The FINANCIAL — “Cartu Bank’s clients are leaving it. Customers’ demand for cash has sharply increased. They are taking their money out of the Bank or temporarily stopping all operations at Cartu bank,” Nodar Javakhishvili, the new General Director of Cartu Bank, told The FINANCIAL.
“I see two reasons for it,” Javakhishvili said. “First of all, when there is such resonance around the Bank and especially when it’s caused by government officials, people understandably have fear and doubts. It’s a normal reaction and we are not blaming the people. Our clients are feeling pressure from the state urging them to leave the Bank. Our government wants to create financial problems for us. I can’t say what the share of these two reasons is in our financial problems but I certainly feel that the pressure has increased. I hope that our government will look a little further in to the future and realize that such actions will negatively influence the banking sector in Georgia and the country’s image worldwide.”
According to Javakhishvili some organizations took money of 2 million USD from the Bank. Other partner banks asked to return money of 2 million USD as well, which they borrowed for the replenishment of Cartu Bank. Is spite of these and some more financial losses, Javakhishvili doesn’t consider the situation of the Bank critical.
“If we manage to keep the situation as it is today, we won’t have serious problems. People often ask me if the Bank is going to stop working. My answer is that even prominent international banks may stop working if the Government wants. If our government stops the pressure on us, we can overcome all challenges,” the General Director said.
The Bank lost 2 million USD and 1 million EUR on October 18, 2011, by an armed operation. According to Cartu Bank officials, in order to guarantee the flawless satisfaction of customer demand, on October 18 Cartu Bank, JSC, executed two standard banknote deals with Bank of Georgia, JSC, under a general agreement on carrying out treasury transactions.
“If commercial banks urgently needed a large amount of cash in a foreign currency, they could inform NBG about it and we could determine the ways of helping them. NBG has solved similar issues quite a lot. This is a normal working process for us,” said Giorgi Kadagidze, Governor of NBG.
“More doubts were raised when the new administration of Cartu Bank said that they need this money for salaries. I want to underline that salaries in Georgia are paid in the national currency and through cards, not by cash,” Kadagidze added.
In answer to the blame of NBG, Javakhishvili said that they operated such transactions of cash replenishment about 190 times in 2011. They had no problems in previous cases and NBG hadn’t interfered in these processes before.
“Previously we transacted a smaller amount of money but it has no sense in this situation. We are allowed to operate cash replenishment through commercial banks. When I was President of NBG it was impossible. It was possible only in NBG but later it changed. Now if we make replenishment at NBG we have to pay a commission amount. For example if we took this from NBG, we would have to pay 7 or 8 thousand to them. So we are saving our money by cooperating with commercial banks,” Javakhishvili said.
“But still if it is illegal and we had to let NBG know about it, why is it only so for Cartu Bank? This year we gave 4 million to the Bank of Georgia and nobody from NBG asked us to provide information about it. It was a partnership between commercial banks. And I can say that it is much accepted practice worldwide,” he stated.
“There are some more doubtful facts. We didn’t tell NBG about this transaction. But as it turned out, they knew about it. If they knew, then why was this armed operation necessary? They could have just contacted us or Bank of Georgia and we would have cancelled the operation,” Javakhishvili added.
But Giorgi Kadagidze presses that such operations have always happened with NBG’s direct involvement, or as a minimum the Bank was aware of the processes.
“This was not an ordinary operation,” Kadagidze said. “It can’t be ordinary when you take such an amount of cash from a bank. If a bank has special problems and needs, NBG has to be aware and we always help banks to solve problems normally. There are too many doubts and we’ll continue inspecting the Bank until all our questions are answered.”
“As the operation failed, Cartu Bank asked cash for replenishment from NBG, but not such a large amount. If several days ago they needed much more money, what has changed? There are too many questions and we will investigate all of them. This is the regulation,” he added.
Kadagidze also said that the reaction to the fact from Cartu Bank is excessive and nothing special is happening.
“The only danger at the moment is that the new administrator of the Bank doesn’t make the issue too political. That would be unacceptable for me,” Kadagidze announced.
Apart from financial problems, some less extreme occurrences transpired at Cartu Bank recently. Cartu Bank’s Supervisory Board Chairman, Director and his deputies all left their jobs because of conflict with Bidzina Ivanishvili. They had been working for Cartu Group for a long time. Ivanishvili blamed the Director of Cartu Bank for being a spy of the Ministry of Internal Affairs of Georgia. NBG is going to investigate this claim as well.
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