Page 1

CMYK Golden Sponsor:

Sponsors:

SP E

CI

AL

ED

IT

IO

PRIME ADS

N

General Sponsors:

Fitch Ratings:

Main Challenge to be increase in competition See on p. 20

Anita Rachvelishvili, La-Scala’s Georgian Mezzo Soprano See on p. 34

News Making Money

March 28, 2011

http://www.finchannel.com GEORGIAN WEBSITE

http://www.financial.ge

C U R R E N C I E S 1 USD 1 EUR 1 RUB 1 TRY

Mar. 26

Mar. 19

1.7106 2.4229 0.0606 1.1044

1.7070 2.4070 0.0599 1.0773

READ THE FINANCIAL IN TWO DIMENSIONS

TBC Bank opening Representative Offices See on p. 6 Bank Republic Increasing Retail and Corporate Portfolios See on p. 8 Cartu Bank Portfolio to Increase by 34%, reaching over 52 million GEL See on p. 10 Internal Audit See on p. 14

Radisson Blu Iveria Hotel has a High Portfo lio of Returning Guests See on p. 16

ADB Loaned 700 million USD to Georgian Public and Private Sectors See on p. 18 EBRD Invested 71.9 million EUR in Georgia’s Financial Sector in 2010 See on p. 19

Banking Sector will Sustain and Support Economic Growth in 2011 Giorgi Kadagidze, Governor of the National Bank of Georgia See on p. 2

T

he Georgian banking sector emerged from the global financial crisis and the impact of the Russian invasion in a substantially good condition, which was due to solid precrisis capital and liquidity positions of banks, the support of international financial institutions as well as the countercyclical fiscal, monetary

and supervisory policies, all of which softened the impact of these events on the domestic economy and asset quality of Georgian banks. In his interview with The FINANCIAL, Mr. Kadagidze spoke about inflation, larizationeffect, as well as interest rates and future potential of Georgian banking sector development.

Georgian Banks will be Expanding to the Regions Zurab Gvasalia, President of the Association of Banks of Georgia

I

n the near future, the development of tourism and regional infrastructure, together with increased employment, will support banking service centres’ moving to the regions,” said Zurab Gvasalia, President of the Association of Banks of Georgia to The FINANCIAL. “Bank profits increase in accordance with consumer

See on p. 3

demand. As more people get employed, the demand for credit resources from the business side will be increased, this will be directly reflected on the profit indicators of the banking sector. Consequently, the bank service market is partly assimilated today, despite the fact that banks are maximally trying to develop it,” Gvasalia said.

Bank Constanta to Offer New Banking Products See on p. 4

S

ince the very beginning of 2011, Bank Constanta, for the first time, introduced deposits with unprecedented 17% interest upon opening which hadn’t yet been offered by any other commercial bank in Georgia. With the introduction of such

an innovative product on the Georgian market, the Bank was able to outnumber its projected attained deposits level by 456% and has collected 1.4 million GEL. Currently, in any branch of the bank, a person is able to open time, demand, children and recurring deposits.

BEST GEORGIAN BANKS SUPPORTED BY NATIONAL BANK OF GEORGIA AND ASSOCIATION OF BANKS OF GEORGIA

© 2009 The FINANCIAL. INTELLIGENCE BUSINESS PUBLICATION WRITTEN EXPRESSLY FOR OPINION LEADERS AND TOP BUSINESS DECISION-MAKERS


CMYK

2

HEADLINE NEWS & ANALYSIS

MARCH 28. 2011 | FINCHANNEL.COM

best georgian banks March 28, 2011 12 (239)

COPYRIGHT AND INTELLECTUAL PROPERTY POLICY FINANCIAL respects the intellectual property of others, and we ask our colleagues to do the same. The material published in the FINANCIAL may not be reproduced without the written consent of the publisher. All material in the FINANCIAL is protected by Georgian and international laws. The views expressed in the FINANCIAL are not necessarily the views of the publisher nor does the publisher carry any responsibility for those views. PERMISSIONS If you are seeking permission to use FINANCIAL trademarks, logos, service marks, trade dress, slogans, screen shots, copyrighted designs, combination of headline fonts, or other brand features, please contact publisher. “&” is the copyrighted symbol used by the FINANCIAL FINANCIAL (The FINANCIAL) is registered trade mark of Intelligence Group ltd in Georgia and Ukraine. Trade mark registration by Sakpatenti - Registration date: October 24, 2007; Registration N: 85764; Trade mark registratrion by Ukrainian State Register body - Registration date: November 14, 2007. ADVERTISING All Advertisements are accepted subject to the publisher’s standard conditions of insertion. Copies may be obtained from advertisement and marketing department. TO GET the ADVERTISING RATE CARD please contact marketing at: marketing@finchannel.com see financial media kit online http://www.financial.ge/presentation.html

DISTRIBUTION FINANCIAL distribution network covers 80 % of key companies operating in Georgia. 90 % is distributed in Tbilisi, Batumi and Poti. Newspaper delivered free of charge to more than 600 companies and their managers. To be included in the list please contact distribution department at: distribution@finchannel.com

“Banking Sector will Sustain and Support Economic Growth in 2011,” NBG “The Georgian banking sector is in a good shape to support further economic growth in the country,” Giorgi Kadagidze, Governor of the National Bank of Georgia In the Governor’s view, the Georgian banking sector emerged from the global financial crisis and the impact of the Russian invasion in a substantially good condition, which was due to solid pre-crisis capital and liquidity positions of banks, the support of international financial institutions as well as the countercyclical fiscal, monetary and supervisory policies, all of which softened the impact of these events on the domestic economy and asset quality of Georgian banks. In his interview with The FINANCIAL, Mr. Kadagidze spoke about inflation, larizationeffect, as well as interest rates and future potential of Georgian banking sector development. Giorgi Kadagidze, Governor of the National Bank of Georgia

CONTACT US EDITOR-IN-CHIEF ZVIAD POCHKHUA E-MAIL: editor@finchannel.com Phone: (+995 32) 252 275 HEAD OF MARKETING LALI JAVAKHIA E-MAIL: marketing@finchannel.com Phone: (+995 77) 74 17 00 CONSULTANT MAMUKA POCHKHUA E-MAIL: finance@finchannel.com Phone: (+995 99) 29 60 40 HEAD OF DISTRIBUTION DEPARTMENT TEMUR TATISHVILI E-MAIL: distribution@finchannel.com Phone: (+995 99) 64 77 76 COPY EDITOR: IONA MACLAREN COMMUNICATION MANAGER: EKA BERIDZE Phone: (+995 77) 57 57 89 MAILING ADDRESS: 17 mtskheta Str. Tbilisi, Georgia OFFICE # 4 PHONE: (+995 32) 252 275 FAX: (+95 32) 252 276 E-mail: info@finchannel.com on the web: www.financial.ge daily news: www.finchannel.com

Intelligence Group ltd. 2010

FINANCIAL

The FINANCIAL

A

t present, the system maintains comfortable liquidity and capital positions coupled with improved profitability indicators, which suggests that that the banking sector will sustain and support economic growth in 2011”. “Needless to say, some downside risks exist. Market participants should make balanced decisions reflecting on mistakes made in the past. At the same time, as a small open economy, Georgia remains vulnerable to global imbalances. Fragile recovery in developed countries and risks of overheating in emerging markets may pose new imbalances, which should also be taken into account,” Kadagidze concluded. Over the past year, the NBG employed monetary as well as macroprudential measures to tighten policy and ease domestic inflationary pressures. These pressures arestill high but are caused by a number of external factors, including rising food and commodity prices worldwide. In the Gov-

ernor’s view, the monetary policy should take into account the risks of damaging economic activity and react on demand driven inflation as well as possible second round effects of cost driven one. Q. From the year 2009 and during 2010 the banking sector’s main strategy was to offer high interest rates on deposits. While at the end of 2010 the trend changed and banks chose to decrease interest rates on deposits. In your opinion, what were these changes governed by? A. Retail and corporate deposits of the banking system were affected by a number of shocks in 2008-2009 - confidence shock instigated by the Russian invasion in 2008 and withdrawals during the 2009 recession. In response to these shocks, the Georgian banks took a conservative stance on liquidity buffers carried on their balance sheets while maintaining credit activity muted until the beginning of 2010. In 2010, private-sector deposit growth gradually rebounded on the back of recovery and strong macroeconomic fundamentals, which mitigated the banks’ concerns relating to uncertainty about liquidity risk. As a result, the banking sector’s offered deposit rates have gradually decreased. Q. In interviews with The FINANCIAL, key company representatives have declared that the high interest rates on loansare due to increased costs of external borrowings. In your opinion, how realistic is it that

the Georgian banking sector becomes wholly dependent on internal rather than external sources of funding? A. Over the past year, NBG did not observe any major increases in the cost of borrowed funds that would explain and/or support the statements made by some of your respondents. At the same time, we believe that there are a number of other variables that explain recent loan interest rate trends in Georgia, such as higher liquidity buffers and credit risk premiums. The Georgian banking system, as well as any liberal emerging banking market, relies on a mix of foreign and domestic funding. Capital accumulation, as well as increase in total factor productivity, is essential for economic growth.In an emerging market, such as Georgia, rapid accumulation of domestic capital can only be achieved at the expense of consumption and quality of living. Consequently, many fast growing emerging markets access external sources of funding to compensate for low domestic savings rate and accelerate the growth of the economy. While the benefits of external funding are evident, banks are expected to manage their wholesale funding,which is predominantly external and long-term, with the goal of minimizing refinancing risks through diversifying sources of external wholesale funding and minimizing substantial concentration of repayments in a single maturity bucket. Overall, it is the NBG’s view that the funding mix of banks operating in Georgia

should complement the resilience of the system as a whole. Q. High interest rates on deposits make it attractive for foreigners to open deposits in Georgia. If the volume of inflow of foreign deposits is increased, what tendencies will it cause? A. The majority of bank deposits are those of Georgian residents with the share of non-residents’ deposits reaching less than 10% as of January 2011. However, the share has been growing steadily over the past several years suggesting international investors’ growing confidence in the Georgian banking market. NBG commissioned research into the behavioural characteristics of non-residents’ deposits during the turbulent 20082009period. The team found no empirical evidence suggesting that these deposits marginally contributed to the flightiness of the banking system’s funding. It is the NBG’s view that non-resident deposits provide funding source diversification benefits, while over-reliance on such noncore funding sources may lead to greater uncertainty going forward and significant deterioration in the liquidity risk profile of the system’s funding base. Even though the share of non-residents’ deposits is moderate, NBG intends to take relevant measures targeted at ensuring viability of banking institutions’ funding vis-à-vis the potentially disruptive impact of international speculative inflows. Continued on p. 23


CMYK

FINANCIAL HEADLINE NEWS & ANALYSIS FINCHANNEL.COM | MARCH 28. 2011

3

best georgian banks

“Georgian Banks will be Expanding to the Regions,” ABG with increased credit activities interest rates decreased on loans as well as on deposits. Banks declared interest rates reduction at the beginning of the year. Moreover, it should be noted that decreasing interest rates are influenced by the deposit price as well as the cost of acquiring resources from international markets, which is cheaper and which is also important in the long term as there are inter-

The FINANCIAL

I

n the near future, the development of tourism and regional infrastructure, together with increased employment, will support banking service centres’ moving to the regions,” said Zurab Gvasalia, President of the Association of Banks of Georgia to The FINANCIAL. “Bank profits increase in accordance with consumer demand. As more people get employed, the demand for credit resources from the business side will be increased, this will be directly reflected on the profit indicators of the banking sector. Consequently, the bank service market is partly assimilated today, despite the fact that banks are maximally trying to develop it,” Gvasalia said. In his interview with The FINANCIAL, Mr. Gvasalia evaluated banking sector operations in 2010 and spoke about the banking sector’s major challenges of the year 2011. Q. How would you evaluate the banks’ operations in 2010? What were the main challenges for the banking sector in 2010? In your opinion, what will be the main challenges for the Georgian banking sector in 2011? A. The Georgian banking sector faced several challenges in 2010. The major challenge was to overcome the trend of loss of 2009 and generate irreversible profits. The year 2009 turned out to be quite difficult for the banking sector, which was due to the recessional processes of 2008. Despite the fact that the country received solid international aid, the increased tendency of overdue loans has been influencing the banking sector since the end of 2008. This should be added to the amortization and restructuring expenses of problematic loans, which in total caused the banking sector to have losses. The losses of the system would be much greater, and the results even harder if not for the politics of National Bank of Georgia, which were directed at better risk management and supporting liquidity management. The second challenge was inflation, which is in connection with on-going and economic cataclysms in the world. The challenge which is firstly associated with energy and the price increase on food products, in terms of exogenic factors, naturally is reflected on our consumer markets and consequently it will be the major challenge for the year 2011. Despite the non-optimistic picture, we do not have a basis for pessimism. The year 2010 showed that commercial banks and NBG managed to successfully overcome the harsh and large-scale challenges. The total profit of the banking sector reached 152 million GEL by the end of 2010, while the loss was 65 million GEL in 2009. The whole assets of the banking sector increased from 8.3 billion GEL to 10.6 billion GEL, by 28%,

“The Georgian banking sector is quite attractive for foreign investors for its liberal banking legislation as well for the dynamic development of the SCAN TO READ sector INitself.” MOBILE

Zurab Gvasalia, President of the Association of Banks of Georgia

from 2009 to 2010. The capital share of the banking sector increased from 1.5 billion GEL to 1.78 billion GEL, or by 18.6%, which defines investors attractiveness towards the banking sector.

