The FINANCIAL — Sources close to one of the leading Georgian banks, told The FINANICAL, that Bank of Georgia has faced liquidity problems, which is the reason they’ve set limits on mortgage loan issues.
Bank of Georgia denies having liquidity problems. “The only explanation for the report is that due to the growth rate tendency on international credits, Bank of Georgia increased mortgage loan rates from 13-14% to 16-18%,” Sopho Balavadze, PR Manager of Bank of Georgia, told The FINANCIAL.
As for the position of National Bank of Georgia (NBG), the latter announced on May 14 that
The Monetary Policy Committee (MPC) of NBG met and decided to leave its main policy rate, the one-week Certificate of Deposit (CD) rate, unchanged at 12%.
The capital inflows have slowed down somewhat in the pre-election period, however it is expected that inflows will return to pre-election levels and will likely remain high for the remainder of the year. The growth of the reserve money rate has slowed somewhat along with the broad money aggregates as of late; however the growing rates of these indicators still remain above comfort levels.
The high rate of growth in lending to the private sector compared to growth in deposits has reduced the existing excess liquidity within the Georgian banking system to a minimum. In response to the abovementioned events, commercial banks increased interest rates. Even though these recent steps by commercial banks occurred with a certain delay, they should help in restoring equilibrium on the money market.
TBC Bank refused to make any comment regarding Bank of Georgia’s liquidity issues.
“It’s not our prerogative to comment on these types of issues and we’ll pass on delivering any statement. As for the increased interest rates on mortgage loans, it’s not in TBC Bank’s near term plans to make any changes. We’ll act in accordance to the global market tendency and related local market demands,” declared Natia Gotsadze, PR Manager of TBC Bank Georgia.
The most recent example of liquidity was at the local Standard Bank, the owner of which – Salford Georgia – was associated with the late Badri Patarkatsishvili, the business tycoon and oppositional candidate running for presidency during the January 5 elections.
On November 24, 2007, National Bank of Georgia Supervisory Commission made the decision to appoint temporary administration at Standard Bank.
An announcement on the purchase of Standard Bank by Arab Abu Dhabi Group was then announced on March 6, 2008.
According to local media reports (Resonance), Bank of Georgia was forced to spend a huge amount of money on the election campaign of the National Movement, instead the current Georgian PM and former Chairman of the Supervisory Board of Bank of Georgia was promised stakes at Tbilisi Water. No official commentary was made however on the report.
In October 2007 Multiplex Solutions, reportedly based in Switzerland, took over the water distribution company in the capital, Tbilisi Water, after offering USD 85.662 million.
The Ministry of Economic Development of Georgia said that Multiplex Solutions was selected after it has pledged to further invest USD 350 million in rehabilitation of the water distribution network and after vowing to maintain current consumer tariffs on water for the next two years.
Written by Kate Tabatadze
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