| Significant Recovery to Begin in 2011 in Georgia, Bank Republic CEO |
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24/11/2009 14:52 (108 Day 21:31 minutes ago) | |||||
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The FINANCIAL -- “All international experts agree that the first period of recovery will be in 2010 but the most significant one will start in 2011,” Gilbert Hie, Chief Executive Officer of Bank Republic, told The FINANCIAL. Mr. Hie is optimistic about the current signs of recovery sins but he says that he doesn’t expect a very quick and significant recovery.
“It is hard for an economy to recover which has been hit by war. However now all the conditions are favourable we are seeing an end to liquidity in the banking system. What we need is a restoration of trust and confidence from the foreign investors in Georgia which is a long process as well,” Hie says.
“We can already see some signs of recovery, a few signs in different sectors, however we know that most of the sectors of the economy have been hit and we are contributing to restarting the distribution process. We are contributing to restarting the real estate sector. We are pushing in all directions but we know for certain that it will be a slow process,” Gilbert Hie says.
According to Mr. Hie, in Georgia we were aiming to have quite a quick recovery in 2009 but it has actually been very hard.
“Everyone was relying on the fast arrival of 4.5 million USD of international help but only 1.8 million has come thus far. The recovery process is never as quick as we hope and we need to be prudent; however we think that 2010 will be the beginning of the recovery in Georgia, but this recovery will be quite a slow process,” Hie explains.
“I’m not pessimistic but I will just say that I am not expecting to have a very quick or significant recovery in the next year. We should not be too optimistic but realistic,” Hie says.
According to Jean-Didier Reigner, Head of Europe International Retail Banking at Societe Generale, Georgia like many countries in central Europe suffered from the global economic crisis, and surely it will continue in 2010.
“What is very important in the long term is that we are confident that Georgia will recover and will recover its strength and growth. We are very confident for the future. Many projects will surely take place in the future and this will offer some different opportunities to the economy of Georgia,” Reigner says.
“Societe Generale group is going to have a very long term relationship with Georgia. We will continue to invest in Georgia. A shareholder meeting took place just to maintain the presence of Societe Generale with 80 percent of equity, 10 percent with Lasha Papashvili and 10 percent of EBRD, thus showing that we are going to continue to work in Georgia, to invest in Georgia with local investors,” Reigner explains.
Lasha Papashvili told Radio Komersant that he is launching a new Airline company in Georgia. The CEO of Bank Republic adds that the level of foreign investments in 2009 has been very low and we need to restore also the trust and confidence of entrepreneurs internally in the country.
“We need to restore the entrepreneurship. We need to restore the initiative of all these companies, to buy goods from abroad, to reemploy people. The unemployment rate is still very high and this will be changing progressively. In retail banking it is absolutely necessary for the banks that a significant amount of revenues are distributed to the economy to position the individual customers better in order to allow them to borrow and it’s absolutely necessary to do that for the banks to be able to develop their portfolio again,” Hie says.
According to Mr. Hie, all banks’ portfolios have been shrinking in 2009 because of the lower demand of customers of both the corporate and private sector.
“We are going through the process of stabilization right now but this is not a financial problem, the main problem is not a financial problem in this country. The main problem is now an economical problem and we need to encourage each sector of the economy in order to restart the activities dynamically which is the only condition and which is not easy to do,” Hie says.
“Bank Republic, started from this week will go back to pre war condition. We will offer the best conditions on the market. We will offer the conditions of mortgage loans starting from13 percent and all consumer finance products starting from 19 percent which will definitely be the cheapest offer on the market. We hope that this will encourage the borrowers to borrow again, however we know that the interest rate is not only a parameter but people first need to have enough resources to contract new depts. Demand is very low we hope that these decreasing percents will be successful enough to reanimate the demand of customers,” Hie added.
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