2008 when the investment activities in the country were high, investments of 800 million USD were made in the banking sector. The increase of the deposit base is not defined only with high interest rates. Today,

“There has been a 30% increase in the credit portfolio of corporate banks, which is quite a high indicator after a recession period, while in separate banks’ cases this indicator is even higher.” Q. The major initiative of National Bank of Georgia in 2010 was Larization. Despite this fact, the share of GEL did not change significantly. In your opinion, what steps should be taken to increase the share of GEL in deposits as well as loans? A. One of the major initiatives of NBG in 2010 was Larization, however no one said it could be reached in a short term period. Larization was declared a priority of NBG and foreseen as a long term process. Despite this, several serious steps were taken in this direction, including the stage by stage increase of minimal reserves to 15% of foreign currency brought deposits and increase of the current liquidity coefficient indicator. The Georgian banking sector is quite attractive for foreign investors for its liberal banking legislation as well as for the dynamic development of the sector itself. In 2007-

banks try to offer clients multifunctional deposit accounts, which as opposed to monodeposit accounts provide the opportunity for the client to together with percentage income, insure exchange rate and percentage risks. Moreover so-called bonus offerings and overdrafts for guaranteeing deposits are widely used. The Larization strategy on one side is aimed at decreasing the pressure of the currency course of USD and on the other hand to stimulate the demand for GEL. It might be considered an antiinflation barrier. As you are aware, in trade turnover the share of import is significantly higher compared to export, which stimulates inflation while the prices on import are increased. I do not believe that the Larization strategy does not work. The GEL’s stabilization is proof of its success, while in recent times the GEL’s strengthening tendency indicates an increase in demand for GEL. The banks plaid

their role in this strategy when they started offering loans in GEL. For clients this is a significant privilege, as when their income is in GEL and liabilities are in USD, currency exchange risk always exists. Decrease in the value of GEL increases the payment amount of the individual. Q. How would you evaluate banks’ crediting politics? In your opinion, which sectors have an advantage while crediting from banks’ sides? A. I believe that after the low crediting activities in 2009, banks have conducted quite active crediting politics in 2010. The 30% increase in the credit portfolio is quite a high indicator after a recession period, while in separate banks’ cases this indicator is even higher. Today, due to economic sectoral development, the

si City Hall in the framework of project New Life of Old Tbilisi, intends to start a new stage together with commercial banks and developers. If we take in to account that this project revived the construction business, from the banks’ side financing the construction sector will increase. Q. From the year 2009 and during 2010 the Bank’s main strategy was to provide high interest rates on deposits. While at the end of 2010 the tendency was changed and banks chose low interest rates on deposits as their strategy. In your opinion, what were these changes governed by? A. When the bank increases interest rates on deposit resources, it is due to resource bringing stimulation. There is nothing special in this strategy. In a period which was quite difficult for the bank-

“Due to economic sectoral development, the priority is addressed to trade operations and the financing of this sector consists of 65% in the credit portfolio.” priority is addressed to trade operations and due to this fact, the financing of trade consists of 65% in the credit portfolio. If we take into account the recent development perspectives of the country, this indicator will decrease and consequently financing the tourism and agriculture sectors will increase. Like last year, Tbili-

ing sector in recent years, it was more difficult to acquire finances from international markets due to the global economic recession. As for 2010, in the first half of the year the banking sector faced over liquidity. From the point of risks profitability, as a liquidity deficit is non-desirable as well as over liquidity. Due to this fact together

nal resources, which provide banks with the opportunity to finance long term assets. Q. Could the decrease of interest rates on loans from the bank’s side be defined by the fact that banks have renewed crediting the economy? A. The decrease of interest rates on loans naturally supported increased credit activities. Credit investment increased from 5.2 billion GEL to 6.3 billion GEL, or by 21%. Due to this fact, the credit portfolio increased by 30% in 2010 compared to the previous year, which was recorded as a profit indicator at the end of the year. Credit investment significantly supported deposit market increase. The deposits of non-bank physical and juridical individuals increased from 3.9 billion GEL to 5.5 billion GEL, or by 42%. The deposits of physical individuals increased from 2.1 billion GEL to 2.6 billion GEL, or by 24% which in total is the indicator of increased trust in the banking sector. Q. In your opinion, will large scale international banks enter the Georgian market in the near future? A. The Georgian market has already been entered by large scale European banks such as HSBC and Societe Generale. Moreover, the banks which represent the leading bank institutions in their countries are represented in Georgia, such as Azerbaijan International Bank, Turkish Ziraat Bank, Russian Vneshtorg Bank and Ukrainian Privat Bank. Moreover, EBRD should be mentioned, which possesses large shares in Georgian banks. The entrance of large-scale international banks in the Georgian market will depend on what large scale businesses enter the country. If we take into account infrastructural economic development tendencies and steps put ahead of liberalization of the economy, integration of the country into the Euro-Atlantic structure, this is quite possible even in the next 1-2 years.


CMYK

4

HEADLINE NEWS & ANALYSIS

FINANCIAL

MARCH 28. 2011 | FINCHANNEL.COM

best georgian banks

Bank Constanta to Offer New Banking Products

S

ince the very beginning of 2011, Bank Constanta, for the first time, introduced deposits with unprecedented 17% interest upon opening which hadn’t yet been offered by any other commercial bank in Georgia.

With the introduction of such an innovative product on the Georgian market, the Bank was able to outnumber its projected attained deposits level by 456% and has collected 1.4 million GEL. Currently, in any branch of the bank, a person is able to open time, demand, children and recurring deposits. In 2010 the Bank was joined by Netherlands based investor namely Oikocredit. The latter investor operates in up to 70 countries worldwide and owns the Shareholder Capital of 31 countries’ micro financial institutions. In essence, Oikocredit owns 13% of Bank Constanta shares. The Bank, with a 71 million GEL portfolio serves 19,000 clients. All through 2010, Bank Constanta disbursed 83 million GEL loans which itself was 66% growth compared to the previous year’s (2009) figures. The number of the customer base also expanded by 36%. By the end of 2010 data the Bank had finished the year with 2,4 million GEL profit by which it stood in 6th position out of 19 commercial banks whilst in terms of ROE (return on equity) and ROA (return on assets) – 3th and 4th position correspondingly. Total financial resources attracted from international financial institutions in 2010 - 32 million Gel by Bank Constanta. In the direction of risk management, Bank Constanta closely cooperates with international financial institutions like International Finance Corporation (IFC). The latter strategy is part of a global initiative since the financial crisis hit the world and Georgia is a part of the world economy. Bank Constanta, officially registered as a bank in 2008, has had a longstanding presence on the Georgian financial market since 1997 as a micro-finance organization. With the strong leadership and the right strategies it has been holding a leading position on the market itself, since its founding. Despite hardships in the very first months of its foundation, in July 2008 the Bank was able to withstand the developing crisis and continue crediting of an economy. Currently, with March 2011 ratings, out of 19 commercial banks, Bank Constanta holds 7th position due to overall net income among banks. Throughout its existence as a micro-finance organization, the management was able to accumulate the experience which now gives them the opportunity to be leaders of the market in the direction of micro loans. Bank Constanta has been very active in the direction of agriculture too, as 25% of loans are by agribusinesses. Cooperation between the Bank and “Borun AgroChemistry Ltd” will benefit customers by providing all the needed chemicals and other necessary products on instalment bases. In accordance with necessity, the Bank offers a 6 month preferential period, during which the client doesn’t pay anything till the final realization of the product. The project is aimed at easing conditions for clients to obtain all the necessary products for better performance of their own business.

Levan Lebanidze, General Manager of Bank Constanta Interviewed by

KOKA KALANDADZE

The FINANCIAL Q. What is Bank Constanta’s profile and its main direction? A. Our bank has been oriented on providing finance for small and medium size enterprises during its long history, since 1997, even from when it was formed as a micro finance organization. Micro businesses are the majority of our clients and we’re the number one bank in the line of providing the best condition loans to SMEs and we aim to develop this direction even further. Currently we have 21 branches of the bank where more than 400 people are employed. This year we’ll add one branch in Marneuli and next year in several other places. Q. You’re very actively crediting agribusinesses in Georgia. Do you have new products to provide to your customers? A. Agribusinesses amount to 25% of our loans disbursed overall which clearly illustrates the importance of the product. With the purpose of supporting our existing clients base in addition to new ones, we’ve introduced a totally new product, not offered by any other bank before, which is cooperating with “Borun AgroChemistry Ltd” which will itself be aimed at providing needed chemicals and necessary products on instalment bases to our clients with the least possible terms. In accordance with the necessity, we offer a 6 month preferential period, during which the client doesn’t pay anything till the final realization of the product.

This year we introduced plastic card use in our bank branches which wasn’t previously available. We also plan to introduce micro deposits where people can deposit small amounts of money. We’re always introducing new products which by itself depends on the demand on the market overall. We do analysis on new directions that need to be developed, and we’ll be having some other new, innovative offer this year too. Q. How risky it is to give out agribusiness loans? A. Regardless of how risky the loans are, the main thing is still the insurance of those loans. Our risk management office is in charge of overseeing the performance of the

Q. How successful was the start of this year? A. Not only the start of this year, but also the previous year, was very successful for the Bank. We grew more than the banking sector grew at large. Our bank assets grew by 30%, our clients’ base increased by 36%, which is also very significant. The main reason why we grew was the growing demand for the products that we provide to people. In addition our deposits proved to have a very successful start this year which we plan to continue. Q. What are the 2011 challenges for the banking sector this year? A. Challenges always persist in the banking sector but the main thing is to timely

“Micro loans were the most profitable direction at our bank” loans provided. Our bank was rated in the list of the best performing banks in Georgia due to strong risk management. Our bank’s high profitability can also be attached to that despite the war and previous year’s events. As for the interest rates it largely depends on how risky the business is; also the amount of the loan and its terms. In general loans are given starting from 15%. Q. Which are the most demanded products at Bank Constanta? A. Apart from agro loans, which account for 25% of our loans, there are: Trade amounting to 52%, the Service sector - 11%, Production - 5%.

identify the risks and tackle them using all necessary opportunities. We, at Bank Constanta, are always dedicated to tailor the products to our clients at their best use and location. In addition, general economic conditions affect our operations including the most recent price hikes on consumer products as well as non-tradable goods but we’re still very positive about the economy en masse. Q. What about interest rates, are you going to cut interest rates on loans soon? A. Usually interest rates are adjusted to the demands of customers, thus in the long-term we are certainly

going to cut interest rates. Our interest rates are also competitive compared to other players (commercial banks) on the market. The Bank, overall, has renewed crediting the economy, hereby 2010 was a very active year in this regard. Business loans are the main direction of Bank Constanta. Savings in Bank Constanta: this year we’ve also started deposits at the Bank - one year deposit in USD - 10%, whilst in GEL - 17%. The Bank’s 456% more attained deposits than planned is a sign of trust among customers towards the Bank. Q. Are you going to implement any changes in the management of the Bank? A. We’re not planning to have any changes in our management. In fact, we’re expanding our capital base through attracting large investors like Oikocredit which is already present in 70 countries, hence has huge experience which will be valuable for us to use. Thus we’ll be able to offer more credit to people in need of it hence supporting growth of the economy. Q. What are your expectations about the banking sector in general in 2011? A. I think that the banking sector will be developed dynamically. The main thing is that the crisis situation from 2008 is now over and the country is now on the road of development. Overall the 2010 credit portfolio has increased. Now we’re positive about the growth of our market by providing a wide range of banking products, and in cooperation with our donors, increasing our capital base for the forthcoming year.


