Allow customers to perform the following operations via telephone: balance inquiry, exchange rates inquiry, reaching a specially designated operator for card blocking Internet BankingAn opportunity to perform desired banking operations at any time and place in the world via internet. Currency ExchangeCash or non-cash currency exchange operations at Bank’s commercial exchange rate. No additional commission is charged.
OTHER: Payment Checks Selling American Express Traveler’s Checks Cashing: American Express Traveler’s Checks and Banking Checks Individual Safe Deposit BoxesIndividual Safe Deposit Boxes are used for storing securities, important
documents, jewelry, artifacts, and other valuables. The Safe Deposit Boxes are leased for the period chosen by the client. Bank offers various size safe deposit boxes for clients convenience.
FINANCIAL HIGHLIGHTS:• Loan Portfolio Development: Retail Portfolio has decreased by (-16) % (-37.6 mln GEL) and reached 198.9 mln GEL. The Corporate loan portfolio has decreased by 21% (60.8 mln GEL) reaching 227.5 mln GEL by the end of December 2010. Total Loan Portfolio has decreased by 19% (98.4 mln GEL) and reached 426.5 mln GEL. • Total Assets Development: During 2010 the main change in Total Assets’ structure was the reduction of Net Loans’ portion from 56% to 47%. On a Y-O-Y basis Total Assets has decreased by 5% (40.1 mln GEL) and reached 772.8 mln GEL. During the same period the growth rate of the Banking Industry was (31) %.• Total liabilities Development: On the Liabilities side the primary evolution took place on Deposit side. The fraction of the Total Deposits has increased from 63% to 70%. The main driver of Increase on Deposits Portfolio is our Current Accounts (13%). BR’s Borrowings has decreased by 22%. Subordinated Loans increased by 5%.• Number of clients (Juridical): 5,765 – (-2%) growth rate • Number of clients (Individuals): 178,376 – 1% growth rate• Number of Employees: 974 – (-2)% growth rate
DISTANCE BANKING:Bank Client Bank Client is a convenient, easy and safe way to simply manage your company funds from your offi ce, without having to visit the bank. The software keeps a copy of the bank’s information on your accounts that enables you to use the core functions of the software by using the communication with the bank.By using the software, you can perform the following transactions:• Transfers in the national currency across the territory of Georgia• Transfers in foreign currency in any country of the world• Currency exchange operations• Sending a notice to the bank on any matter• Having access to the bank transactions performed on your account for any period• Having access to Georgian and foreign banks and their codes
INTERNET BANKING Advantages of Internet Banking:• Effective way of disposing your accounts• Access to your accounts from any point• Saving the time to visit the bank• A secure and reliable system to perform banking transactions• Additional benefi t of SMS service• Receiving information on the new products and services of the bankOur secure and reliable Internet Banking employing modern technologies enables you:• To convert money and put it to your accounts• To promptly monitor your personal and company accounts• To pay utility and other charges• Access to and printing out account statements for any period• Access to the bank's offi cial commercial rates for any period• Access to the codes of commercial banks operating in Georgia and SWIFT codes of foreign banksSMS BankingSMS Banking will help you to control your accounts, make a variety of bank transactions through SMS and obtain prompt information on transactions made on your accounts.With SMS banking, you can:• Fill up your and other's cell phone balance;• Check balance of card and current accounts;• Obtain information on the offi cial currency exchange rate of GEL;• Obtain information in automatic mode on transfers on our account and sums withdrawn from your account.• Obtain information in automatic mode on transactions made on your account through POS terminal or Internet Banking.
DEPOSITSTERM DEPOSIT Save your money safely and get maximum interest income.If you open a Term Deposit account, Cartu Bank offers a high interest rate.And if you open a long-term deposit account, you’ll get even more interest earnings. • account opening and service is free• you can enjoy a high interest rate• you can choose a preferable deposit term from 3 to 24 months.
If you open a Term deposit account, Cartu Bank offers for free:• Standard Internet Banking;• Free SMS Banking for three months• VISA or MasterCard plastic cards
FLEXIBLE DEPOSITFlexible Deposit enables you:• To reliably deposit your money for a defi nite term.• To withdraw at any time 30% of the sum without losing the interest earnings of your remaining deposit savings.Advantages of Flexible Deposit:• With us it is free to open and serve a deposit account• With us you'll get a high interest rate• With us you can withdraw part of your money and put it back to deposit• With us you can enjoy deposit secured overdraft or loan on concessionary termsIf you open a Flexible Deposit account, CARTU Bank offers for free:• Standard Internet Banking• Free SMS Banking for three months• VISA and MasterCard plastic cards
SAVINGS PLAN Open a Savings plan account with Cartu Bank and enjoy the advantages:• With us, it is free to open and serve a savings plan• With us, a small minimum payment is needed to open a savings plan• With us, each of your deposit payment accrues high interest rate• With us, you can add money on the deposit without having to visit the bank, via Internet Banking or by means of standing order • With us, you can use a deposit-backed overdraft or loanIf you open a savings plan, Cartu Bank offers you for free:• Internet Banking• Free SMS banking for three months• VISA and MasterCard plastic cards
ON CALL DEPOSITOpen a on call deposit account with Cartu Bank, deposit or withdraw your money at any time you wish and get maximum interest income.
ADVANTAGES OF ON CALL DEPOSIT:• You can deposit money on or withdraw it from the account at any time you wish• Deposit term is unlimited until you request cancellation• You can add your money on the deposit without having to visit the bank, via Internet Banking or standing orderIf you open a On Call Deposit account, Cartu Bank offers you for free:• Internet Banking• Free SMS banking for three monthsCartu Bank offers documentary operations in national and foreign currency. We can assist you in fulfi lling any transaction successfully.You can enjoy:• Letter of credit• Bank guarantee• Documentary collection (for legal entities only).You manage your business; we create comfort for you through fast and quality service.
