The FINANCIAL — HSBC Georgia and Bank Republic (BR) Societe Generale are actually quite confident about Georgia’s future despite the current Russian-Georgian conflict. Since the one day holiday announced by the National Bank of Georgia (NBG) the two have kept on with their regular work, though with some restrictions of course as Georgia’s financial regulator ordered the banks to suspend all lending activities till August 18.
“Business since the holiday has been normal for HSBC. Perhaps a little quieter for corporate and smaller businesses but with plenty of retail clients, including new clients opening accounts and depositing their funds. Under the circumstances, the mandatory holiday on Tuesday was welcome, even though most of HSBC’s staff were in the office as usual, catching up on things,” Tony Turner, HSBC CEO, told The FINANCIAL.
“Considering the critical situation in the whole of Georgia and the tense atmosphere, the banking sector is still continuing with its normal operations except for the minor restriction applied by FSA in regards to credit operations. All the other banking services and products that were available in BR prior to the conflict and its escalation, still are. BR provides its customers with uninterrupted money transfer services through Western Union,” Gilbert Hie, Bank Republic-Societe Generale CEO, told The FINANCIAL.
In his words, Bank Republic is operating fully with all of its existing network except those located in strategically dangerous areas, which are temporarily closed for safety reasons. BR branches are working usual business hours including Saturdays till 14:00. Even today, the BR 24-hour service centre located at Chavchavadze Avenue restarted its full operations to provide customers with non-stop 24 hour banking services.
As the banks noted, no increased amounts of money withdrawals have been made these past few days.
“HSBC hasn’t noticed changes in our clients’ funds flow; overall deposit balances have continued to rise since the bank’s opening in June with net funds still coming into the bank,” claimed Turner.
“Such unpredictable situations usually lead people to fear about their savings and apply to banks to withdraw their savings. However we have managed to assure our customers that the safest thing to do is to keep their deposits with such a big international institution as ours is, guaranteeing safety and customer satisfaction. In addition, those clients who withdrew their savings because of the crisis are welcome to restart their deposits under the initial terms and benefits at BR,” stated Hie.
According to the banks the national currency remains stable at this point.
“As part of this week’s emergency regulations applied by the regulator, the GEL exchange rate currently remains set by the Central Bank and so there has been minimal movement to date. The outlook may be for an adjustment in the rate of the GEL, particularly against the USD which has anyway strengthened this week against many international (including “hard”) currencies,” said Turner.
“The economic situation in Georgia remains stable which prevents any negative influence on Georgian currency and guarantees stable monetary policy,” noted Hie.
As the BR CEO said, the bank together with the Patriarchy of Georgia opened a special account for contributions to assist refugees and those who were injured during the conflict. Furthermore, various humanitarian assistance is being rendered by bank employees and customers through different channels.
Bank Republic is running normal stable business despite the situation. During the force major situation, the bank managed to attract resources from International Financial Corporation (IFC) to the amount USD 22 million. IFC is providing BR with a USD 7 million subordinated loan to support the bank’s capital and is extending a USD 15 million senor loan for mortgage loan financing. The senior debt is for a 10-year tenor maturity, the longest period ever offered by IFC to a Georgian bank. This longer tenor financing will help Bank Republic to make mortgage loans more affordable in Georgia in times of tight liquidity and with the absence of long term funds.
The European Bank for Development and Reconstruction (EBRD) has provided Bank Republic with USD 65 million credit, which is targeted both at mortgage and SME financing.
Societe Generale doubled its commitment despite the strained conflict situation in Georgia and allocated Euros 45 million additional credit lines.
“We are also receiving full support from our mother company SG Group during these critical circumstances. All this means that the bank has nothing to fear and can still continue its operations as normal,” claimed Hie.
“There are already many important IFI’s supporting Georgia like World Bank and IMF; other aid and international agencies like Millennium Challenge and the Bush Administration among others have pledged continued and indeed increased aid support. No doubt these various forms of financial assistance and support will all be maintained and we would expect them to grow still further given the recent tragic events,” said HSBC CEO.
Written by Kate Tabatadze
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