CMYK

FINANCIAL HEADLINE NEWS & ANALYSIS FINCHANNEL.COM | MARCH 28. 2011

5

best georgian banks

Advertiser: Bank Constanta. Contact FINANCIAL Ad Dep at marketing@finchannel.com


CMYK

6

HEADLINE NEWS & ANALYSIS

FINANCIAL

MARCH 28. 2011 | FINCHANNEL.COM

best georgian banks

TBC Bank opening Representative Offices

“Now when the financial crisis is over TBC bank is given huge opportunities to set ambitious growth plans both in the local and international market, plus Azerbaijan,” Vakhtang Butskhrikidze, General Director of TBC Bank By KETI CHKHIKVADZE The FINANCIAL

I

n his previous interview with The FINANCIAL, Mr. Butskhrikidze stated that the high interest rates make it attractive for foreigners to open their deposits in Georgia banks and according to him each month deposits amounting to several million are opened by foreigners at TBC Bank. To the question - does TBC Bank promote the above mentioned advantage in the international market? Butskhrikidze said “Yes, of course, we outline the big difference among interest rates in Georgia and in the international market. To encourage this, we took the decision to open our first representative office in Tel Aviv, Israel, We think that by the end of the year several representative offices will be added throughout the world,” Butskhrikidze said. The year 2010 was quite profitable for TBC Bank, with total net profit of 45 million GEL, exceeding the financial results of 2007 by 17 million GEL. Butskhrikidze said that net income of 45 million GEL is not a high indicator as investors are mainly interested in return on capital which turned out to be 14% at TBC Bank in 2010. “I strongly believe that in the next 5 years the banking sector will grow rapidly. However, we should not forget those mistakes the banks made in the years 2007 and 2008, the growth should be more dynamic. In the first half of 2008 the growth was 70% which meant that risks would not be manageable,” Butskhrikidze said. Q. How has the demand for different banking products changed at TBC Bank? A. The demand for different banking products depends on the country’s economic conditions. After the August war, for a year and a half, the focus was on deposit products, which was for a reason. Due to increased risks people took fewer decisions on spending and preferred to keep money for the future, consequently the number of deposits was increased. However, as the economy is returning back to its old indicators, there is expectation that the economy will stabilize and lead to growth. Consequently, from the second half

Vakhtang Butskhrikidze, General Director of TBC Bank

of 2010 the demand increased for loans, and we forecast that within 2-3 years the tendency for loans will be stable. Q what is prognosis on rates on deposits and loans for the next months? A. Interest rates on loans will be decreased; the fundamental base exists for this. However, first of all the interest rates on deposits should be decreased and this will happen later, Everything depends on the next 3-4 months, what the bank sector’s behaviour will be regarding interest rates. If the inflow of deposits will increase in huge sums from local as well as foreign markets, the interest rates on deposits will be decreased which automatically in several months will cause the rates on loans to decrease. TBC Bank always prefers to provide a low interest rate loan which carries lower risk. We are interested in creating the environment which gives us the opportunity to provide low rate loans. Q. Out of banking products, which provides the largest share of profit? A. If we discuss the issue according to segments, currently TBC Bank is a corporate and retail bank. Most of the profitability came from the corporate sector in 2010. Historically we were a corporate bank and from 2007 we decided to enter the retail sector. When the company started expanding the chain, it coincided with the August war. Consequently we opened the chain and could not provide lending. We started developing the retail chain from 2010 and will continue making it a more profitable direction. Q. In your opinion, which products will be most in demand in 2011? A. We believe that the year 2011 will be active both from a deposit and lending side, not only at TBC but in the whole banking sector. Q. From the year 2009 and during 2010 the Bank’s main strategy was to provide high interest rates on deposits. While at the end of 2010 the tendency was changed and banks chose low interest rates on de-

posits as their strategy. In your opinion, what were these changes governed by? A. Due to the fact that in the first half of 2009 there was outflow of deposits, there was high competition on deposits and banks offered high interest rates. However in 2009 there was more than 40% liquidity in the market, which is quite high according to Georgian and international standards. There was necessity for the banks to start lending. For motivating lending banks started campaigns which caused a decrease in interest rates. Q. The Bank had significantly decreased interest rates on mortgage loans at the end of the year 2010. You offered mortgage loans from 11% interest rate - what was the total amount distributed in that direction in 2010? A. The two month campaign turned out to be quite successful and within this period only we increased our credit portfolio by 64 million GEL. The major aim of the campaign was to test the behaviour of clients, how they would respond to decreased interest rates. Q. Out of the cards issued by TBC Bank, which types of cards are most popular? A. The most successful card was Cosmo, specially designed for Georgian women. Cosmo Cardholders are offered different discounts at very wide range of merchants, which they visit for everyday shopping. Our experience shows, that if a consumer is offered even low discount at the merchant, this usually becomes a reason for them to choose it. In May we will have a big campaign of new cards and will offer completely new types of cards to society. Q. How would you evaluate client’s loyalty towards TBC Bank before and after the crisis? In your opinion,

what are the expectations of clients towards TBC Bank? A. Client loyalty is vital for us. Each year TBC Bank conducts research which indicates that we have high outcomes. In 2010 we launched a big loyalty campaign - Smart Club. This is a long term project and has already incorporated 70,000 TBC Bank clients. This project is one of the most successful projects launched by Bank, which directly linked to the activities of our individual clients. Whether you make a transaction, open a deposit or take a loan within TBC Bank you’re given Smart Club points. Besides, TBC Bank

SCAN TO READ IN MOBILE constantly offers various events, exclusives to the members of Smart Club. Smart Club has attracted some tens of thousands of people from the very beginning and we’ll be launching bigger marketing activities to further promote this project. TBC Bank’s Smart Club is also the most large-scale social media project in Georgia. Currently the number of fans of Smart Club page on Facebook exceeds almost 130 000 and this number significantly increases every day. We pay lots of attention to clients and spend millions each year on increasing their loyalty.

Q. How would you evaluate the activities of corporate clients in 2010? A. Corporate banking plays an important role in the creation of competitive advantage of TBC Bank. TBC Bank’s indicators in this direction are increasing annually. At the same time, the bank’s structure and operation methodology is being developed in order to improve quality of service. In 2010 the whole banking sector increased financing of corporate clients, which had been restricted since the second half of 2008. This year we plan to have an increase in the corporate sector by 25%. As for 2010, we managed to have a 35% increase on corporate clients lending and deposits practically doubled. Q. What will be TBC Bank’s offers for corporate clients in 2011? A. Our approach will be more clientoriented in 2011. We have already considered with whom to continue partnership. We will try to acknowledge what the demand from corporate clients is and try to satisfy these demands from the Bank’s side. Q. In your opinion, what challenges does the Georgian banking sector face in 2011? A. I believe that there will be more activities in retail as well as corporate sectors in 2011. However, National Bank of Georgia has restricted banks’ regulations from a liquidity point, capital adequacy and reserves were increased also. Whereas in the banking system the credit activities growth consisted of 25% in 2010, we expect this number to be 15-20% in 2011. Q. TBC Bank is represented in Azerbaijan also by TBC Credit. How does Azerbaijan’s banking sec-

tor differ from that of Georgia’s? How is this reflected in numbers? A. The banking sector in Azerbaijan is developing dynamically. Compared to 2009 when the banking sector in Georgia decreased in Azerbaijan the market was increasing. However the percentage increase was lower in Azerbaijan than in Georgia in 2010. The financial crisis did not influence Azerbaijan’s economy much, as the country is an exporter and has income from oil. The banking sector in Azerbaijan will grow. However as opposed to in Georgia where the banking sector is presented by local as well as international banks, and there is high competition, in Azerbaijan we see more local banks and international institutions are not present there. Q. Did the demand for Gold Deposits change? Is gold currently considered a solid guarantee? A. Demand for gold has increased not only in Georgia but throughout the world. If we observe the price change of gold, we will see permanent growth. The gold campaign which we started two years ago was successful. Those who believed and trusted us received a 16% interest rate. Q. How did the demand for GEL and USD deposits change in 2010? A. There was a slight tendency of an increasing share of GEL in lending and deposits. However it is vital to decrease the level of dollarization in the banking sector, which is a long term issue, needs years and cooperation from the banks’ side, from NBG as well as the Government. GEL, which is mainly used for daily transactions, is to become a saving mean. Q. Does TBC Bank intend to expand the chain in 2011? How many branches and service centres does TBC Bank currently have? A. TBC Bank will add seven new branched and service centres during the year in Tbilisi as well as outside the capital. We are maximally trying to cover and provide our service throughout Georgia. Currently TBC Bank operates 44 branches. Q. Does the Bank plan to form an agreement with an online payment system like PayPal? A. First of all the Government should switch to the system. As soon as this happens, we will be switched to the system also. Q. In February, TBC Bank announced that internet banking is already available in Safari and Firefox. However, using Bank Client is impossible on Mac computers. Does the Bank plan to implement any changes in these directions? A. TBC Bank will have completely new internet banking by the end of 2011. This will be a modern programme based on high-edge technologies, which will be more flexible than modern technologies. Q. In 2010 TBC Bank accumulated more than 100,000 likes on facebook. Do you intend to use such a critical mass for other purposes? A. We believe that together with the development of social networks, TBC Bank’s participation in this system is important. Through facebook and other pages we try to raise awareness of our products and company, and gain potential clients.


CMYK

FINANCIAL HEADLINE NEWS & ANALYSIS FINCHANNEL.COM | MARCH 28. 2011

7

best georgian banks

Advertiser: TBC Bank. Contact FINANCIAL Ad Dep at marketing@finchannel.com


CMYK

8

HEADLINE NEWS & ANALYSIS

FINANCIAL

MARCH 28. 2011 | FINCHANNEL.COM

best georgian banks

Bank Republic Increasing Retail and Corporate Portfolios “Bank Republic plans to develop its business in both directions – Retail and Corporate in 2011, therefore we are aiming at increase of our portfolios in both fields in line with the market development and our ambition to gain market shares,” told Christian Carmagnolle, CEO of Bank Republic, Societe Generale Group, one of the leading financial service groups in Europe.

Bank Republic is one of the leading commercial banks in Georgia employing more than 1000 staff, serving its clients through 49 branches and service centers. Currently, Societe Generale posses 80% share in Bank Republic.