ELECTRONIC COMMERCEDevelop a new business space, offer your products to more customers and boost your sales!E-commerce is a bank service enabling you to sell your products/services in the Internet and get VISA and MasterCard cards as a means of payment.We can provide consultations in designing an e-shop website, organizing the delivery of products and services and making guaranteed and secure payments.E-commerce makes it possible for you to:• Sell your services and products via the Internet;• Boost your sales in the regions
of Georgia;• Expand the area of your sales across the whole world;• Cut shop chain expansion costs;• Make your services and products ever more available for consumers.Standard package of services:• Discount in web-design studios;• Discount in mail/courier services;• Free consultations on software;• Receiving e-mail notices of each transaction made. Premium package:• E-shop with a design modifi cation opportunity;• Consultation and training for e-shop administrators;• E-shop integration into the system;• Opening a free multi-currency account with the bank;• Installation of a full internet banking DG Pass software;• One-year SMS Banking service;• Discount in mail/courier services;• Receiving e-mail notices of each transaction made.Advantages of e-commerce:• Payments from any country of the world by using VISA and MasterCard cards;• Making fast guaranteed and secure payments;• High security provided by Verifi ed by VISA and MasterCard SecureCode technologies;Advantages of Verifi ed by VISA and MasterCard SecureCode technologies:• A very low risk of unauthorized transactions;• Guaranteed payment of authorized transactions;• High level of trust among consumers making online purchases.E-commerce is a facility bringing additional benefi ts for your customers:• Time saving;• Home delivery of products purchase;• Online card authorization in making transactions.AcquiringCartu Bank offers POS terminal services. This is to imply an alternative method of receiving of payment for selling of goods in trade objects, in particular, the settlement via international plastic card instead of money in cash.
ADVANTAGES OF THE SERVICE:• In case of lack of money in cash, no risk of derangement of transaction is to occur.• Increased volume of sales (often, when using a card, the customer spends more than when paying in cash)• Advantageous for the customers to pay by means of POS-terminal as conversion of money into cash through ATMs is more expensive.• For trade object, it is simple to register and control cash drive as long as amounts withdrawn by POS terminals are to be directly transferred to its bank account.Advantages of Cartu Bank service:• Free POS terminal installation• Extensive experience in acquiring terminal business• The fi rst authorized bank in Georgia to serve international VISA plastic cards• Unprecedented service of 4 cards in Georgia through 1 POS terminal: - VISA - MasterCard - Amex - Diners Club
LOANSBank offers its clients the following credit products: • Energy Effi ciency Loan • Network Business Loan• Small and Medium-sized Loan• Import Replacement Production Loan• Agriculture Development Loan• Export-Import Business Transactions Loan• Public Enterprises Privatization Loan
29 Assets restatement reserves 0 X 030 Total share capital 133 558 849 X 133 558 849
31 Total liabilities and share capital 161 602 770 371 093 678 532 696 448
Bank: JSC CARTU BANKDate: 12.31.10
RI Income Statement in GEL
N GEL Foreign currency TotalInterest income
1Interest income from banks according to nostro accounts and deposits 1 521 040 30 438 1 551 478
2 Interest income from loans 13 854 198 41 583 941 55 438 1392,1 From interbank loans 0 0 02,2 From loans to the tarde and service sector 3 920 715 19 337 980 23 258 6952,3 From loans to the energy sector 32 363 155 058 187 4212,4 From loans to the agrarian and forestry sector 540 059 982 298 1 522 3572,5 From loans to the construction sector 2 816 571 8 903 496 11 720 0672,6 From loans to the mining and processing center 2 168 859 3 719 791 5 888 6502,7 From loans to the transport and communications sector 18 544 398 126 416 6702,8 From loans to individuals 527 445 4 706 798 5 234 2432,9 From loans to other sectors 3 829 642 3 380 394 7 210 0363 Interest and discount income from securities 717 803 0 717 8034 Other interest income 0 0 05 Total interest income 16 093 041 41 614 379 57 707 420
Interest costs6 Interests paid on call deposits 411 670 892 131 1 303 8017 Interests paid on time deposits 117 877 2 098 214 2 216 0918 Interests paid on bank deposits 4 007 85 326 89 3339 Interests paid on own debentures 0 0 010 Interests paid on borrowings 0 23 474 012 23 474 01211 Other interest costs 012 Total interest costs 533 554 26 549 683 27 083 23713 Net interest income 15 559 487 15 064 696 30 624 183
Non-interest income14 Net commission and other income according to services 1 112 522 -248 769 863 75314,1 Commission and other income according to services rendered 1 601 842 1 953 575 3 555 41714,2 Commission and other income from services received 489 320 2 202 344 2 691 66415 Received dividends 0 77 265 77 26516 Profit (loss) from dealing securities 0 -42 018 -42 01817 Profit (loss) from investment securities 5 0 518 Profit (loss) from currency operations 3 888 364 3 888 36419 Profit (loss) from currency restatements 941 393 941 39320 Profit (loss) from property sales -14 922 0 -14 92221 Non-interest income from other bank operations 6 925 136 728 975 7 654 11122 Other non-interest income 1 078 488 4 077 347 5 155 83523 Total non-interest income 13 930 986 4 592 800 18 523 786
Non-interest costs24 Non-interest icosts from other bank operations 1 847 002 308 339 2 155 34125 Bank development, consulting and marketing costs 268 560 47 104 315 66426 Bank personnel costs 7 794 544 7 794 54427 Fixed assets maintenance costs 241 798 241 79828 Depreciation and amortization costs 1 410 360 1 410 36029 Other non-interest costs 4 272 640 170 881 4 443 52130 Total non-interest costs 15 834 904 526 324 16 361 22831 Net non-interest costs -1 903 918 4 066 476 2 162 558
32 Net profit before reserve allocations 13 655 569 19 131 172 32 786 741
33 Loss from impairment of loans 10 966 983 X 10 966 98334 Loss from impairment of investments and securities 196 X 19635 Loss from impairment of assets 1 784 274 X 1 784 27436 Total loss from impairment of laons 12 751 453 0 12 751 453
HEADLINE NEWS & ANALYSIS 31FINANCIALFINCHANNEL.COM | MARCH 28. 2011
C M Y K
best georgian banks
Bank of Georgia is the leading Georgian bank offering a broad range of corporate banking, retail banking, wealth management, brokerage and insurance services to its clients in Georgia, Ukraine and Belarus. Bank of Georgia is the largest bank in Georgia by assets, loans, deposits and equity, with 36.2% market share by total assets (all data according to the NBG as of 31 December 2010). The bank has 142 branches and more than one million retail and corporate current accounts.
