Page 31 - GEORptFeb19

8.1.6 Bank news
EU's ambassador to Georgia looking into officials' TBC investigation
Georgia’s TBC Bank to enter Uzbekistan in early 2019
The Ambassador of the European Union to Georgia, Carl Hartzell, has stated that the Representation of the EU to Georgia is looking into the case of TBC Bank being investigated by the Office of the Prosecutor General , Georgia Today has reported.
“It is certainly significant for us that the process be carried out in a transparent and trustworthy manner. TBC Bank is an important player contributing to the financial stability of citizens, as well as the entire country,” Hartzell reportedly said.
Georgia’s Prime Minister Mamuka Bakhtadze, meanwhile, has argued that the investigation is related to bank shareholders involved in alleged activities and that the scandal should not put at risk the country’s financial system. Under scrutiny are Mamuka Khazaradze and Badri Japaridze, who together own some 20% of the bank’s shares. They are the president and vice-president of TBC Bank, the largest lender in Georgia and listed on the FTSE-250 share index.
The Prosecutor’s Office of Georgia has launched an investigation into TBC operations carried out in 2008 said to involve “facts of the legalization of illicit income”.
Observers claim that there is political motivation behind the investigation and that if there were any wrongdoings they would by now be too dated for a prosecution under the statute of limitations.
Georgia's TBC Bank is planning to enter Uzbekistan with Space, a mobile-only brand launched by the bank in Georgia last summer, Euromoney reported on January 7. The Uzbek version of Space will have a physical presence in the form of “next-generation” branches, TBC Bank’s CFO Giorgi Shagidze told the publication.
The lender’s activities were expected to launch in Uzbekistan early 2019. The bank would focus on the retail sector and MSME customers, ignoring the Uzbek corporate sector. TBC will be among a number of other foreign banks entering Uzbekistan thanks to efforts by the current ruling regime to enact reforms aimed at opening up the country for foreign investors.
“The current reform drive in Uzbekistan resembles that of Georgia. We went through this and gained very strong knowledge and capabilities that we can bring to the Uzbek market. We can act as a catalyst for the Uzbek banking sector,” Shagidze said.
“There was a time when people in Georgia wouldn’t use banks for savings, but that has largely changed, partly thanks to our efforts,” he added. “If we can leverage that experience and combine it with local expertise, we will be in a very strong position [in Uzbekistan].”
8.2 Central Bank policy rate
Georgia cuts policy rate by 25bp to 6.75%
The Monetary Policy Committee of the National Bank of Georgia on January 30 cut its refinancing rate by 25bp to a still restrictive rate of 6.75%. The central bank sees headline inflation around 3% in the medium term.
In December, the annual inflation rate was 1.5% y/y. According to existing forecasts, inflation will move around the 3% y/y target rate in the medium term. The central bank said in a press release that it plans another rate cut during
31 GEORGIA Country Report February 2019 www.intellinews.com