By KETI CHKHIKVADZE The FINANCIAL

W

hen we launched our lending campaign early December, we sent a clear message to the “market’: Bank Republic is back to business. It was well perceived and our commercial results are positive. The campaign was a “commercial rebound” for our teams who worked very hard to satisfy our clients with the timely response for their credit application and for sure with very good price during the campaign,” Mr. Carmagnolle told. According to Mr. Carmagnolle, Bank Republic will continue to provide clients with new products and advantages in the future. “Bank Republic will offer very soon new innovative solutions for day-to-day banking, deposits and all the range of services for retail and corporate clients. We are ready to implement many new solutions during 2011 and for the years to come,” Mr. Carmagnolle said. “We continue to adapt our commercial organization and we just implemented some internal improvements. Thanks to that, we are able to dedicate more skilled bankers to our clients to better know and thus better serve them. In accordance with Societe Generale ambitions 2015 strategy, we need to be the “most desirable” bank on the market. We are challenged to be innovative but stable, proactive but smooth financial institution for delivery of the best terms products and superior quality of service,” Mr. Carmagnolle added. Mr. Carmagnolle joined Bank Republic in December, 2010. Before appointed as CEO of BR, Mr. Carmagnolles’ very first career step in SG was undertaken in 1972, in corporate direction, being later promoted to Deputy Executive Director in SG affiliated Komercni Banka in Czech Republic. Q. Mr. Carmagnolle you have been in charge of CEO position, since the beginning of the year 2011. What has changed in BR after your arrival? A. Bank Republic is very interesting institution, with good

Christian Carmagnolle, CEO of Bank Republic

experience and practice. The Western standards have been already successfully pioneered in the Bank and the corporate culture of the Bank is overall high. It was really interesting and challenging for me to join BR as the CEO. In addition to that, my arrival coincided with the period of “commercial rebound” of the Bank, when the new commercial campaigns and projects have been implemented. The projects ultimately became very

natural amortization was so significant. Furthermore, in line with our strong social responsibility behavior, we decided to strengthen the credit parameters and criteria in order to avoid generating additional turmoil in our clients’ indebtedness. Doing so, we were less developing our new portfolios than some competitors having more aggressive lending policies. As you can see, we are developing a long term sustain-

“Bank Republic is developing a long term sustainable strategy, oriented on the social responsibility thus focusing on ours clients’ benefits and profitable long term relationships with them.” successful thus contributing to the overall rehabilitation of the Bank. From the end of last year, our commercial status became more active and the results improved respectively. Q. According to the last audited financial statements of September 2010, BR profit and loss statement shows 27 million net loss. In your opinion, what were the main causes of high expenditures? A. When the crisis happened, Bank Republic decided to take care of its clients and acted in accordance with Societe Generale culture and principles. We spent lot of time to elaborate solutions with our defaulted clients, in a period where all our organization and strategy was to develop our networks (branches, call center and Internet banking) and our franchise. We were longer to react than our main competitors which are much more mature “universal banks”. It is also right that the structure of our “new” retail portfolio was quite “short term maturity oriented”, due to the fact that many loans were dedicated to short term needs, as consumer finance or auto loans. That was the reason why in 2009 and 2010, portfolios

able strategy, oriented on the social responsibility thus focusing on ours clients’ benefits and profitable long term relationships with them. A. Thank to our retail campaign and strong commercial action, first quarter is well oriented, but it’s too early to talk about financial results. Q. BR, is part of Societe General Group, does this mean access to Societe Generale funds? How does Societe Generale Group participate in strengthening BR financial statements? A. We are the member of Societe Generale, large financial institution. As any other subsidiary, we enjoy the competitive edge of being the international brand thus facilitating the international transactions / trade finance for any our client which is interested in such type of operations. SG supports Bank Republic not only financially, but in any rational initiative and action. The recent capital increase dedicated to strengthening our lending capability is, if necessary to stress, the confirmation of our shareholders’ and mainly Societe Generale group’s confidence and support to Bank Republic.

Being part of SG group means to benefit from SG rating to improve cost of funding thus ultimately leading to better service of our clients. Q. Among banking products, for which comes the biggest share of profit? A. On lending activities, our strategy is to balance Retail and Corporate revenues on one side and short and medium/long terms revenues on the other side. We also need to increase our fees and commissions revenues thank to news innovative offers. Q. How would you evaluate clients’ loyalty before and after crisis period? In your opinion, what is the expectation from clients towards BR? A. We are estimated as highly reliable bank, and the customers are really keen to save the deposits with us, to implement the different transactions and, generally speaking, bank with us. We have been several times awarded for trustfulness and reputation. The volume of deposits is constantly increasing. The clients are really loyal, and of course they naturally

in both retail and corporate products and solutions. The mortgage, business, consumer loans, corporate packages and deposit products are equally popular among the respective segment.

Recently the mortgage loans have been very popular during the campaign; now we are stimulating the business loan campaign to enable the business representatives to enjoy attractive products and solutions. We design the products with very competitive terms and rates to make them very popu-

“Societe Generale supports Bank Republic not only financially, but in any rational initiative and action. Being part of SG group means to benefit from SG rating to improve cost of funding thus ultimately leading to better service of our clients.” expect the even wider range of the banking solution and more improved quality of service, which is and will be definitely delivered by us. Q. How has the demand changed for different products at BR? Which products are mostly demanded currently? A. Our clients are interested

lar, useful and beneficial for the retail and corporate customers. Q. How would you evaluate activities of corporate clients in 2010? A. As economy is gradually recovering, large companies have activated their transactions with banks. Although some segments have not fully recovered yet, 2010 year has

proved that the worst is already behind for large companies. These positives trends are reflected in most of our corporate customers’ activities. In fact, some of them are starting to think about gradual expansions of their businesses, which is good sign. We would be happy to support them in those plans. Q. What offers will BR have for corporate clients? A. Bank Republic provides tailor made financial services to its corporate customers. Our Corporate Banking Division is responsible for managing and developing the relationship with corporate customers. We aim to be the true banking partner by helping our clients to meet their long-term, strategic goals across all essential functions, like financing and operational services. In addition, we provide a complete range of trade products and services, such as guarantees and letters of credit, to help corporate clients to secure and finance their international transactions. Q. Which product will be the most actual for Bank Republic’s corporate clients in 2011? A. The most active corporate banking products still remain short and medium terms credit facilities, both cash and documentary financing. Being part of Société Générale Group enables us to offer these products, like credits, international guarantees and letters of credit with exclusive terms to our Georgian customers. Q. What is the index of bank deposit growth in Bank Republic? Please compare it to the last year. A. The deposit growth rate is sufficiently high in Bank Republic. The growth rate of the deposits in December 2010 vs. December 2008 decreased very insignificantly, just by 1%. Q. The major strategy for banks was to charge high interest rates on deposits at the end of 2009 and during 2010. However, by the end of 2010 the tendency was changed and banks main strategy became to charge lower interest rates on loans. In your opinion, what were these changes governed by? A. Each bank follows its own commercial strategy based on several criteria on which the cost of funding is crucial. To offer better prices on loans it is obvious banks must offer lower prices on deposits which are “banks raw materials”. Q. NBG increased saving reserve from 10% to 15%. In your opinion, what will be the affect from bank’s side in crediting Georgian economy? A. The usual mechanism of such central bank policy is to tighten lending policy of the banks to mitigate inflation. It should lead banks to reflect cost of liquidity in their pricing. Q. Does BR plan to expend the chain and service centres in 2011 during the end of the year? A. We are very pragmatic in this area. Any good opportunity will be studied but we need to be selective with places which are already over covered by banks.


CMYK

FINANCIAL HEADLINE NEWS & ANALYSIS FINCHANNEL.COM | MARCH 28. 2011

9

best georgian banks

Advertiser: Bank Republic. Contact FINANCIAL Ad Dep at marketing@finchannel.com


CMYK

10

HEADLINE NEWS & ANALYSIS

FINANCIAL

MARCH 28. 2011 | FINCHANNEL.COM

best georgian banks

Cartu Bank Portfolio to Increase by 34%, reaching over 52 million GEL By KOKA KALANDADZE The FINANCIAL

Cartu Bank, with 14 years of experience on the Georgian market, extended its deposit portfolio by 34% overall in 2010 which amounted to 50,225,501 GEL compared to the previous year’s figure. According to the latest statistics, those of 28 February, the Bank disbursed up to 76 million GEL worth of loans whilst the total amount of loans disbursed adds up to more than 440 million GEL. Cartu Bank was one of the first Georgian banks to be granted full membership to the VISA and MasterCard Payment Systems. Cartu is the first Georgian bank to have VISA and MasterCard service licenses in ecommerce. The Bank’s main client base is held by medium and large corporations hence it concentrates on corporate financing mainly, as well as private banking for managers and corporate clients. Loans disbursed by Cartu bank are of the following types: Chain business loans, Exportimport loans, Import Substitution loans, Small and Mediumsized, Government Enterprises Privatization loans, Energy Efficiency Loans. Cartu Bank ended February with profits of 3.2 million GEL and the net profits equalled 4,411,196 GEL as of March 1, 2011. The ratio of foreign currency denominated loans accounts for 82.8% (365,027,686 GEL).

SCAN TO READ IN MOBILE

George Kvirikashvili, Cartu Bank CEO

Q. What is Cartu Bank’ business strategy for the years 2011-2012? A. The Bank’s strategy in 2011 is concentrated on the diversification of its activities, including within the credit portfolio, which means a greater focus on Small and Medium Enterprises. The Bank’s plan is to guarantee organic and healthy growth to provide stability for its shareholders and clients. Q. Which products are most interesting and demanded by your clients? A. Cartu Bank is a universal bank which provides a wide range of banking products to its customers. This includes: • Loans • Checking accounts • Plastic Cards • Deposits • Documentary Operations • Distance banking (internet banking, SMS banking, Bankclient software) Considering the fact that our main client base is medium and large corporations, we are primarily concentrated on corporate financing, as well as private banking for our managers and owners of our corporate clients. Q. Tell us the main philosophy of the Bank? Who are your main clients and for which sector is Cartu Bank providing finance? A. Cartu Bank is a financial institution providing universal banking services to private and corporate clients. Its strategy centres on providing superior quality services to corporate clients and a full spectrum of private banking products to owners, top and middle-level management of the companies. Moreover, the Bank offers competitive products to Small and Medium Enterprises. Bank Cartu has been operating in the Georgian banking industry for 14 years. The Bank was established in 1996 as a Joint Stock Commercial Bank. Since then, the Bank has been steadily developing. Cartu Bank

was one of the first Georgian banks granted full membership to the VISA and MasterCard Payment Systems. Cartu is the first Georgian bank to have VISA and MasterCard service licenses in e-commerce. Also, the Bank is actively cooperating with the European Bank for Reconstruction and Development, the Black Sea Trade and Development Bank and the World Bank to finance Georgian businesses. The Bank fosters import and export operations among BSEC countries and stimulates energy efficiency and renewable energy projects in Georgia, helping the economy to reduce its energy intensity with a credit line for on-lending to local private companies. Q. How supportive is Cartu Bank towards SMEs in Georgia? A. Cartu Bank has experience, proven stability and a broad portfolio of products and services to be the best partner in Georgia. In order to meet the expectations of our SME clients we developed several credit programmes which are tailored to their needs: Chain business loans - designed for companies having two or more branches or just planning to expand more. Export-import loans - designed for companies working in international trade. Government property privatization loans - designed to help companies or individuals buy government property and expand their business. Import Substitution loans - designed to support local production and help substitute or reduce imports. Q. How successful is the import replacement production support programme? A. I would like to mention first that Cartu Bank was one of the first local financial institutions which decided to support local producers and substitute imports. The programme is quite successful; the Bank has financed a number of Georgian