Bank of Georgia on a standalone basis reported Q4 2010 Net Income of GEL 30.0 million, (up 26.7% q-o-q), which compares to the standalone Net Income of GEL 7.8 million in Q4 2009. In Q4 2010, Total Operating Income (Revenue) on a standalone basis grew by 6.9% q-o-q to GEL 80.1 million, (up 28.5% y-o-y), driven by 4.4% q-o-q increase of Net Interest Income to GEL 54.8 million, (up 22.4% y-o-y) and 12.5% q-o-q growth of Net Non-Interest Income to GEL 25.3 million, (up 44.1% y-o-y). The growth of the Bank’s standalone Revenue items is the result of the increase of the Bank’s loan book on both quarterly and full year basis, while increased lending and overall business activity translated into the 3.1% q-o-q growth of Net Fees and Commission Income to GEL 11.8 million, (up 36.3% y-o-y) and 34.0% q-o-q increase in Net Income from Documentary Operations to GEL 3.2 million, (up 44.3% y-o-y). In Q4 2010 the Bank’s Net Foreign Currency Related Income on a standalone basis grew 19.3% q-o-q to GEL 9.7 million, up 5.1% y-o-y.
Bank of Georgia’s standalone Q4 2010 NNOI grew to GEL 45.0 million, an increase of 12.4% on a quarterly and 57.1% on a yearly basis, a result of improved operational effi ciency and cost containment measures implemented by the Bank. In Q4 2010, Total Recurring Operating Costs increased by 0.5% q-o-q to GEL 35.1 million (up 4.2% y-o-y), as the Bank’s standalone Personnel Costs declined by 3.8% q-o-q, predominantly due to the decrease in bonus related expenses resulting in the decrease of Personnel Cost/Income ratio to 23.5% in Q4 2010 from the same ratio of 26.1% in Q3 2010. As a result, Bank of Georgia achieved standalone positive operating leverage of 10.9% on a consecutive q-o-q basis and 31.1% on a y-o-y basis. Bank of Georgia’s standalone Cost/Income ratio decreased to 44.0% in Q4 2010 from 49.0% in Q3 2010 and from 58.0% in Q4 2009. Due to the combination of Loan Book growth and increased effi ciency, Profi t Before Provisions grew by 71.6% y-o-y to GEL 44.9 million, up 17.4% q-o-q. The Bank’s Net Provision Expense on a
standalone basis decreased from GEL 9.9 million in Q3 2010 to GEL 9.5 million in Q4 2010.
On a full year basis, Bank of Georgia reported strong standalone results with a record Net Income of GEL 91.0 million, which almost tripled compared to the standalone Net Income of GEL 30.8 million in 2009. Revenue grew 12.2% y-o-y to GEL 283.5 million, driven by 7.1% y-o-y increase of Net Interest Income and 26.2% increase of Net Non-Interest Income, and more than offset the 9.0% y-o-y growth of Recurring Operating Costs to GEL 133.2 million, in line with the increased lending and expansion of business activity during the year. As a result of improved operating leverage, NNOI grew 15.2% y-o-y to GEL 150.3 million. Net Non-Recurring Costs of GEL 5.1 million remained largely fl at compared to previous year. Net Provision Expense in 2010 amounted to GEL 38.3 million, compared to GEL 89.6 million Net Provision Expense in 2009, refl ecting the improved credit quality on the back of improved economic environment in Georgia.
As of 31 December 2010, Bank of Georgia’s Total Assets on a standalone basis reached GEL 3.9 billion, up 12.1% q-o-q, up 38.9% y-o-y. Bank of Georgia’s standalone Net Loan Book increased 14.4% q-o-q (up 37.1% y-o-y) to GEL 2,205.6 million driven by 21.9% q-o-q increase of the Corporate Net Loan Book to GEL 1,190.7 million up 44.0% y-o-y and 7.0% q-o-q growth of Retail Net Loan Book to GEL 974.3 million, (up 32.2% y-o-y). Standalone NPLs stood at GEL 81.2 million and represented 3.5% of the total gross loan book, a decrease from the same ratio of 4.7% in Q3 2010, when the NPLs amounted to GEL 96.5 million on a standalone basis.
