Page 47 - GEORptApr21

recommendations of the IMF, the European Central Bank and other leading financial institutions,” the NBG said in a press release.
However, the decision of the National Bank has one condition: banks should not apply for the proceeds to issue management bonuses and dividends to shareholders. Also, with the aforementioned amount, banks should not finance repurchase operations of their own shares on the stock exchange.
Regarding the loan repayment grace period, a common measure enforced by countries these days, the central bank said that it “significantly softened the supervisory requirements in order to give the banks maximum flexibility in deferring the installments”.
8.1.5 Bank news
Bank of Georgia obtains €25mn in financing from EIB
Fitch cuts Georgian banks’ support ratings in wake of state passing bank resolution bill
The LSE-listed Bank of Georgia Group has announced that its subsidiary, Bank of Georgia, has signed a €25mn loan agreement with the European Investment Bank (EIB) with the aim of increasing its financing capacity to support small and medium sized companies.
The facility has a maturity of up to seven years.
It represents a top-up on the existing €50mn multicurrency loan facility signed with EIB in December 2019.
The facility can be drawn in euros, dollars or made available in local currency. Part of the local currency tranche is also supported by the Neighbourhood Investment Facility of the European Union.
The purpose of the credit is to aid the recovery of micro, small and medium sized enterprises (MSMEs) and mid-capitalisation enterprises (MidCaps) in Georgia from the coronavirus (COVID-19) crisis, and to finance investment projects important for local private sector development.
The financing operation is part of Team Europe's COVID-19 emergency response to help sustain jobs, maintain liquidity and operations and fuel the economic recovery of Georgia.
Fitch Ratings has downgraded its Support Ratings for Georgia's three largest and systemically important banks—TBC, Bank of Georgia and Liberty Bank— to '5' from '4' and revised the banks' Support Rating Floors (SRFs) to 'No Floor' from 'B'.
The rating actions follow the recent introduction of bank resolution legislation, which is in line with international practice and provides for the imputation of losses to creditors rather than taxpayers, in the case of the failure of a big bank.
Georgia's bank resolution framework provides a credible mechanism for the bail-in of senior creditors in the event of bank failures, Fitch commented.
“We believe that this legislation, combined with constraints on the ability of the authorities to provide support, mean that government bail-outs, although still possible, can no longer be relied upon,” the rating agency commented.
The regime does not provide for a mandatory senior creditor bail-in in the case of failure, but instead states that decisions on bail-in and/or support will be at the sole discretion of the authorities, based on such considerations as broader financial market stability and the ability of the bank to continue its key operations. Fitch said this suggested that support for senior creditors was still possible, but the adoption of the resolution framework, combined with constraints on support ability, mean that the support can no longer be relied upon in the ratings agency’s view.
47 GEORGIA Country Report April 2021 www.intellinews.com