The FINANCIAL — The two commercial banks in Georgia: TBC Bank and Bank Republic/Societe Generale announced receiving credit line from the European Bank for Development and Reconstruction (EBRD)
The 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 for Bank Republic.
The EBRD 5 year credit line to TBC Bank is USD 7.5 million and another USD 7.5 million is expected by the end of the month. The credit is targeted at SME and mortgage financing.
According to abc.az August 12 report, TBC Credit (former SOA Credit) non-bank credit institution has completed spending the credit lines raised from the European Bank of Reconstruction & Development (EBRD) and Overseas Private Investment Corporation (OPIC).
Ajdar Aliyev, TBC Credit deputy general director, said that they were preparing to raise new credit lines.
“We are conducting relevant negotiations and most probably agreements on the occasion will be signed this autumn. Financing to be raised from EBRD and OPIC will be directed partly for mortgage loans and partly for consumer loans,” Aliyev said.
Last year TBC Credit raised a $2 million EBRD loan and directed it for business crediting.
The $2 million loan agreement with EBRD was signed in Baku last October.
As for OPIC, it extended a $10 million loan for mortgage lending.
TBC Credit has been operating in Azerbaijan since 2001 and its credit portfolio reaches $20 million with charter capital $10 million. Its shareholders are Georgia’s TBC Bank (75%) and US’s Shorebank (25%).
Georgia's economy is likely to slow from near double-digit growth this year because of its conflict with Russia, a European Bank for Reconstruction and Development official told Reuters.
Michael Davey, the EBRD's director for the Caucasus, Moldova and Belarus, said it was too soon to estimate the overall impact on the Georgian economy, but added that prolonged war would be disastrous.
However, he said that if recent events led to a resolution of Georgia's long-standing border disputes with Russia, this could make the country more appealing to foreign investors.
"It (prolonged war) would be disastrous because the government has been very successful at turning an unappealing investment destination into an attractive one, and if that was undone it would be a serious setback," he said by telephone from the Georgian capital Tbilisi.
A simmering conflict erupted last Thursday when Georgia sent forces to retake the breakaway territory of South Ossetia. Moscow responded with a counter-attack that drove Georgian troops out of the region on Sunday.
The Georgian economy grew 9.3 percent in the year to March, a source in the Georgian ministry of economic development told Reuters in July, a fall from 11.4 percent the year before.
Economic analysts and government officials say that a political crisis at the end of 2007, when opposition protests led to an early presidential election, scared off investors some of whom might have already been deterred by political risk.
"The frozen conflict in South Ossetia has always been a worry for foreign investors in Georgia and if that is ultimately removed as a result of this, it could become more appealing," Davey said. "If there is a final conclusion then the slowdown may not be that pronounced … but there will be one."
As Thomson Financial reported, the EBRD urged Georgia and Russia to reach a 'rapid resolution' to the conflict between the two nations that receive EBRD investment.
'The EBRD is closely following the events in Georgia and urges all parties involved to reach, together with active support of the international community, a rapid resolution of the conflict,' the London-based bank said in a statement.
Russia kept up its attacks on Georgia despite growing international pressure for a ceasefire.
The EBRD, created in 1991 to help ex-Soviet states adopt market economies, invests heavily across 28 countries including Georgia and Russia.
'During recent years, Georgia has made enormous progress in introducing and implementing key reforms which have accelerated and broadened the development of its economy and attracted substantial amount of foreign investments,' the statement said.
It added: 'Over the last four years, the EBRD has invested significant amounts — about 150 million dollars — in the Georgian banking sector through equity, long term funding and trade facilitation guarantees.
'The EBRD considers the Georgian banking sector as a whole as efficient, well capitalised and robust.
'The EBRD will continue to stand by its partner banks in difficult times and to work on active prospective projects in the Georgian financial sector.'
During 2008 the bank plans to invest a total of 2.4 billion euros (3.7 billion dollars) in Russia. That amounts to 40 percent of the investment budget across its countries of operations.
Written Kate Tabatadze
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