ABOUT THE CEO George Kvirikashvili has focused his career on commercial banking in Georgia for the last 13 years. Currently Mr. Kvirikashvili serves as CEO of Cartu Bank. He holds a Master’s Degree in Finance from the University of Illinois and has extensive knowledge of the local banking sector. Prior to working with Cartu Bank, Mr. Kvirikashvili served as the Director of Business Development and Branch Network Management at United Georgian Bank, where he oversaw the entire branch network. As a member of ALCO, he managed the Bank’s liquidity positions, including branch liquidity strategies, securing provisions of adequate liquidity sources. Mr. Kvirikashvili also worked with the State Chancellery of Georgia where he served as Deputy Head of Fiscal, Monetary and Foreign Economic Relations. He successfully promoted land privatization and titling to private landowners as part of the Land Market Development Project sponsored by USAID. companies in different industries (including poultry farms, egg production, vegetable oil production, plastic production etc). Q. Agriculture is one of the main priorities of the Government this year. How active is Cartu Bank in this regard - how many businesses have been financed? A. Last year we outlined agriculture as one of our priority industries for the Bank’s future development, because we see that this industry has a much higher potential for growth compared to others. Currently we are working on a special offer for farmers in the Kakheti region. This project aims to create a tailored-made offer for farmers (primary production) in the region. Q. What is the amount of deposits in Cartu Bank what is the interest paid on

them? And how about people’s behaviour in recent months towards inflation? A. As of December 31, 2010, the Bank’s Deposit Portfolio amounted to 50,225,501 GEL which is a 34% increase compared to 2009’s results. This allows us to conclude that (1) the Georgian population regained its trust in the stability of Georgian banks and (2) their saving behaviour is higher compared to in the last several years. Q. What requirements should businesses nowadays satisfy in order to get a low interest loan from Cartu Bank? A. Again, Cartu was one of the first banks to offer its clients low interest rates on loans. We have an individual approach to each project. However, there are some common requirements (based on the world’s best practices

and our expertise) for the loan applicant to be successful: (1) a company should demonstrate good historical performance (including financial and operational) and (2) the ability to repay the loan based on current cash flows. If these requirements are fulfilled, then the Bank will be able to offer the best rates currently available. Q. What are your expectations of 2011? A. As a frontier economy, Georgia stills needs considerable investment into its infrastructure development. More importantly, Georgia would benefit from the expertise and knowledge of the international community. Along with consulting or technical assistance, it is essential to gain practical, empirical knowledge through doing business together, agriculture, starting new production plants, developing value chains in the economy or creating new industry clusters, etc. Q. What growth do you foresee at your bank and what will it depend on? A. With our new products we have been introducing in 2010 and the high level of support and interest of our clients we expect continued growth in these new services and a steady increase in the growth of our portfolio. Q. How about CSR - how active are you in this regard and what activities do you plan for the forthcoming year? A. Social Responsibility is one of Cartu Bank’s core values. Therefore, a significant portion of our profit is donated to the Cartu Charity Foundation every year, which is the biggest charity fund in the country. Moreover, we stimulate the Georgian economy through various credit programmes. Particularly important is our Import Replacement Support Programme; the goal of the programme is to support local entrepreneurs and increase local production levels.


CMYK

FINANCIAL HEADLINE NEWS & ANALYSIS FINCHANNEL.COM | MARCH 28. 2011

11

best georgian banks

Advertiser: Cartu Bank. Contact FINANCIAL Ad Dep at marketing@finchannel.com


CMYK

12

HEADLINE NEWS & ANALYSIS

FINANCIAL

MARCH 28. 2011 | FINCHANNEL.COM

best georgian banks JTI to Open Caucasus Regional Headquarters in Georgia By KETI CHKHIKVADZE The FINANCIAL

AUTO EXPRESS STARTED TRANSFORMATION OF CARS ON CNG The FINANCIAL

O

n 22nd of March Wissol daughter brand Auto Express started a new service of transformation of cars on Compresssed Natural Gas (CNG). Considering the raised prices of oil on the international markets Wissol, as a socially responsible company, plans to further develop the CNG stations nationwide as well. Auto Express offers service of transformation of cars on gas at the Wissol branded service station in Mukhiani, #4 Gobronidze Street. Wissol cooperates with Italian OMVL SMA to offer safe gas transformation services and is an exclusive distributer of OMVL fuelling systems in Georgia. OMVL is a leading player in the alternative fuel vehicles sector, designing, manufacturing and marketing complete fuelling systems for gas-propelled vehicles and for the conversion of engines from petrol to CNG. “Consumption of CNG decreases fuel expenses by 50% and providing safety guarantees by offering international standard fuelling systems hav-

ing ISO quality and safety certificates, customers will be able take care about environment as well as CNG is ecologically clean fuel,” As technical expert of OMVL SMA Salvatore Ricobenne claims. Salvatore Ricobenne was invited in Georgia to give trainings and instructions for Auto Express staff. “The cars will be technically safe, and the customers will get a guarantee as well being trained and given instructions. Moreover Wissol will be offering an installment service and needing only ID card they can get a bank loan to cover expenses”, according to Guram Dapkviashvili, Director of Auto Express. Wissol, one of the largest scale businesses is Georgia, has added the new Auto Express brand to its diversified business in February, 2011. Besides transformation of cars on gas, Auto Express is developing in two other directions as well: provides oil and lubricant change services exclusively offering French Total lubricants to customers and provides vulcanization services and sells wheels;

Mikhail Saakashvili Visited Smart Trade Center Construction in Marneuli The FINANCIAL

O

n 21st of March The President of Georgia Mikhail Saakashvili visited Smart Trade Center in Marneuli and observed construction works to be finished by September, 2011. Wissol Group is further expanding Smart supermarket chain throughout Georgia. Smart Trade Center is located at #26 May Street on the 2500 square metre territory in the center of Marneuli. Beside Smart supermarket, pharmacy, bank branch and other trade objects, cinema ready to host 150 guests will be located in the Marneuli Trade Center.

100 people will be employed at the high technological trade center. The first supermarket of Smart Retail appeared in Tbilisi in 2010. Located at D. Aghmashenebeli Alley 13th kilometer the first Smart supermarket offers “everything at one place”. Wissol Group entered the supermarket business after two years of market research and international or local experience analysis to minimize risks and successfully use market opportunities. Foreign experts were also involved in Smart Retail development strategy. In the nearest future Smart Supermarkets will appear in Gldani, Vazisubani and Khakheti highway.

WISSOL GROUP LAUNCHES EUROPEAN STANDARD FITNESS CENTER LAGUNA IN KUTAISI The FINANCIAL

O

n 24th of March Wissol Group opened modern standard fitness center Laguna at the Torpedo Kutaisi sports complex in Kutaisi, the Imereti Region. Laguna is considered to be the only European standard sports complex all over Georgia. Wissol Group Supervisory Board Chairman Samson Pkhakadze said the company has invested about 1 million GEL in the complex construction. “Wissol Group acquired the swimming pool jointly with Kutaisi Torpedo football club

as part of the interesting cooperation between the state and private sectors. After the deal, we started investing in constructing a modern complex. Besides a swimming pool, visitors are able to use fitness facilities, massage and solarium services. The fitness center is equipped with modern American and German technologies”, Pkhakadze noted. Laguna complex offers various individual, family and corporate service packages. The price of a one-month membership fee starts from 90 GEL for the swimming pool. Laguna complex is located on 2 500 square meters and employs 60 individuals.

J

apan Tobacco International, JTI, has made the decision to locate its headquarters for the Caucasus region in Georgia, according to Martin Braddock, JTI Regional President for the CIS, Romania and Adriatica Region. “There were many reasons for our decision. We looked at the investment and business climate here in Georgia. In the tobacco industry two things are very important: excises and regulations. Here in Georgia, what we have seen is that the Government is willing to talk to the industry and listen to the industry and with the industry help to ensure that the operating environment is well regulated,” Braddock said. “Moreover, we had to look at the quality of resources available in the country in terms of office, people, and professional skills. Our decision was that Georgia is the right place to locate headquarters of our Caucasus business,” said Braddock. “We are also looking at business performance in the Caucasus. In 2010 we increased business here by 50% compared to 2009. In Georgia we significantly increased our Camel business and our Winston business. We had 44% growth of JTI sales. Clearly business performance and the investment climate helped us make the decision to base our headquarters here in Georgia,” Braddock added. JTI operations in Georgia have generated significant tax revenues: in 2006-2010, JTI importer, Eliz Group Ltd., paid over 327 million GEL in different types of taxes, including more than 98.5 million GEL in 2010 only. Currently, JTI is in the process of looking for office space in Georgia, establishing a legal entity and hiring 41 employees in addition to already existing staff. As Braddock mentioned formal registration documents will be completed sometime in the middle of the year and currently the company is being presented by a representative office. JTI is one of the leaders of the domestic tobacco market. The company has reached a 23% SOM in Georgia since its entry in 2000. JTI offers Georgian smokers renowned international brands: Winston, Camel and Sobranie. JTI has a strong growth trend. In 2010 JTI sales increased by 44% compared to 2009. The company’s leading brands Winston and Camel have grown by 38% and 71% respectively. The number of JTI employees in Georgia increased by 39% since January 1, 2008. “We are assessing that the Georgian tobacco market volume is 7 billion cigarettes, and I think year on year we have not seen significant changes in demand volumes,” Braddock said. JTI is the international tobacco division of Japan Tobacco Inc. (JT), the leading international tobacco product company with 23 billion USD net sales (fiscal year ended March 31, 2009). JT is the third largest global tobacco company, with a global tobacco market share of 10.5% and is listed in global Fortune 500 Company. JTI was formed in 1999 when

Martin Braddock, JTI Regional President for the CIS, Romania and Adriatica Region

JT purchased, for 8 billion USD, the international tobacco operations of the US multinational R.J.Reynolds. JTI total sales amounted to 435 billion cigarettes in 2009, generating net sales of 9.6 billion USD and growth rate of 15% compared to 2008. The company brands are sold in over 120 countries worldwide. It has 89 offices all around the world, employing over 90 nationalities. Eight Global Flagship Brands constitute the core of JTI’s brand portfolio, including Winston, Camel, Sobranie, Mild Seven, B&H, Silk Cut, LD, and Glamour. Martin Braddock started his career at JTI/RJR in 1993 at the company’s headquarters in Geneva, where he held various

base management here is aimed at increasing our business in the future. We have plans and a number of products that are coming into the market, which are aimed at increasing our market share in the future. We have plans for the strengthening for two of our leading brands - Winston, Camel. Moreover, we have brought our brand Sobranie into the market, a trademark with unique heritage and history. JTI is looking for opportunities in market to access segments which we do not compete in yet. We aim to become the number one tobacco company in terms of market share. Q. In your opinion, what are the main challenges JTI will face in Georgia?