As of the year-end 2010, the Bank’s Client Deposits in Georgia amounted to GEL 1,808.5 million, representing an increase of GEL 296.1 million, or 19.6% during Q4 2010, up GEL 681.7 million, or 60.5% y-o-y. The growth of Client Deposits was primarily driven by the Corporate Client Deposits, up 25.8% q-o-q and 71.2% y-o-y, while Retail and Wealth Management Deposits grew 9.4% q-o-q and 43.8% y-o-y and 19.6% q-o-q and 60.4% y-o-y, respectively.
As of 31 December 2010 Bank of Georgia on a standalone basis held its record high market share of 36.2%, 35.9%, and 32.2% by total assets, gross loans, and client deposits, respectively in Georgia. Since the year-end 2009, the Bank gained market shares of 3.2% by assets, 4.1% by gross loans and 3.9% by client deposits7.
Bank of Georgia MAIN SHAREHOLDERS
100% of the bank’s shares is owned by ProCredit Holding AG (Frankfurt, Germany). MISSION & VISION: ProCredit Bank Georgia is a development-oriented full-service bank. We offer excellent customer service and a wide range of banking products. In our credit operations, we focus on lending to very small, small and medium-sized enterprises, as we are convinced that these businesses create the largest number of jobs and make a vital contribution to the economies in which they operate.Unlike other banks, our bank does not promote consumer loans. Instead we focus on responsible banking, by building a savings culture and long-term partnerships with our customers.Int. rating & awards: On August 6, 2010 Fitch Ratings, a leading global rating agency, assigned ProCredit Bank Georgia rating “BB-”, which is the best and highest possible rating in Georgia.Number of branches: ProCredit Bank Georgia has 58 branches all over the country. Customer groups: The ProCredit group comprises 21 target group-oriented fi nancial institutions. It focuses on developing countries and transition economies in three regions: Eastern Europe, Latin America and Africa.The bank aims to be the accessible, trusted, socially responsible bank for local small businesses and “ordinary” people who live and work in the area. In its lending business, the bank focuses on small and medium-sized enterprises. At the same time ProCredit Bank provides retail banking services to ordinary people, with a focus on low-income families. In this way the bank aims to be a long-term banking partner for our target groups. By providing socially responsible products, the bank aims to contribute to the economic development of the countries in which it works.
LATEST DEVELOPMENTS: New Head Offi ceProCredit Bank celebrated the “Richtfest” (roof-topping) ceremony at the construction site together with employees and partners, following the German tradition. The modern 12 000 sq. m. building, being constructed on Kazbegi avenue, with an adjoining park and underground parking facility, will be completed by 2012. It will serve three functions: of the head offi ce, a training centre and a new central branch of the bank.
YOUNG BANKERS’ PROGRAMProCredit Bank is the fi rst in the Georgian banking sector to introduce “Young Bankers Program.” This new initiative is aimed at supporting recent graduates and last year university students from all over Georgia in acquiring
theoretical knowledge and practical experience in banking, giving them unique opportunity to start their career in the banking sector, particularly in ProCredit. “Young Bankers Program” is intended for 20 participants and lasts for 6 months.
ONE STOP BANKING, NEW BRANCH CONCEPTProCredit Bank shared an important novelty to its clients: the One Stop Banking service. The new service will allow clients to perform transactions faster and receive and pay small amounts of cash not necessarily at the cash-desk but with a client advisor. All transactions will be done conveniently in one place, making it more effi cient and enjoyable for the clients to use banking services. There will also be separate meeting rooms for more privacy, where clients can receive consultations and be served individually.
PRODUCTS AND SERVICES To its main target group – small and medium businesses, ProCredit Bank offers the following products and services: Business loans: up to USD 10,000, up to USD 30,000, from USD 30,000, agro loans, visa business card, e-banking, money transfers, standing orders, documentary operations. Business loans are used to fi nance: Working capital, fi xed assets, real estate; Or are used for personal purposes: Consumer purposes, housing renovation, real Estate. Anyone who is running a business, for instance: trade, export-import, transportation or other services, production, etc. can qualify for business loans from ProCredit Bank.To small and medium businesses, the bank offers the following types of deposits: Term Deposit, Flexible Deposit, Savings Plan.To individuals, ProCredit Bank offers:Utility payments, deposits, loans, plastic cards, travelers cheques, overdraft facilities, e-banking, money transfers, standing orders. The following types of deposits are offered to individuals: Term Deposit, Flexible Deposit, Savings Plan, Savings Account, Child Deposit, “My Piggy Bank” Deposit.
ProCredit Bank Georgia
According to Audited Financial Statements IFRS 31‐Dec‐10
Total Assets 863 559 Gross Loan Portfolio 591 464 Liabilities to Customers 480 492 Total Liabilities 741 637 Total Equity 121 922 Operating income 82 024 Operating Expense 57 576 Profit before tax 24 448 net profit 20 869
• The major shareholder of “VTB Bank (Georgia)” is the Open Joint Stock Company “VTB”.• VTB bank’s mission is to provide world-class fi nancial services for a sustainably better future for our customers, our shareholders and our society• International Agency Fitch Ratings published updated ratings on 4 March 2011. VTB Bank Long-term Credit Rating in Foreign Currency is the BB- Rating forecast of VTB Bank (Georgia) has been changed with "Positive" instead of "Stable".• VTB Bank has 17 Bank points.• On August 9, 2010 EBRD ceased to be the shareholder of JSC “VTB Bank (Georgia)” • Also, there have been changes into the management of JSC “VTB Bank (Georgia)”. Along with the new members of the managements in 2010 the new fi nancial director Elena Narozhnaya was assigned.• Together with the other new products JSC “VTB Bank (Georgia)” introduced new product “VTB Private banking”. VTB Private Banking is an exclusive banking service which has been developed in order to provide a high standard of specialized service for our special clients. • In 2010 JSC “VTB Bank (Georgia)” supported many cultural and sports events, being their active sponsor. Also in 2010 the Bank participated into many charity actions, cooperating actively with the foundation “Iavnana” and being involved into the projects by other charity organizations. • In 2010 the bank together with the foundation “Iavnana” has sponsored many charity actions.• JSC “VTB Bank (Georgia)offers various types of accounts:Demand Account – max 4%Mobile Account – max 5%Comfort Account – max 8%Growing Account – max 11%Growing plus Account – max 11.5%Child Account – max 12.5%Term Account – max 12%
• Loans:Consumer loanPremium consumer loanMortgage loanUniversal mortgageStudent loanDeposit secure loan• Banking:On-line banking, internet banking, direct debit, foreign exchange;
MISSION & VISION:OUR MISSION:To contribute to development of business relations in the society based on confi dence and mutual benefi t.To commit to development of stable and successful society based on traditional values.Bank is oriented to promotion of modern education in Georgia.To take care of the bank’s employees.
