The FINANCIAL — The total amount of EBRD’s credit portfolio in Georgia in 2007 was USD 700-800 million. The number rose by 50% in 2008, as top banker of EBRD Georgia, Irakli Mekvabishvili, says.
USD 300-350 million was used by the banking sector. EBRD owns shares of three leading Georgian banks; Basis Bank, Bank Republic and VTB Bank Georgia. Furthermore EBRD plans to buy shares of Cartu Bank.
In 2007 EBRD allocated USD 6 million for Basis Bank. The loan is long-dated, 5 years. EBRD is working at transmitting an additional sum for Basis Bank.
Basis Bank has presented a new loan product which is for small and medium businesses.
As Basis Bank’s Director David Tsaava stated, “The Bank’s priorities are the encouragement of native production. Creating a new loan product can be considered support of this. Today we need as many successful industrialists as possible. In developing the country’s economy the most important thing is supporting small business.”
The new credit product foresees mortgages from GEL 500 to 200,000.
“With other advantages our creditors can use a preferential period. The mortgages will be allocated for experienced and beginner businessmen. Basis Bank has large experience in the direction of small crediting. It was the first partner bank of the special project Georgian Financial System Framework. The project was created by EBRD for the Georgian banking sector,” Tsaava added.
For this project Basis Bank received USD 6 million for financing micro, small and medium business.
EBRD became the shareholder of Basis Bank in May 2008. In the Georgian banking sector Basis Bank is the only one where EBRD is not presented with other strategic partners.
“There is huge work that banks might do in the direction of improving risk management. On the Georgian market there are some banks where risk management is in simple forms. In some of them there is no notion of it at all. During the recent past most Georgian banks have been oriented at increasing the number of their branches. Now they should focus at keeping their quality,” Mekvabishvili, EBRD, says.
EBRD acquired a 15 percent-stake in Basis Bank, through subscription to new shares.
The investment will strengthen Basis Bank’s capital base in order to support its further growth, EBRD said.
This plan will focus on improvements in the Bank’s corporate governance, organizational restructuring, business development, operations, risk management and internal systems. The EBRD will also nominate a member to the Supervisory Board of the Bank.
With the acquisition of an 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. 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. The Bank’s 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 optimization of corporate governance and organizational structure and improving the efficiency of risk management.
Written By Madona Gasanova