“Two things are certain in this industry: excise will grow higher and regulations will become stricter. And these two things combined with governmental policies to reduce tobacco consumption will ensure that over time tobacco prices will grow.”

financial positions. Braddock rose to the position of Senior Vice President Finance, Information Technology & Chief Financial Officer for JTI in 2002. Braddock is a qualified accountant who trained with Price Waterhouse and worked on different assignments in Eastern Europe advising on accounting, privatization and business valuation matters. He believes that one’s career path is like a pyramid, the stronger the base the higher one can climb. “I believe the accounting qualification I have is a very strong stone in my career. The professional experience I gained in PwC allowed me to work with many big companies in a very short period of time, gave me business experiences in the short term. I was lucky to go to work in Eastern Europe as soon as I qualified as an accountant, which gave me huge experiences and put another very strong stone in the pyramid,” Braddock said. Q. What are JTI’s expectations in terms of sales growth and market share growth after establishing headquarters in Tbilisi, Georgia? A. Clearly the decision to

A. The main challenges as always in any business are continuing to increase business volume. JTI has many plans. Recently, in Camel we introduced a new line extension called Camel Black and Camel White, it took a lot of effort from marketing and sales force to management force and required time. We have plans to increase the market share of Camel, Winston, Sobranie and many other brands which are still not present in the market. The first challenge is to keep that going, and second to establish the management structure here. The company has to hire staff, that’s 41 people who are not employed yet. We have to find those people, staff those people and educate them. Building the organization is a huge challenge. So the challenge is to continue to run and grow the business, and second, to build management structure. Q. JTI sales in Georgia started in 2000. What has changed since then in the Georgian market? How would you compare the present and past situation? A. I have seen that the market has become much more sophis-

ticated. All the international players in the market are presented here, the environment is very competitive, you have well established local players, and you have some very sophisticated distribution companies right now that you did not have 10 years ago. You have very discerning consumers who only want quality products. Moreover, now you have a much more regulated tobacco market, excise is significantly higher than 10 years ago, so there are many changes that are already evident in the market. Q. Georgia is among the countries with the cheapest prices for cigarette and largest number of smokers. In your opinion, will the prices of tobacco increase in the near future? A. This is a very simple question with a complex answer. If you say that in Georgia the price of tobacco is cheap you should look at the purchasing power of the consumer. So, when you consider countries like Ukraine, tobacco is more expensive for the consumer than countries like the USA due to purchasing power. So looking at absolute prices is not necessarily the right view to take. To answer the question will tobacco prices rise - of course they will. Two things are certain in this industry: excise will grow higher and regulations will become stricter. And these two things combined with governmental policies to reduce tobacco consumption will ensure that over time tobacco prices will grow. Q. Japan Tobacco is listed on the Tokyo Stock Exchange. In your opinion, what will be the effect and outcomes of the recent events in Japan on your production, sales as well as stock price? A. I think, in looking at recent events in Japan the first issue is really the scale of human suffering as a result of the tsunami, earthquake and situation around the nuclear facility. From a JT perspective the business has been impacted and JT has made external releases in terms of the specific impact on its production and sales operations. There is clearly an impact on the business, and the company is currently assessing it, what that means and how we can continue to run effective operations. At JTI we are separate from the business in Japan as we run a separate organization in Geneva, Switzerland. So, we continue to produce and sell cigarettes. Within the company we have established a disaster relief fund to show solidarity and support to our colleagues in Japan. This programme allows employees and our business partners to contribute to the fund, and whatever amount is contributed by April 30, the company will double that money. Q. What are the CSR activities JTI is engaged in in Georgia? A. As any company we have the duty to contribute to society, and we set a goal to be the most responsible tobacco company from a CSR point of view. We have many programmes across the world which we are supporting including charity projects and cultural activities. On the philanthropic side we have established a programme with Caritas here in Georgia, where we have agreed to support a soup kitchen over 3 years, supporting primarily the elderly. Currently 190 people are getting daily food at Caritas soup kitchen. Moreover JTI supports cultural activities in Georgia. We are working with the Japanese Embassy and held several events together. We have brought Japanese and Georgian culture closer to each other.


CMYK

FINANCIAL HEADLINE NEWS & ANALYSIS FINCHANNEL.COM | MARCH 28. 2011

13

special edition

Advertiser: The FINANCIAL. Contact FINANCIAL Ad Dep at marketing@finchannel.com


CMYK

14

HEADLINE NEWS & ANALYSIS

best georgian banks “MORE GEORGIAN COMPANIES USING INTERNAL AUDIT FUNCTION,” GRANT THORNTON

By KETI CHKHIKVADZE The FINANCIAL “More and more Georgian companies realize the advantages of internal audit function. The banking sector is one of the good examples where internal audit functions are put in place,” told Nelson Petrosyan, Director/Partner of Grant Thornton Georgia in exclusive interview with The FINANCIAL. Large companies are also another example where more and more often we see internal audit divisions being instituted. “Internal audit function has a rather complimentary outcome because internal action is always better understood than any similar external action. Internal auditors are the best ambassadors, inside their companies, about the need for a professional approach in any division of company management,” Petrosyan added. Grant Thornton Georgia, part of Grant Thornton International, is a multi-professional group of public accountants and auditors, specialist advisers in finance, business and management, as well as tax and legal advisers operating in Georgia since the year 1999. Grant Thornton Georgia has increased its turnover by approximately 40% in 2010. The company has experienced significant growth of its activities in Georgia in the past year. The entity says the major factor behind such growth were the strategic decisions made by the company management, including but not limited to, increased level of market presence and expanding our investments related to obtaining a stronger presence in Georgia. To the question of from when should company start using the audit service, including company size, growth rate, structure, Mr. Petrosyan told this was not a question of size or turnover. “If the company management hesitates on whether or not it is best timing to undergo audit, I would suggest management to answer to one simple question: Would you like a professional to give you his opinion and recommendations about your business?” Petrosyan asked. “If the answer is “Yes”, go and find an auditor who will be so happy to create a real team with you. If this team operates, in a year’s time company management will be surprised how much added value their auditor has brought to the business.” Q. Small and medium size companies do not audit their companies due to high costs of the service. In your opinion, why is not special low price service created for SMEs? A. I will need to surprise you here. Audit costs are much cheaper than you would imagine! We perform many audit assignment at SMEs and the audit cost has never been a problem as soon as managers understand what audit means and what benefits it brings to their business.

Q. Businesses in Georgia are among the most optimistic owners according to the 2011 Grant Thornton International Business Report (IBR). It holds ninth position in the list following Germany. Georgia is followed by Argentina, Canada, Botswana and Singapore. However, despite this fact investments are still low in the country. In your opinion why? A. I believe it is question of time. Businessmen are not used to find such a good place to invest in the former Soviet counties. That’s why Grant Thornton study was very interesting. There are yet some very appealing and prospective investments taking place as we speak. Those who invest first are right as they choose the best part! Q. Ed Nusbaum, CEO of Grant Thornton International, told that in recent years the focus for emerging economies has been on the BRIC economies of Brazil, Russia, India and China. How would you evaluate potential of Georgia from investment side in the global market while making choice among emerging and BRIC economies? A. Even if Russia is for sure with huge natural resources, it’s not so easy to invest there. As you know, investors don’t need only potential markets, they obviously need to be secured, for the long-term prospect, about their investments. This is what Georgia must focus on: clear rules, not too many frequent changes in legislation, clear and long term objectives. Q. In your previous interview with The FINANCIAL you mentioned that throughout Grant Thornton’s 12 years of operations in the Georgian market, Georgian companies have become more and more aware of the benefits of trustable financial information. Please name the advantages trustable financial information both for internal and external use?

company. This also explains Grant Thornton’s rapid development, especially in the last couple of years. Q. The European Commission recently issued Green Paper on Audit Policy which identifies excess market concentration by Big Four firms? What was your reaction to this policy paper? A. Grant Thornton welcomes the debate which has been opened by the Green Paper. We believe that it represents a timely and significant opportunity for change. Following issuance of the EC Green Paper, prominent global midtier audit firms have called for regulatory intervention to improve competition and reduce Big Four concentration of the audit market. In Georgia, this is especially true for the banking sector. There is really a need for regulatory intervention. We are ready to work with the National Bank and other government agencies to address the issue. Abolition of Big Four lending clauses will introduce practices that require audit committees to regularly reassess audit appointments. We need to address the misperception that there are a limited number of firms that can do certain work. Abolishing these clauses is one way to promote free trade. We have clients that want to engage us but are restricted because of restrictive covenants that are imposed on them by banks and other outside parties. The theory behind the regular reassessment of audit appointments is that it improves transparency and corporate governance, and allows audit committees to assess other firms in the market. Q. Auditor’s profession is somewhat universal in many countries. How is your work regulated when there are increasing number of cross-border assignments? A. Uniformity across the profession is influenced by the cohesion among the professional bodies. For example, International Federation of Accountants (IFAC), Association

“Georgia must focus on: clear rules, not too many frequent changes in legislation, clear and long term objectives.” A. I answered, yet, about external use. But, you are right, there is, first of all, a significant benefit for internal purposes for those companies who run an accurate accounting system. When companies are developing fast or when their size turns to be large enough, management needs a full and comprehensive financial system in place. This accounting record keeping system help to timely find the right information, to evaluate consequences of management actions. So, the financial system has multiple advantages. Q. How would you evaluate the financial documentations and statements of current Georgian companies you are auditing? How has the situation as well as companies attitude changed towards preparing more detailed and accurate financial documentations? A. One cannot imagine operating or collaborating with international companies or western banks or international investors without fair financial information. Many Georgian companies understand this it and are preparing better quality financial information. Company managements understand that they need their financial statements to be audited by an international recognized audit

of Chartered Certified Accountants (ACCA) and Georgian Federation of Professional Accountants and Auditors (GFPAA) all these three professional bodies share the same core principles, code of ethics and professional standards. This is pretty consistent. That is why, global firms like Grant Thornton invest significant resources quality of their professional services. Our strength is in being a part of a cohesive global organization, providing our clients with distinctive, high quality service in over 100 countries. What refers to regulation of profession, I will just give you a recent example from US and UK. Grant Thornton and colleagues from five other global firms have recently welcomed the cooperative agreement between US Public Company Accounting Oversight Board (PCAOB) and UK Professional Oversight Board (POB) for regulating the audit firms. The global nature of corporate activity demands that audit regulators share information and cooperate across borders. This enables audit firm inspections to move forward and hopefully regulators in other countries will also follow. Such cooperation benefits not only the regulators and registered audit firms but also investors, whose investments today increasingly cross borders.

FINANCIAL

MARCH 28. 2011 | FINCHANNEL.COM

Internal Audit Nelson Petrosyan, Director/Partner of Grant Thornton Georgia


CMYK

FINANCIAL HEADLINE NEWS & ANALYSIS FINCHANNEL.COM | MARCH 28. 2011

15

best georgian banks

Big decisions follow you around.

Assurance and audit related services Specialist Advisory Services IT Governance and Advisory Domestic and international taxation Outsource accounting Legal and policy advice

www.grantthornton.ge

Audit • Tax • Advisory

Grant Thornton is a member firm within Grant Thornton International Ltd. Grant Thornton International Ltd and the member firms are not a worldwide partnership. Services are delivered independently by the member firms.

Advertiser: GrantThotnton. Contact FINANCIAL Ad Dep at marketing@finchannel.com


CMYK

16

HEADLINE NEWS & ANALYSIS

FINANCIAL

MARCH 28. 2011 | FINCHANNEL.COM

financial interview

Radisson Blu Iveria Hotel has a High Portfolio of Returning Guests

B

y the end of the year 2010 Radisson BLU Iveria Hotel hosted over 40,000 people. As Mr. Atakan Turhan, General Manager of the hotel says, out of this number a very high percentage of guests will return. By TAKO KHELAIA The FINANCIAL

By the end of this year the hotel plans to open a new restaurant. The hotel will offer its guests a new menu this summer. “There will be new cocktails and new products that haven’t been available on the market before,” said Atakan Turhan. “We have a very good portfolio of return guests. One of our biggest concerns is to make our guests want to come back to our hotel. We are sure that a very high percentage of our 40,000 guests will come back again,” Turhan said. “I’m proud to announce that the Rezidor Hotel Group which is our mother company has been named one of the World’s Most Ethical Companies in the hotels, travel and hospitality sector by the Ethisphere Institute for the second year in a row. So this means that we have not just sat back and relaxed after having received the award last year, but strived to deserve it the second year in a row. Our head office is really controlling what we are doing in every individual hotel in the sight of ethical standards, global ethical standards and we pay a lot of attention to following these standards,” Turhan said. Radisson Blu Iveria Hotel Tbilisi won the award of Best New Hotel presented by the Central Asia and Turkey Hotel Investment Conference (CATHIC) in Istanbul in February 2011. “The criteria for receiving this award includes investment terms and the product that consists of different things together which make leisure and business travellers happy. This package is not really easy to find in many hotels, either its more business oriented or its leisure oriented. In our case it’s a product that covers both segments,”Turhan said. “We have a good variety of outlets where people can spend their weekend or spend their time in the evening, or do their business throughout the day. It’s a good product, it’s a design product, we call it a new breed design, and it has quite a unique design. The style of the rooms is really great. Most of the guests who are staying at our hotel for the first time are really surprised,” Turhan said. “We are proud to say that the service level at our hotel is recognized as the best on the market. We have very high guest satisfaction scores,” Turhan said. “In 2010 Radisson Blu Iv-