OUR VALUES:BENEFITSRelation with Basisbank provides benefi t.REASONABILITY In operations and style of the bank.RESPONSIBILITYAcknowledgement of liability.LOYALTYOrientation to the long-term relations.
INT. RATING & AWARDS: Fitch Ratings: LONG – TERM B- SHORT - TERM B OUTLOOK – STABLEInternational Partners: EBRD, World Business Capital, OPIC, USAIDNumber of branches: The network is structured so that 14 offi ces are located in the central part of capital city and at places of active business
and residential areas, the rest of 3 branches are in regional areas with well developed infrastructure and business sectors.
CUSTOMER GROUPS: Basisbank provides full package of banking services, for private and corporate customers.Latest developments: Changes in shareholders:CEO – Zurab Tsikhistavi has been appointed as the Chairman of the Supervisory BoardChanges in management: Corporate Director – David Tsaava has been appointed as an Acting CEO
NEW BRANCHES:In October 2010 Basisbank opened its another service center at 5, Politkovskaya (Jikia) Street. Also the new head offi ce has been opened situated at 1, Tsamebuli str.
NEW SERVICES OR PRODUCTS OFFERED: Since 2010 till the present days has been a profi table period. New products have been created: “Useful business loan”, Seasonal business loan”, payments from fast payment machines, automatic transfer services, “Useful auto loan” and mortgage loans in GEL “Your mortgage”.
PUBLIC CAMPAIGNS AND CHARITY: The bank’s scope and priority is the educational sector from the point of view of social responsibility.Undergraduates of Ilia State University have been granted with personal computers by the bank’s educational fund.The science conference has been held at Shota Rustaveli State University supported by Basisbank, where along with Georgian scientists, participated
“Neofofi t-rilsji” University representatives as well. With fi nancial support of Basisbank the conference materials were published in the form of brochure.The bank’s CEO David Tsaava and Georgian minister of Science and Education – Dimitri Shashkin have presented the library of the Public school N45 of Tbilisi with books.With the support of Basisbank “Architectural Rewards 2010” rewards ceremony has been held;Also the 1st telecommunication event „TMG – Telecom Meeting in Georgia“ has been held;The company “Tbil elite house” with Basisbank support has fi nished building of an apartment house.The best sportsman of 2010, David Ziraqashvili has been awarded with 5000 GEL.Basisbank fi nancially contributed in charity event - “Heroes of Imedi” held in “Tbilisi Marriot” The bank participated in the “Iavnana” charity event held in Barcelona
PRODUCTS, SERVICES AND RATES Deposits and payment:Term Deposit, Increasing Future Deposit, Demand Deposit, Child Deposit, Useful Deposit, Increasing Saving Deposit. Debit Cards.Maximum Interest rate 14.5% in Gel.
LOANS:Your Mortgage, Useful Mortgage, Useful Auto Loan, Consumer Loan, Student Loan, Business Loans, Credit cards.Interest rate from 16%
BANKING: Internet Banking, SMS Banking, Tele-banking, Express Transfers, Cash Collection, Direct Debit, Foreign Exchange , Documentary Collection, International Guarantee.
31 TOTAL LIABILITIES AND EQUITY CAPITAL 66 066 385 73 984 706 140 051 092
Reporting Period
• JSC BTA Bank KZ, JSC “Silk Road Financial Group”• Number of branches: 8Latest developmentsManagement:Director General - Kairat KenzhegarinRisk management Director - Irakli KakabadzeCorporate Director - Alexsander DzneladzeNumber of clients (Juridical)--- 3065Number of clients (Individuals)---20408New services or products offered: o Credit Card –“Placti card”;o Credit Card –“Placti card + (plus)” for customers involved in the payroll services;o Money Transfer – Express Money;Deposits and payment:• Term Deposit – GEL/USD/EUR for 12 months 12.50% / 9.25 / 9.00%;• Savings Deposit – GEL/
USD/EUR for min. amount 7.50% / 5.50% / 5.00%, Difference between balances 2.50% / 2.00% / 1.50%;• Increasing Savings Deposit - GEL/USD/EUR for 12 months 12.00% / 8.50% / 8.00%;• Demand Deposit - GEL/USD/EUR for 12 months 4.00% / 3.50% / 3.00%;• Child deposit - GEL/USD/EUR - 13.75% / 9.75% / 9.75%;• Flexible deposit - GEL/USD/EUR for 12 months 12.50% / 9.25% / 9.00%;• Safe Deposit - GEL/USD/EUR for 12 months 11.50% / 8.25% / 8.00%;Loans:• Consumer Loan – max. 42 month starting from 18%;• Auto Loan – max. 42 month starting from 18%;• Credit Card – max. 24 month 30% or 36%;• Business Loan – max. 42 month 16%-18% in GEL, 60 month 14%-24% in USD;
• Credit Line;• Loans for Small and Medium Business Development;• Overdraft;Banking: • Internet Banking;• Direct Debit;• Foreign Exchange;• Standing Order;• SMS Banking;• Mail Banking;• Cash collection;• Money market & Derivatives;• Plastic Cards.Insurance: • Life Insurance;• Property Insurance.Other:• Money Transfers;o Western Union;o Faster;o Contact;o Anelik;o Express Money.• Utility Payments;• Bank guarantee;• Payroll Services.
