The FINANCIAL — Cartu Bank was founded in 1996. It got its name of Cartu Bank in 1998. Businessman Bidzina Ivanishvili, founder of Cartu Group, is the owner of a 100 percent share of the Bank. During this period the Bank was developing at a slow pace, but has quite a large number of clients. Their main direction is corporate clients. Currently the Bank has 9 branches and service centres all around Georgia, 41 ATMs in Tbilisi and 9 ATMs in the regions of Georgia.
Cartu Bank was the pioneer in developing e-commerce services in Georgia. The Bank holds third position among profitable Georgian banks, with 6 million profit in the first quarter of 2011.
Bidzina Ivanishvili recently accused Giorgi Chrdileli, Cartu Group President, of being an agent of Vano Merabishvili, the Minister of Internal Affairs of Georgia. Later Bank President Giorgi Kvirikashvili and his deputy Dimitri Kumsiashvili left their positions and the Bank. Ivanishvili has appointed new General Director Nodar Javakhishvili, who was the President of National Bank of Georgia (NBG) from 1993-1998. Javakhishvili, whose signature is on the first national currency banknotes, was a member of the Georgian Parliament in 1999-2003. In recent years Javakhishvili has been an expert at national forums and oppositional political movements.
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The Georgian national currency was introduced into circulation on September 25, 1995. On October 2, 1995, it was declared the only legal means of payment in the territory of Georgia. Banknotes have the signatures of President of the National Bank, Nodar Javakhishvili and Minister of Finance David Iakobidze.
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Georgia’s central bank launched a probe on Wednesday into Cartu Bank. Police have seized millions of USD and EUR on suspicion of money laundering.
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In an interview with The FINANCIAL Nodar Javakhishvili criticizes local banks and the general situation in the banking sector of Georgia. He also speaks about the future of Cartu Bank.
Q. How would you evaluate the banking sector in general in Georgia? How is it working?
A. Compared to all other business sectors in Georgia, banking is operating quite well. But I as a financier see some problems. First of all banks aren’t financing new objects. This is a very significant problem for a country like us. Georgia isn’t well-developed yet and lots of sectors aren’t operating here at all. They have to start developing from zero. But usually banks aren’t financing such sectors.
Another important problem is that banks aren’t financing agriculture. There are some reasons for this. The state has to create adequate conditions for developing the insurance of agriculture. If the insurance of agriculture is functioning properly, the financing of agriculture will grow significantly.
Banks have to serve people and society. But now they have too many rights. They have forgotten that banking is a serving sector and today they are creating rules and terms of the market. The sector has to develop according to people’s needs but banks do everything so that it is better for them. The National Bank has to control this.
Q. You said that the banking sector is operating well in comparison to other sectors. But the majority of them finished the previous year with a loss. What do you think, why did it happen?
A. It was somehow a result of the Georgian-Russian war and the world economic crisis. But it has another very important reason. Banking supervision has weakened all over the world and especially in Georgia. And it resulted in the disorder of loans’ and financing sectors of banks. Generally banking is a very sensitive sector and important one at the same time. That’s why they obey more regulations of state in spite of being private. But these regulations and control have weakened and banks felt too much freedom. So they lost control of finances. They gave too many loans to developers and constructers. And on the other hand, they gave out too many consumer loans. The results are evident. They have quite serious problems. Banks assured developers that they could finance as much building as the developers wanted. So too much reconstruction started in the country. Banks also made people sure that they could help in buying living apartments. So people took out loans and bought them. But everyone saw how the building sector collapsed a short while ago which brought much loss to the banks.
Q. Let’s talk about you and Cartu Bank. Was this offer from Bidzina Ivanishvili unexpected for you? What was your reaction?
A. It was totally unexpected for me. I didn’t know Bidzina Ivanishvili in person before. We had talked only once in my life before this offer. My previous life was never hidden from society but we didn’t know each other in life and this step from him is very significant. Such an offer is a huge honour for me. They made their choice according to professionalism but first of all it was a result of their trust in me. I appreciate that and it’s a very serious responsibility for me. If a person is responsible then you are wary of every offer, even tempting ones.