Atakan Turhan, General Manager of the Radisson BLU Iveria Hotel eria Hotel was evaluated by a Mystery Guest giving 97.2 points to the hotel out of 100. This was the highest score of a Rezidor Hotel Group hotel in 2010,” Mr. Turhan said. “While evaluating the hotel, the company who is sending a Mystery Guest does not reveal that information. During their stay the Mystery Guest scores the hotel in terms of service quality, guest satisfaction level, our standards, and conditions. Receiving such high scores is a thing that we are really proud of. It’s a result of teamwork and how we pay very special attention to standards. We really focus on each small issue that can make our service better. If we receive any guest complaints which are not really positive, we really spend much time on how we can improve ourselves, how we can change the procedures and how we can recover the guests. We do our best to make our guests happy,” Turhan told The FINANCIAL. “I can say that our advantage as a hotel in Tbilisi is having the friendliest and most smiley people of Georgia working as our team. You can taste Georgian hospitality in Georgia and the best place to

experience it is at the Radisson BLU Iveria in Tbilisi,” Turhan said. The hotel room rate at the Radisson is around 280 USD without breakfast and 300 USD with breakfast for single occupancy, without TAX. “We do discounts for groups. Sometimes, the prices change based on different products or on the potential of the company,” Turhan said. “For the weekends we have special discount rates, for special locations we come up with special promotions and we inform our customers with direct mailing or we put out advertisements. We are one of the best users of facebook in Georgia. I believe that we are quite active and we have a high number of followers on our facebook account. From time to time we offer different surprises to our facebook users,” Turhan said. As Mr. Turhan says, the majority of guests of the Radisson BLU Iveria are Americans. Americans are first in terms of the major nationality of our guests, second are guests from Turkey, the rest are mainly Europeans and those from our neighbour countries. “For this summer we expect the majority of guests to be from the same countries, but

to have more leisure guests than we served in the winter. The number of leisure tourists from Azerbaijan and Armenia is increasing and we also expect more local guests,” Turhan said. “We will soon open our terrace that will attract guests in summer and we are working on a new design at the moment. We will have a new product at out terrace, which is an upgraded version of last year. We expect increased demand for our terrace. It was almost occupied every night, so this year we will probably have to say no to some people unfortunately - this is my projection that with the new design it will be more popular,” Turhan said. “In summer we will offer our guests a new terrace menu. The terrace menu is centred more on grilled products, more Georgian tastes which we are happy to offer. The Filini menu is updated every six month; we receive menus from the head office of Filini. By the end of the year we well come up with a new restaurant at our hotel which will soon be designed by our team. We also updated the menus of both our bars. We have new menus with more varieties of dinks; we have a

bigger variety of food products now,” Turhan said. As summer is coming soon, hotel guests as well as many others would like to have a variety of entertainment outlets at the hotel. Together with restaurants and bars, Radisson Blu Iveria offers people the already-well known Anne Semonin Spa. “People have the opportunity to try the best spa in Georgia at the Radisson hotel, an international brand - the Anne Semonin Spa. I often receive compliments from our guest that this is a really unique spa. Most of our guests are people who travel a lot, so they are the experts on hotels and who can compare the products of different places with our products,” Turhan said. “People who have visited spas in different places of the world say that our spa is the best one that they have ever seen. The design of our spa is really unique. There is Georgian poetry on the spa’s walls in Georgian and in Latin letters, so this is a special concept - we are reflecting Georgian culture. The treatment quality is best at the spa and it satisfies all international standard levels of spa service,” Turhan said.

“Our casino is also very big and a very popular one. People are very happy that we have such an outlet. Our summer outlet terrace is really nice as well. Our Oxygen bar is also very famous and usually we run out of space unfortunately for all the people who want to visit us there. We will also come up soon with new cocktails and new products that haven’t been on market before. We are keeping it alive with new offers,” Turhan said. “We are expecting a new music programme in the Filini restaurant, Piano night; Gigi Wonder will start playing at our hotel. He is a very popular artist and musician, so this will bring more business to our restaurant. 3 days a week he will be playing with us and we will soon be announcing this. We are opening a new hotel in Batumi and our executive chef has transferred to Batumi, so we will come up with interesting offers in Batumi. Our hotel will have a new chef with different tastes and we will come up with more attractive offers in Tbilisi. We will make a couple of changes to our menus too,” Turhan said. Radisson Blu hosted the most influential business awards - Golden Brand - in March 2011. “It was a gorgeous night with very high profile people representing the leading brands in Georgia. I was happy to attend the Golden Brand event myself. Golden Brand adds more credit to our portfolio of business and corporate clients,” Turhan said. The Radisson has significantly reduced energy consumption, making the hotel more green. “We have improved a lot, saving energy after the opening of the hotel. Our building has an automation system and I can say that it’s an intelligent building. We have decreased energy consumption by 40% by better management and optimization. This environmental protection system is one of the focuses of our hotel chain. We have to report the consumption of utilities to our head office every month and we have to come up with different resource-saving activities.” “We have to make sure that we are consuming less and less energy and we improve our effectiveness and efficiency. So we really spend much time on this issue. The return of investments is saving in money and also using these energy resources less. It’s good for the environment around us, it’s good for the resources of the country and we spend a lot of time on this issue. It’s called a responsible business that is a part of the responsible business programme that the Rezidor Hotel Group has. We also focus on charity activities, improving our staff, adding value to our community around us and also helping people who need help,”Turhan said. “Georgia has its own cuisine, own music and even its own alphabet. It’s interesting to see Tbilisi, its people, nature and the country itself. Georgia has a great wine culture. What I like the most about Georgia is its own, special taste; it’s a combination of different things that makes Georgia - Georgia!”


CMYK

FINANCIAL HEADLINE NEWS & ANALYSIS FINCHANNEL.COM | MARCH 28. 2011

17

best georgian banks

Advertiser: Radisson Blu Iveria Hotel. Contact FINANCIAL Ad Dep at marketing@finchannel.com


CMYK

18

HEADLINE NEWS & ANALYSIS

FINANCIAL

MARCH 28. 2011 | FINCHANNEL.COM

best georgian banks

ADB Loaned 700 million USD to Georgian Public and Private Sectors “Private sector development in Georgia is very promising and the Bank is currently studying a number of opportunities in several important sectors including banking, renewable energy and transport” Giorgi Kiziria, ADB Country coordinator in Georgia The FINANCIAL

O

n the private sector side, up to this date ADB has been focusing on banking and SME sector development. ADB has approved 75 million USD in two separate loans to the Bank of Georgia for SME on-lending between 2007 and 2010. These loans are expected to help Georgia expand its SME sector, as well as strengthen confidence in banks in the wake of the global financial crisis. In 2011 ADB is planning to extend its trade finance programme to the two largest local banks - Bank of Georgia and TBC. These two banks have shown increasing trade volumes and a potential for growing demand for trade related transactions. The facility will assist the banks in the development of trade through revolving credit lines for on-lending, Asian Development Bank (ADB), based in Manila, Philippines, is one of the major International Financial Institutions dedicated to reducing poverty in its developing member countries through inclusive and environmentally sustainable economic growth and regional integration. Established in 1966, the Bank is owned by 67 member countries - 48 from the region. In 2010, it approved a total of 13.8 billion USD in financing operations through loans, grants, guarantees, equity investments, and technical assistance projects. Georgia joined ADB in 2007 and the resident mission began operations in December 2008. The partnership between Georgia and ADB has been expanding since then at a rapid pace encompassing a number of key sectors including municipal infrastructure, urban transport, road corridors, water supply and sanitation, energy, social services and private sector development. Between 2007 and 2011 ADB has approved loans for Georgia’s public sector surpassing 600 million USD and grants totalling 5 million USD. The private sector has received loans in the amount of 75 million USD. Today, ADB is one of the largest donor organizations in Georgia with a pivotal role in reforming and upgrading Georgia’s transport and water supply and sanitation sectors. ADB is also involved in banking and SME development through its private sector operations and is expanding to cover private infrastructural projects carrying developmental impact. The sectors of interest include renewable energy, transport and manufacturing.

Giorgi Kiziria, ADB Country coordinator in Georgia

In his interview with The FINANCIAL, Mr. Kiziria spoke about ADB’s role in Georgia, as well as projects implemented by ADB in Georgia. Q. ADB’s commitment is part of a 4.5 billion USD pledge by donors made in Brussels in order to revitalize the Georgian economy. What is the share of Georgia’s financing in the total lending of ADB for 2011? A. ADB pledged 300 million USD in assistance to Georgia over the 2008-2010 period at a donor conference held in Brussels in October 2008. Up until

sike and others. The programme is nearing its completion and its impact can be easily examined on the ground. Another programme is Road Corridors Investment Programme: Together with other donors ADB is financing the rehabilitation and expansion of Georgia’s East-West highway with a focus on the Adjara region. The on-going projects include the construction of bypass roads in Batumi and Kobuleti in order to decongest these resort towns, enhance the transit capacity of the highway and improve road safety. The project is

“Today transport is a significant contributor to Georgia’s GDP and has the potential to serve as a fundamental driver of economic growth.”

today, the Bank approved loans to Georgia’s public and private sectors surpassing 700 million USD. The projects to be approved by the Bank in 2011 are currently under preparation and more detailed information regarding the volume of assistance in 2011 will be shared once those volumes are confirmed. Q. What is the status of current projects sponsored by ADB, including Small Business, Water Supply, Transport and ICT? A. As of today, ADB’s interventions fall within several key sectors including the Road Corridors (East-West highway), Urban Transport, Municipal Infrastructure and Water Supply and Sanitation Systems. Following is the break down of the current projects and programmes. Municipal Infrastructure: Municipal Services Development Project is financing the rehabilitation of roads and water supply and sanitation systems in many municipalities benefiting hundreds of thousands of Georgians across the country through more than 100 subprojects. Some of the highlights of this programme include the rehabilitation and expansion of water supply and sewerage systems in Poti, Oni, Lagodekhi and others; construction of roads in high mountainous areas like Mestia, Keda, Shuakhevi etc.; rehabilitation of roads within the important urban centres such as Borjomi, Telavi, Akhalt-

in the early stage of construction. Within the same programme ADB is also preparing to finance the modernization of customs at Sarpi crossing point in order to allow for faster and more efficient crossing. Sustainable Urban Transport Investment Programme approved in 2010 is designed to improve the public transport network and support the development of green and efficient transportation modes in key urban areas. The programme includes technical assistance to develop the Transport MasterPlan for the capital Tbilisi - a first in its post-soviet history. Some of the confirmed projects for 2011-2012 include extending the subway network on Vazha Pshavela avenue, construction of a tunnel on Gorgasali Avenue to decongest the historical heart of Tbilisi; construction of an additional bridge on Mtkvari river; modernization of the Tbilisi-Rustavi road; rehabilitation of the connecting road to Mestia; coastal protection works in Batumi aimed at protecting the Black Sea coast from erosion and loss of urban space. These and other urban interventions are part of a larger urban transport development roadmap jointly developed by the Government and ADB. Urban Services Improvement Investment Programme is currently under consideration to support the rehabilitation of water supply and sanita-

tion systems in 6 urban centres - among them, the largest cities, administrative capitals and towns of growing economic potential (Kutaisi, Marneuli, Zugdidi, Poti, Mestia and Anaklia). As a result of the programme, 335,000 inhabitants will be provided access to uninterrupted safe water supply and functioning sewage systems. This in turn will improve health safety conditions, decrease environmental pollution through improved sewage treatment and strongly support development of local economies - in particular tourism and processing industries. The programme is based on a sector development approach to ensure long-term sustainability of the investment. This implies extending the technical assistance to the relevant state agencies and the publicly owned Water Company to help improve legal and regulatory framework, tariffication methodology and overall technical capacity. The technical components include state-of-the-art technology transfer that will boost the asset management capacity. Q. How do you manage to control implementation of the above projects? A. All ADB financed projects in the public sector are designed and implemented by government agencies with a need based support from ADB. The Bank closely monitors the implementation process in order to ensure the compliance with our general guidelines, project specific covenants and that all targets are achieved as planned in the design process in a timely manner. Particular emphasis is placed on the monitoring of procurement practices and social and environmental aspects. Q. How do you evaluate the current condition of Tbilisi’s urban situation, in terms of pollution, infrastructure, etc? A. Tbilisi sits on a fairly complex landscape from the perspective of urban development. The long shape of the capital, Mtkvari and Vere rivers, number of hills and mountains, while contributing to the uniqueness and charm of the capital, at the same