MISSION & VISION: Investbank’s mission is to create a strong, sustainable and credible fi nancial institution by means of teamwork, with support of the clients, business partners and stakeholders.At the time of establishing the bank and defi ning its development strategy, Investbank management set the goal to establish a fl exible and dynamic banking institution that fully satisfi es local and foreign entrepreneurs and individuals demands and requirements, providing civilized and favorable environment for their activities.
INVESTBANK MANAGEMENT GOALS:• To protect shareholders’ and clients’ business interests;
• To meet and focus on clients’ needs;• To retain high level banking service together with fi nancial growth;• To provide fi nancial credibility and stable development;• To meet the level of demand in mechanisms of bank management and internal control;• To conduct banking activity in accordance with international standards and experience.Our efforts are aimed at solving problems facing the Bank, developing services we can provide to our clients, and minimizing capital management risks.Our aims are to create comfortable and benefi cial conditions for the activity of corporate bodies and individuals both residents and non-residents of Georgia, to launch new banking products and to develop individual relations with clients in order to understand their demands better.
• CHANGES IN MANAGEMENT: MANAGEMENT: General Director - Giorgi GzirishviliDirector - Iva Sikharulidze
PRODUCTS, SERVICES AND RATES Please provide us with a brief description of the products and services offered by your bank. Indicate rate of interest.Deposits and payment:Savings accounts, business cards etcLoans:Mortgage loans, consumer loans, credit cards etcBanking: On-line banking, money market & derivatives, cash collection, internet banking, direct debit, foreign exchange Insurance: Life insurance, property insurance etc
The tickets are availableat tbilisi international airport
freedom square 4courtyard marriott hotel,
1st fl oorTel: 400 400; 400 040
13, Rustaveli Avenue.; Tel.: 779 200
4, Freedom Square,
Tel: 779 100
BUSINESSTRAVELCOM
HOTTEST TOURSTEL: 999662
best georgian banksJSC Progress BankSHAREHOLDERS“Kala Capital” Ltd
MISSION & VISION: Our Mission is to provide superior, proactive banking services. Our vision is to become the bank of choice for corporates, medium businesses and upmarket retail customers
• Number of branches: 1• Customer groups: Corporate, SME, Retail
LATEST DEVELOPMENTS: • Changes in shareholders: No Changes• Changes in management: No Changes (Chief Executive Offi cer - Konstantine Sulamanidze; Chief Operations Offi cer - Akaki Kordzadze; Chief Risk Offi cer – Ilia
Kechagmadze)• New services or products offered: Child Deposit, Progressive Deposit, Increasing Deposit,• Public campaigns and charity: Progress Bank is not primary involved in the charity events; However Kala foundation, which is a group member of Kala capital (the same group that owns progress bank), provides charity events.
ANALYSIS BY SEGMENT: Corporate Loans - 2,859,987, SME Loans - 2,857,173, Retail – 4,101,975.• Average balance sheet and net interest: Total Assets – 13,923,026, Net Interest Income - 1,740,857• Total equities and liabilities: Total equity - 11,199,241, Total Liabilities - 2,723,785• Analysis of changes in net interest income: In the last six
months we have stable growth in net interest income which is caused from loan portfolio growth. Change in Net interest income in comparison with June 2010 is the following: 23% in July, 9% in August, 2% in September, 15% in October, 25% in November and 29% in December• Number of clients (Juridical): 142• Number of clients (Individuals): 612
Deposits and payment: Deposits: Term Deposit, Saving Deposit, Child Deposit, Progressive Deposit, Increasing Deposit. Payments: SWITF, Western UnionLoans: Consumer loans, auto loans, mortgage loans, loans for businesses (for SME and Corporate clients)Distance banking: Internet Banking (www.v-bank.ge) Other: Safe boxes
Long, black curly hair, strict but at the same time very tender - a view of this beautiful Georgian lady would convince you that she is the best Bizet’s Carmen ever. Anita is the youngest opera singer to have opened a season at the La Scala Theatre.
By TAKO KHELAIA The FINANCIAL
I started to sing in my childhood. I was singing Pop and Soul music. My family thought I had tal-
ent and decided that I could be involved in opera art as well. I was 16 years old when my fa-ther decided to search for a good voice teacher in Tbilisi, who would prepare me for pass-ing entrance exams to the Con-servatoire. We found Mrs. Mzia Davitashvili, who was a former opera performer. She was a fas-cinating soprano and she start-ed giving me lessons, preparing me for the Conservatoire. Mzia was a great teacher and in a very short period, she taught me everything that a young singer could learn.”
“I started lessons in Septem-ber and I had to pass exams for the Conservatoire in July. Fortunately I passed the exams and became a student of the Conservatoire. Manana Egadze became my teacher there. She taught me for 6 months. After that I decided to go to Europe and pass exams to enter the La Scala Theatre Academy.