I remember the time when I was appointed President of National Bank of Georgia (NBG). Before that day I had a meeting with head of the country Eduard Shevardnadze. I was persuading him for three hours that I was not the right person for that position. I thought that I had persuaded him of that. But the next day my friend called me saying that he had heard the news on the radio about my appointment as President of NBG. After finding that out I was shocked and actually shaking for a while. I was thinking about how I would manage it. But later I calmed down and told myself: you are considered the first banker in the country. If you can’t do it, who can? It is your country and you have to serve as much as possible.
The next day I started working. It was really very tough as NBG was only a sign at that time and the most destructive organization was functioning behind that sign. But our team did the best and after two years one of the first economists of the world, Director of the International Monetary Fund announced in a meeting of delegations of about 200 countries that a miracle had occurred in Georgia.
If we are talking about difficulties, they are quite numerous now as well. I can say that my job is more difficult now because at that time the Government was providing us with significant support. Unlike then, today I feel under attack and pressure from the Government. That brings about extra problems and difficulties for us. But I hope these issues will soon be over.
Q. How did Bidzina Ivanishvili offer you this position?
A. Bidzina Ivalishvili’s brother was my schoolmate. We aren’t in close contact now but sometimes we call each other and meet up. He called me and said that Ivanishvili had such an offer for me. After two or three days we met and talked. When I was sure that he had no negative ambitions and he was going to fight for Georgia, I agreed. Knowing this was enough for me to agree. I can support anyone who truly cares about our country. Then I left my political party and started working at Cartu Bank.
Q. You already mentioned that you feel under attack. Now you are one of the most high profile figures in Ivanishvili’s team. Aren’t you afraid?
A. I spent all my life fighting. I can say that huge jobs can’t be done with fear. When I was the President of NBG I was fighting for the economics of Georgia. Now I have to fight for our country itself. I can say that it is more of a responsibility and more difficult. But we aren’t afraid. A country of cowards can never win.
Q. Only a few days have passed since you were made General Director of Cartu Bank. Have you looked through the current processes of the Bank? How is it working now?
A. I have little information about everything in the Bank. This is quite a large bank and to look through every detail will take quite a long time. The general situation at the Bank is good however. I like the staff that I have met here. They are professionals. I’m becoming aware of everything stage by stage and at the moment can just tell you that we have some financial problems thanks to the Government.
Q. Do you already have some concrete plans?
A. Of course not. I’m just starting to think about future plans and development right now. In this current situation only dreamers could plan long-term goals. I have my plans, but not anything concrete yet. I’m not going to change anything radically in the next several months.
Q. What will be the main priorities of Cartu Bank? Will charity remain one of the main priorities, as it currently is at Cartu Group?
A. Charity is one main priority of Cartu Group and therefore of Cartu Bank. But it isn’t the main direction of the Bank. Bidzina Ivanishvili wants to continue and expand this direction. But now we don’t know how affairs will develop. We are trying to keep the current direction of the Bank and successfully finish the ongoing operations. For the moment we aren’t able to give out credits. All other services are working properly. To my mind, these financial problems will be solved soon. Ivanishvili has unlimited possibilities for a country like Georgia. It’s difficult to scare him, especially in terms of financial issues.
Q. In your opinion, what are your clients’ expectations of Cartu Bank at the moment?
A. We have quite a few clients who properly appreciate and understand the situation and with their small amount of money are ready to stand by us. They believe in us and aren’t going to take their money from the Bank. Others think that under conditions of pressure from the Government, we can’t work properly and are trying to withdraw their money as soon as possible. Some of them really need money for their business and we can’t ask them to fail in their business and still remain our clients. In spite of everything, the fact that some clients are leaving the Bank doesn’t mean that the Bank will be closed. No! We are continuing to offer a service of high quality to our faithful clients just as we used to.
Q. Do you and Bidzina Ivanishvili often meet and discuss issues about Cartu Bank? Is he very involved?
A. We met several days ago and he was very involved. We talked about the financial problems. We need money at the moment and this is the only problem Nodar Javakhishvili can’t solve without Bidzina Ivanishvili’s support and involvement.
Q. Have you met or talked to Giorgi Chrdileli, former Director of the Bank?
A. I have had no meeting with him and I do not plan to meet any former colleague of his of my own volition. But former members of the Board of Directors met me and we did talk a great deal. I also know that one of them is ready to cooperate with me and give me all the information I’m interested in. We are not taking about returning them to their jobs. But neither Bidzina Ivanishvili nor I have a hostile attitude toward them. I personally have the feeling that they regret their departure. So we’ll see together how affairs develop.
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