Georgian Banking Sector Overview Q1 2017 | KPMG | GE

Georgian Banking Sector Overview Q1 2017

Georgian Banking Sector Overview Q1 2017

This report summarizes and analyzes the financial results of the 17 commercial banks of Georgia for the 1st quarter of 2017, as well as provides some insights into the recent developments in the sector.

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General highlights

On January 17 de-dollarization program was implemented together by Government and National Bank. Individuals who had real estate bank loans in foreign currency had a chance to convert it into national currency. Following this, loans of $75 million were converted to GEL by the end of March.

At the end of February Government decided to return Finance Sector Supervision functions to National Bank of Georgia (NBG).

In March, 2017 Georgian government with support of World Bank has approved legislative amendments for introduction of deposits obligatory insurance system. The law is planned to be adopted this year and will come into force on January 1, 2018.

In March NBG issued a banking license to JSC Credo Bank, which has been operating on Georgian market since 2007 as a microfinance organization.

In March Netherlands Development Finance Company (FMO) has sold its own shares in TBC Holding. Institutional investors of UK, USA and Europe have bought the shares under accelerated deal managed by Barclays and Renaissance Capital.

By the end of March the accounts of Bank Republic clients had been tied to TBC Bank and Bank Republic cards were replaced by TBC Bank cards. Merger has successfully finished in May.

In March Minimum Capital Requirement for banking license applicant was increased up to GEL 50 mln, in turn, for the banks licensed by NBG before coming into effect of official order, supervisory capital should be not less than GEL 30 million (by December 31, 2017), not less than GEL 40 million (by June 30, 2018), not less than GEL 50 million (by December 31, 2018). To note, Silkroad bank, Finca bank and Ziraat bank will have to grow their capital by the end of 2018.

On May 2 announcement was made that Turkey’s state-run Ziraat Bank will offer services in neighboring Georgia under a new institution called JSC Ziraat Bank Georgia.

On May 15 the official ceremony of signing declaration, concerning founding of Georgian development bank was held in Beijing, China. The declaration was signed by Vice Prime Minister, Dimitri Kumsishvili. The founders of the bank are largest Chinese corporations: „CEFC China Energy Company Limited’’ and the company „Eurasian Invest LLC”.

The Minimum Requirement Of Liquidity Coverage Ratio will be established for the Commercial banks from September. The LCR ratio will be calculated as High Qualified Liquid Assets / Net cash outflow (Net outflow represents difference between cash inflow and cash outflow over a 30-day stress period). The aim of the new limit is to ensure that banks have sufficient high qualified liquid assets to survive the stress period.

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© 2017 KPMG Georgia LLC, a company incorporated under the Laws of Georgia, a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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