“Unfortunately my teacher Mzia Davitashvili died before I had started studying at the La Scala Theatre Academy, she would have been so very happy to see my success. The La Scala Theatre Academy is the best place to receive the chance to get noticed in the big theatre and to represent yourself. It gives you big professional expe-rience, but it’s not as good for a singer who wants to study how to sing. There are many of the famous faces of opera art, but unfortunately as teachers they can’t transfer their knowledge to their students that well.”
“It was really hard for me to study at the academy for 2 years, I even lost my voice dur-ing one period, but fortunately my friends’ and my future hus-band’s teacher often gave us les-sons and that’s what helped me so much. The Academy is a great exhibition of talented singers which can afterwards stand in the right way and start perform-ing in big theatres. I was playing many small and different roles at the La Scala Theatre.”
In April 2008 Rachvelishvili was in front of the great con-ductor Daniel Barenboim. He was looking for an artist for the role of Mercedes in the opera Carmen.
“Barenboim made me sing nearly all of the songs of Car-men. A few months on from this event I was notifi ed that I was going to sing at the pre-miere of Carmen on the open-ing of the season in 2009. It appeared that Barenboim was really impressed with my voice and my appearance, as I looked very like Carmen. During the meeting, the theatre director told me the following words: “Over 1 month we have listened to many Carmens, but neither
Barenboim nor I want anyone except you to sing Carmen”. It was a great happiness for me and a big step forward in my ca-reer. I had to perform at one of the world’s biggest and most fa-mous theatres in the main role of Carmen.”
“It was huge responsibility for me. I started serious prepa-ration for this role. Even dur-ing my time in Tbilisi, I had prepared some parts of this role, but of course the level of preparation in Europe is much higher. They emphasize more on pronunciation of words in Italian or French languages and it’s a very important factor. Due to improving pronunciation and studying the French language, the La Scala Theatre sent me in Paris, France to the pianist of Maria Callas. She is an old wom-an, who plays the piano herself, her name is Janine Rice and she works on improving one’s mas-ter of the French language and develops pronunciation.”
“I worked with her for two months. She is a fascinat-ing piano player. I was pretty much practiced when I started rehearsals at the theatre. I was also meeting the conductor before starting the rehearsals. I worked hard with the great drama theatre director Emma Dante, who was staging opera for the fi rst time. Working with a director of drama theatre gives you much more than working with just an opera director, who emphasizes more on the gener-al aspect of the play. The drama theatre director works much on the character itself. It was a great experience for me.”
According to Rachvelishvili,
when she went out on stage on 7 December for the opening of the season she was very calm as she had practiced much and was prepared for the performance.
“I stayed so calm on the stage, due to the fact that I was so prepared. I wasn’t nervous at all. I remember that Italian and French newspapers noted that I had iron nerves. They noted that I wasn’t nervous about anything or else I just couldn’t realize the importance of what was hap-pening around me at the time. I was actually very aware of the situation around me. It was a big risk for me, because if any small detail had gone wrong my career would have ended on the very day it began.”
“I was well prepared for the performance and I felt much support from the theatre, con-ductor and my colleagues. Even my colleagues remained quite sceptical about my debut on stage, but after seeing how hard I was working they began to support me and gave me some good advice. It was a very beau-tiful, unforgettable debut which will stay in my memory and my life for a long time. I think that the main determiner of my suc-cess was my preparation. Every-one has talent in different areas, but there are people who just don’t develop it, they are lazy. At the other end of the spec-trum there are people who try hard and work hard to achieve their aim. I am sure that those who work hard always achieve their goals.”
“My husband is represented in the same sphere as me, which helps me so much in every as-pect. It’s very important that you
have another person with you who completely understands your profession and you. Our work is very hard, we are always traveling in different parts of the world and we are often quite far away from each other. At the moment he is in America where he is singing Tosca. We haven’t seen each other for a long time. A person with a different pro-fession might not understand all these aspects, but we under-stand each other so well. When I am tired he knows how to help me and before a concert he knows how to make me calm.”
New York is the favourite city of Rachvelishvili, while performing in front of viewers. She says that that city has very exceptional viewers who greatly respect opera.
“My favourite city where I enjoy being and playing in the theatre is New York. The view-ers there are very generous and they stand up after the end of the play and applause. Germany is also a nice place to perform; viewers are very emotional on the whole, as opposed to in Italy as Italians are always very criti-cal. It’s very hard to sing in Italy, they even go so far as to whistle if they don’t like the play. Of course this fact hasn’t happened in my case, I performed my de-but in Italy, people respect me there, I have many admirers there and am in close contact with them.”
“My favourite plays are Car-men, Werther - Charlotte’s Aria, and Dalila’s Aria. At the age of 26 I am singing only French operas, I have very limited rep-ertoires. The mezzo sopranos of Verdi have to sing more dif-
fi cult arias and it’s too early for me to sing such kinds of arias. At the moment I am working on French operas and I like Wer-ther and Dalila very much.”
“I will make my Dutch de-but in my fi rst performance of Dalila in Samson et Dalila at the Concertgebeouw in Amsterdam on 21 May, which will be broad-cast by radio in nearly all Euro-pean countries. I look forward to my performance as Dalila’s Aria is really diffi cult. Then I will come back to Rome to my Maestro where we will practice much on my plays. After Rome I will come back to La Scala to prepare for Gioacchino Rossini - The Italian Girl in Algiers. It’s a very beautiful role and I look forward to performing this dif-fi cult role.”
