Page 36 - GEORptFeb20

Bank of Georgia obtains 10-year $107mn subordinated club facility agreement
2016 to the Anaklia Development consortium (ADC) formed by TBC Bank with foreign partners. The contract with ADC was terminated by the government as the new year got under way.
One of Georgia’s two major bank groups, Bank of Georgia Group, announced​ on December 17 that its subsidiary, Bank of Georgia, has signed a 10-year, $107mn subordinated syndicated loan agreement arranged by the Dutch Entrepreneurial Development Bank (FMO) in collaboration with other participating lenders.
The facility is expected to be treated as a Bank Tier 2 capital instrument (upon disbursement and approval of the central bank, the National Bank of Georgia) under the Basel III framework recently introduced in Georgia. It will further improve the overall capitalisation of the LSE-listed bank.
The other lenders in addition to FMO are Deutsche Investitions und Entwicklungsgesellschaft (DEG), the Finnish Fund for Industrial Cooperation, Obviam, on behalf of the Swiss Investment Fund for Emerging Markets (SIFEM), the Swedish Development Finance Institution Swedfund International, the BlueOrchard Microfinance Fund (BOMF) and Symbiotics Group.
“I am pleased to see that our long-standing and very successful partnership with FMO has now extended to this substantial transaction, this time with a subordinated Tier 2 loan facility, which will help us further improve our capital position under the Basel III regulations. I would like to thank FMO for arranging the deal in cooperation with our existing and new partner financial institutions, who I would also like to thank for assisting us in our efforts to diversify our capital structure, maintain a strong capital position and remain a leading lender in the country,” said Archil Gachechiladze, Bank of Georgia CEO.
8.2 ​Central Bank policy rate
Georgian expects hawkish monetary policy to pay dividends by year-end
Georgia’s central bank at its January 29 board meeting maintained its refinancing rate at 9% and said that monetary policy would remain tight until medium-term inflation expectations declined to the 3% target. ​The hawkish monetary policy might be kept in place for some time, the central bank implied in a press release issued along with the rates decision.
The National Bank of Georgia (NBG) argued that although the nominal effective exchange rate strengthened slightly in December, reducing pressure on inflation, the Georgian lari remained undervalued and if economic growth and lending, both of which have remained robust recently, created additional inflationary pressure then “the tight monetary policy stance may be maintained for a more extended period”.
Besides one-off supply side factors in early 2019, the nominal effective exchange rate depreciation had a significant impact on inflation and the NBG explained the tight monetary policy stance as a response to the depreciation and its impact on price stability.
Georgia’s consumer price index (CPI) inflation rate stayed at 7% y/y in December. It is expected to fall in January when the effects of a hike in excise duties one year ago will fade.
36​ GEORGIA Country Report​ February 2020 ​ ​www.intellinews.com