The FINANCIAL — The EBRD will hand out half million Euro for Basis Bank’s institutional changes. The EBRD acquired a 15 percent-stake in Basis Bank, a privately-owned Georgian bank through subscription to new shares.
The investment will strengthen Basis Bank’s capital base in order to support its further growth, EBRD said. “The EBRD’s involvement as a shareholder will improve Basis Bank’s business operations and corporate governance over the next 3 years through the implementation of an extensive institution building plan developed by the EBRD”.
Basis Bank has a long history, stable and transparent ownership and a branch network that will provide an attractive platform for future growth. Basis Bank was founded in 1993 and has successfully established itself in the Georgian banking sector. It is a universal bank providing services to selected customers, SMEs as well as entrepreneurs and middle-class consumers.
According to Michael Dave, the regional director of the EBRD, the bank has been observing Basis Bank for a long time.
“Basis Bank has been developing step by step and has overcome many difficulties. Today the bank is occupying a leading position at the Georgian banking sector. The EBRD acquired a 15 percent-stake in Basis Bank. We will merge to the group of stake holders of Basis Bank. The group is very solid and they are working very well. Basis Bank has a good young and well experienced team of managers.
EBRD will give not only credit support to the bank, but also technical support too. Cooperation with EBRD is the guarantee of working in accordance with European standards. We will have several representatives in the Supervisory Board”, Dave declared.
According to Basis Bank, its strategy for the next five years will be focused on the expansion of its branch network, the strengthening of its retail and corporate businesses, the optimisation of corporate governance and organisational structure and improving the efficiency of risk management.
“The EBRD is very cautious about the objects it invests in. We scrupulously examined this case and now I can declare proudly that EBRD is very content with this investment. I hope that this cooperating will be mutually beneficial. Our target is to create new competing environment at the Georgian banking system in order to develop private sector. I think that our cooperation will increase healthy competition at the market.
Basis Bank and the EBRD have been partners since the previous year, when the bank became the first recipient of a $6 million loan for lending to Micro, Small and Medium Enterprises under the newly-introduced Georgian Financial Sector Framework and trade finance line worth $1 million under the EBRD’s Trade Facilitation Programme. An additional €0.5 million of technical cooperation funds are planned for training and institution building. It is anticipated that the funding will be provided by EBRD Early Transition Countries Multi-Donor Fund.
“The figure mentioned in the media about EBRD paying 4 million for purchasing Basis Bank stocks is not correct. The sum we paid was far more solid. Unfortunately, I can’t name it as the figure is confidential”.
According to Zurab Tsikhistavi, General Director of Basis Bank, EBRD is the most conservative bank among the international financial institutions.
“After holding some discussions, EBRD made decision on investing in Basis Bank. It is a great honour as well as challenge for Basis Bank. EBRD’s experience in the banking sphere is very important for the future development of our bank. Jointly with EBRD administration, we designed a special institutional project . This project aims at developing the bank in the upcoming three years. The bank will seriously change its image. This plan considers development in almost all directions: retail and corporate credits. Moreover, it focuses on improvements in the bank’s corporate governance, organisational restructuring, business development, operations, risk management and internal systems”, Tsikhistavi said.
After buying equity stake in Basis Bank the EBRD now intends to build on this successful relationship and strengthen the position of an independent competitor in the highly concentrated Georgian banking sector.
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