“I also have a visit to Spain with the Orfeo ed Euridice opera of Christoph Willibald Gluck. It’s an old opera and I am singing a man’s role. A mezzo soprano sings Orfeo’s role, it’s a kind of tradition. Af-ter my Carmen debut in New York in January, the theatre gave me 5-6 new contracts. Two of them will be Carmen and in 2012-2013 I will be back with a role as Carmen in New York’s Metropolitan Opera. I will also play The Italian Girl in Algiers in New York together with two Russian operas Boris Godunov and Prince Igor.”
Rachvelishvili is also plan-ning some debuts in German theatres with the same roles. She will have concerts with the maestro Barenboim, who will play the piano. She has also planned a Russian and German music concert.
“I was the fi rst Georgian singer to have opened a sea-son at the age of 25 in La Scala and performed Carmen. Many Georgians have sung important arias there, but I was the young-est singer who opened a season in the main role. During the La Scala Premiere, a delegation from Georgia visited us. We hosted the Minister of Culture and even President Mikheil Saa-kashvili visited our 4th play.”
“There are many famous, Georgian opera singers abroad like Nino Suruladze, Nino Mach-aidze, Lado Ataneli, Gia Gag-nidze and many others. All of them are very good and success-ful singers with beautiful voices and they know how to sing. Peo-ple all around the world have started talking about Georgia. My colleagues abroad are really enthusiastic about Georgian op-era singers, it’s a talent that God gave us as present.”
“The concert which will take place at Rustaveli Theatre on 29 March was planned in Novem-ber when Nika Memanishvili ar-rived at La Scala to see my Car-men role. He attended the play and was fascinated, so it was at that time when we decided to hold a concert in Georgia together with the Georgia state philharmonic orchestra and choir with Nika Memanishvili.”
“I had the idea to perform Tamar Salukvadze’s composi-tions at the concert. She is a young, really talented, in my view world-level composer who is not so famous and I decided to perform her vocal music at our concert. I have known Tamar for a long time already and I have performed some of her compositions at the Tbilisi Conservatoire. I offered Nika Memanishvili to perform Geor-gian music in the fi rst part of the concert. French music will be represented in the second part. It was Nika’s idea to perform some parts from the play Car-men together with other com-positions at the concert.”
“I am very happy that I am here in Georgia and for me as a Georgian singer organizing a
solo concert here is a really big responsibility. I know that al-most all tickets have been sold and many people will come. I am nervous because Georgian viewers are very critical and are awaiting something exceptional from a singer who performs abroad. I hope I will justify their hopes, because I am working very hard for this concert.”
Rachvelishvili is happy to be performing at a concert togeth-er with Nika Memanishvili, she thinks he is a gorgeous conduc-tor. She says that Memanish-vili breathes together with the singer. There is a great harmony between the singer, conductor, choir and orchestra.
“I hope that Nika will have more support in his future projects, because cultural devel-opment is really important. The country’s cultural development means the country’s economic development. It refl ects so much on people’s intellectual develop-ment. People should visit con-certs. I am happy that the ticket price for this concert is pretty normal and starts from GEL 5-30. I know that Georgians have economic problems but they have managed to buy tickets re-gardless, because they want to listen to a great orchestra with great choir, see a professional conductor and listen to a profes-sional singer.”
“A singer should work hard on their development, they should never stop. My aim is to work hard and sing as long as I can. I want to perform different repertoires after 10 years, which will be harder I know, but I will manage it,” Rachvelishvili said.
Rachvelishvili says it does not matter how often you trav-el, nothing compares to your home.
“Returning home is always an opportunity to take a deep breath and have a rest. I love Georgia very much. I want to tell Georgians to remain more posi-tive and hopeful for the future. I know that Georgians have ma-terial problems, but if a person wants something enough then he/she can defi nitely achieve it. If we have the desire to devel-op, we will reach our goal. The world has started to notice us, when just a few years ago they didn’t even have any informa-tion about the country.”
“During the last 2 years many things have changed. When I was fl ying to Georgia before I only saw Georgians or Turkish people on the plane, but now I can see French, German, Ital-ian, American and even South Africans. Many foreigners are visiting Georgia which makes me very happy. I am trying hard to make foreigners interested in our country. I have a kind of au-thority and many people in the world are acquainted with me. I am always speaking about our culture, our cuisine, wine and everything that our country has. We have lots of things but un-fortunately we ourselves don’t respect them enough.”
“I can assure you sure that there is no other nation or peo-ple in the world like Georgians. We are very honest and hospita-ble and everyone notices it. My husband when he visited Geor-gia for the fi rst time last year was shocked and amazed by our hospitality. Unfortunately most Georgians have lost hope. I know that everything will be ok. If I managed to achieve success and if many other Georgians from different spheres have also achieved it, we all can stay posi-tive for the future.”
“There are only 5 million peo-ple in Georgia, that is seen as a small dot on the world map, but this country has many great people,” Placido Domingo told Anita during her premiere at La-Scala.
Anita Rachvelishvili, La-Scala’s Georgian Mezzo Soprano
HEADLINE NEWS & ANALYSIS 35FINANCIALFINCHANNEL.COM | MARCH 28. 2011
We offer amongst the best rates for corporate and trade financing. As the world’s local bank we have unique experience, knowledge and resources to help your business. HSBC Bank Georgia is a member of HSBC Group, one of the world’s largest financial and banking institutions. For borrowers this means paying amongst the lowest interest rates available in Georgia and for traders - working with one bank on both sides of international transactions, which reduces costs and related risks whilst increasing profit.
Find out how we can support your business at www.hsbc.ge
Advertiser: HSBC. Contact FINANCIAL Ad Dep at marketing@fi nchannel.com
