The FINANCIAL — Bank of Georgia, one of the leading banks in Georgia, has received 50 million USD financing from the European Bank for Reconstruction and Development.
The financial package is for on-lending to local private micro, SME as well as corporate enterprises. The package is divided into three types of loans: 20 million USD is allocated for financing SMEs, 10 million USD for energy efficiency loans, and 20 million USD loans for financing medium and large-sized Georgian companies.
20 million USD is allocated for financing SMEs, providing entrepreneurs with medium-term financing up to 1 million USD for business development. For better convenience the loan can be distributed into GEL.
“The role of SMEs in economy sector development is absolutely crucial. It should form the backbone of a well functioning market, and that’s why we focused a lot of expertise on getting money for SMEs,” said Mike Taylor, EBRD Director, Financial Institutions.
“Bank of Georgia will be financing all directions of SMEs according to demand. If we overlook financing of the SME sector by banks, this is mainly trade and especially retail trade. The majority of representative of SME businesses is in the trade sector and consequently financing comes for this sector,” said Giorgi Chiladze, Deputy CEO at Bank of Georgia.
“Our interest is financing manufacturing, which will support increase in small and medium size production in the country,” added Chiladze.
“Huge potential is seen in the production and agro business in Georgia. However, Georgian banks are not active in the agro business sector,” declared Chiladze.
EBRD has issued a 10 million USD energy efficiency loan for on-lending to private sector industrial entities and residential customers to finance investments aimed at reducing energy consumption.
This is the third energy efficiency facility in Georgia under the Caucasian Energy Efficiency Programme that has been developed to encourage enterprises and housing associations to make better use of the country’s energy resources.
“Energy efficiency loans are becoming more and more popular in Georgia. Entrepreneurs will see huge savings just by implementing more efficient equipment or even putting the right insulation in their factories. They can really make a big difference in their bottom line,” declared Taylor.
According to Irakli Mekvabishvili, EBRD Senior Banker, EBRD has allocated a total amount of 35 million USD for energy efficiency loans. From which 10 million USD has already been given to TBC Bank, 5-5 million USD to Cartu Bank and Bank Republic, Societe Generale Group, and 10 million USD to Bank of Georgia.
As Mekvabishvili declared, the remaining 5 million USD might be given to ProCredit Bank Georgia.
“The energy efficiency loans are both for corporations as well as physical individuals. A 10 million USD loan covers all directions and will be distributed according to demand. For private individuals a loan can be taken from 200 USD and for corporate it depends on the business loan,” declared Mekvabishvili.
The remaining 20 million USD loans are for a medium-sized co-financing facility to finance investments and the working capital of medium and large-sized Georgian companies. The facility will further increase Bank of Georgia’s ability to address the growing demand for longer-term funding from Georgian enterprises.
“The total amount of investment to the Georgian economy will be up to 300 million EUR in Georgia this year. And it is going to all sector SMEs, property insurance, infrastructure, transport, energy and banks,” declared Loretta Martikian, Public Relations Manager at EBRD.
“The main interests and direction of EBRD in Georgia are property and tourism, renewable energy, infrastructure, and the transport sector. The corporate sector is quite important, especially now they need much support from us and we are concentrating our efforts on agro business sectors. The agro business sector is extremely important for us, to consult with a lot of small farms, and make them work properly, so that they work efficiently. In Georgia there is a very favourable environment for this,” added Martikian.
Since 1995 EBRD has provided Bank of Georgia with various debt and trade facilitation facilities worth over 160 million USD.
Bank of Georgia is the largest Georgian bank, with a 35.1% market share by total assets. The Bank has over 137 branches and approximately 1 million retail and more than 157,000 corporate current accounts.
Since the beginning of its operations in Georgia, EBRD has committed over 1 billion million EUR in approximately 129 projects in the financial, corporate, infrastructure and energy sectors.