time create natural obstacles to urban transport development and require more creative and sometimes expensive transport solutions. The urban migration trends through the last couple of decades, rapid growth in the ownership of motorized transport and the construction boom of the recent years have only added to these complexities. Traffic jams, car accidents, the eating up of pedestrian space, pollution and noise have proliferated rapidly and the city is requiring multiply transport interventions if it is to accommodate the increasing urban load and maintain its attractiveness. Some of these interventions have already been initiated by the local authorities including relocation of the rail system away from the city, modernization of the subway system, construction of additional roads, improvements in pedestrian crossing and better enforcement of traffic rules. ADB is currently providing a grant financed technical assistance to Tbilisi City Hall to put together a transport development Master Plan for the capital, which will propose a number of additional short and long run transport related interventions. The bulk of the study has already been done including detailed analysis of traffic flows, surveys on origin-destination behaviour (around 12,000 people surveyed) etc. The Master Plan will be presented to the public within weeks. It will create a roadmap for further transport related interventions by the Government and interested donor organizations including ADB. The highlights of the plan include: construction of additional Bridge on Mtkvari River for traffic decongestion, construction of a tunnel on Gorgasali Avenue aimed at redirecting the congested traffic away from one of the major tourist landmarks of the city Abanotubani and bringing one more green area to the city centre; Construction of the metro extension on the Vazha Pshavela avenue to promote greener and more efficient transport as well as to reduce the pollution, development of an urban boulevard through the corridor to be freed by the relocating railway, introduction of a modern tramway as a greener and more efficient transportation mode. Q. Why is the largest sum being spent on Transport ? A. Transport is a vital sector of the Georgian economy for very obvious reasons. Georgia sits on a major crossroad connecting

Europe and Asia through Black Sea ports, a well-developed rail system and the East-West highway. Regional and inter-regional trade flows through this corridor have been picking up very significantly in recent years (save for the immediate aftermath of the 2008 conflict and the world economic crises) and are projected to continue steady ascendance. Today transport

is a significant contributor to Georgia’s GDP and has the potential to serve as a fundamental driver of economic growth. This inherent competitiveness makes the development of the East-West corridor a primary task of the state, the soundness of which is widely acknowledged. In addition, donor assistance in the sector has two decades of history and the benefits of past assistance are obvious. This is why ADB is particularly active in the sector. Q. Do you advise the Georgian Government on spending (which concerns your funding)? A. Optimal and result oriented utilization of assistance is always a priority. During the design phase, ADB together with the Government carefully examines the scope of each project/ programme, its intended impact and the efficiency of financing and implementation arrangements under consideration. In the process, ADB often extends its technical assistance through which we try to bring our knowledge products and sector expertise in order to facilitate the most optimal project design. Also, most of our current projects are part of larger sectoral programmes, which are backed up with Sector Development Plans and Roadmaps developed together with the Government. Our individual projects are analysed and approved in the context of these long term and more comprehensive frameworks. To sum up, the entire cycle of project selection, analysis, design and implementation can be characterized by very close and meticulous teamwork between ADB and government agencies, where both parties are contributors to the process. Q. Are you going to finance Tourism development in Georgia? A. ADB recognizes that Tourism is one of the most promising sectors of the Georgian economy, which can have a very significant positive impact on economic growth and employment in the country. Most of ADB financed projects in Georgia are expected to generate both direct and indirect positive impacts on tourism development. ADB financed full rehabilitation and expansion of Water Supply and Sanitation systems in Mestia will not only benefit the local communities, but it will also facilitate hotel development in this historical town and strongly contribute to Mestia’s attractiveness as an important tourism destination. ADB financed rehabilitation of the main access road to Mestia will facilitate faster, more comfortable and safer transformation both for local communities and for the tourists vacationing in Mestia. Kobuleti and Batumi bypass roads, which are currently under implementation will relieve the heavily congested traffic in these resort towns by diverting it away from the touristy areas. Easier and safer road transportation as well as reduction in pollution and noise will only boost the tourism potential of the area. ADB is also preparing to finance the shoreline rehabilitation works in Batumi and Anaklia in 2011-12 in order to protect the Black Sea coast from erosion in these resort areas and conserve the existing urban space. The project will significantly increase the attractiveness of these resorts.


CMYK

FINANCIAL HEADLINE NEWS & ANALYSIS FINCHANNEL.COM | MARCH 28. 2011

19

best georgian banks

EBRD Invested 71.9 million EUR in Georgia’s Financial Sector in 2010 The European Bank for Reconstruction and Development invested 71.9 million EUR in Georgia’s financial sector in 2010, two fifths of the portfolio is in the financial sector. EBRD hopes to invest a similar amount to the 2010 figure and maybe even more in Georgia’s financial sector according to Paul-Henri Forestier, EBRD Director for the Caucasus, Moldova & Belarus. The FINANCIAL Henri Forestier, EBRD Director for the Caucasus, Moldova & Belarus

S

ince the beginning of its operations in Georgia, EBRD has committed over 1 billion EUR in approximately 129 projects in the financial, corporate, infrastructure and energy sectors. The main projects for 2010 at EBRD were: Black Sea Transmission Line (80 million EUR), Tbilisi Railway Bypass (100 million EUR), Poti Port (8 million EUR), Enguri Hydro Plant Rehabilitation (20 million EUR), and Adjara Solid Waste Project (3 million EUR). The key areas for EBRD include industry, commerce and agribusiness, energy, financial institutions and infrastructure. In the financial sector EBRD’s key priority is to support the stability of the financial banking sector in particular. The Bank’s focus will be on ensuring adequate levels of capital and supporting the resumption of lending by existing clients in the financial sector. Moreover, the Bank will support rehabilitation, construction and expansion investments in the power sector that will help Georgia achieve security of energy supply while facilitating trading of electricity in the region. Strong emphasis will be put on supporting the enterprise sector. “Like many other emerging countries, Georgia has also suffered from the global financial crisis. EBRD’s main priorities for Georgia, since the crisis, were, largely to support the financial sector to remain liquid, with loans as well as with credit lines to be extended to the real sector of the economy. Developing the enterprises sector remains the backbone of a healthy economy,” Forestier told The FINANCIAL. “The Bank continuously focuses on developing the private sector in Georgia addressing critical bottlenecks to local private sector investment and foreign direct investment. In the financial sector, in addition to expanding its support to existing and new partner banks in Georgia, EBRD will assist in developing the non-bank financial sector with a specific focus on leasing, insurance and private pension schemes,” Forestier said.

To the question how would he evaluate the performance of the Georgian banking sector, Mr. Forestier said “Georgian banks have generally restored their confidence in lending and currently have good liquidity.” Q. Which banks are mainly financed by EBRD in Georgia and what was the main decision in choosing these banks? A. We deal with the majority of the leading banks as well as with medium/small ones measured by assets, covering 85% of the whole banking industry. We also work with two non-bank financial institutions - Imedi L insurance company and TBC Leasing. The Bank primarily focuses its investments on projects that meet the key criteria of sound banking, additionality and transition impact. EBRD also seeks to promote the development of financial markets and contribute to financial stability. A healthy, efficient and stable financial sector remains the cornerstone of a market economy. Q. In the financial sector, EBRD will expand support to existing and new partner banks in Georgia, as well as developing the non-bank financial sector with a specific focus on leasing, insurance and private pension schemes. Currently, how would you evaluate the development stage of the non-bank financial sector? A. A range of banks and specialist institutions offer micro finance. Bank lending to the MSME sector has increased with the rapid growth of ProCredit Bank contributing to a significant competitive pressure in this segment of the market. Nevertheless, only some financial intermediaries have developed sustainable MSME lending, and there is still a big gap in further development of the Micro finance Organizations in Georgia. The insurance market remains relatively small (with a premia-to-GDP ratio of less than 1%), and the legislation and regulation fall short of the IAIS standards. The scale of private pension funds operations is very limited. Leasing operations are being gradually

developed but from a very low base with only three leasing companies operating in the market. EBRD will expand its support to developing the non-bank financial sector with a specific

and trading across borders exhibited especially large improvements, reflecting the progress with reforms in these areas. Georgia also moved up slightly in the Transparency International Corruption Perception’s Index for 2009 to 66th globally, a level above any CIS country by a wide margin. The Government has continued to further simplify and streamline the tax system, building on the changes implemented in 2009. These eliminated the tax on dividends from publicly traded enterprises, on interest income from bank deposits and on capital gains. The 2010 reforms, to be implemented in 2011, are set to introduce a number of tax breaks for micro and small businesses, including the elimination of profit tax on small businesses, provided they submit relevant accounting documentation. These reforms should help reduce the size of the shadow economy. To further reduce corruption, the new tax code will establish a board of auditors to supervise the tax inspectors. At the same time, the previously foreseen decrease in income taxes will be delayed in order to satisfy budget revenue requirements. The Government is creating a supportive environment for the development of the country’s nascent information technology (IT) sector. IT use in Georgia is already growing rapidly, as evidenced by the almost 50% increase in

“It will be important for the Government to make a credible commitment to implementing a responsible fiscal policy in the future to support a recovery of market confidence.” focus on leasing, insurance and private pension schemes. Q. Georgia is the most anti-corrupt state in Europe, European Bank for Reconstruction and Development (EBRD) Vice President Jan Fischer declared in Kiev. In your opinion, what other factors might be attractive for foreign investors? A. Recent developments of the country are as follows. The Government’s extensive reform agenda, with its focus on improving the business environment, has already achieved important results since implementation began in 2009. The World Bank’s Doing Business 2010 survey ranked Georgia 11th out of 183 countries by its composite ease-of-doing business measure, a further improvement on the country’s 16th position a year earlier. Its ratings in both paying taxes

the number of broadband users in 2009. By 2011 the authorities plan to implement a bill on the creation of virtual IT zones, with significantly faster issuance of relevant licenses. However, the exemption of companies operating in the zones from all taxes and customs duties may complicate tax administration. The National Bank of Georgia (NBG) introduced new measures and policy instruments in 2010 designed to increase the effectiveness of monetary policy in a heavily dollarised financial system. Among these measures, which the NBG hoped would also boost GEL lending, were guaranteed refinancing instruments with variable interest rates and an expansion of the range of collateral, which can be used to tap central bank refinancing. The measures had a limited impact on reducing dollarisa-

tion, however. Ongoing efforts to build capacity to adopt a credible inflation targeting regime should help build confidence in the ability of the NBG to maintain price stability and, consequently, in GEL. Combined with further strengthening of prudential policies and deepening of the local capital market, these policies would help reduce dollarisation over time. Q. In your opinion, what strategies should Georgia follow and which sectors should be further developed to make Georgia more economically attractive for investors? A. The main challenge for Georgia is to attract private investment after the crisis. There is considerable uncertainty about the future pace of foreign direct investment (FDI) inflows - a key driver of pre-crisis growth. Therefore, it is important for the authorities to focus on structural reforms to encourage domestic savings and investment. Further reforms are required in the financial sector to ensure continued recovery from the crisis and stable growth in the longer run. A credible shift of the monetary policy framework to inflation targeting, further strengthening of prudential policies and deepening of the local capital market are the key issues. Over time, these policies should help reduce dollarisation of the banking system. Although the Government has pursued fiscal consolidation in 2010, the overall deficit remains high and public debt has yet to stabilize. It will be important for the Government to make a credible commitment to implementing a responsible fiscal policy in the future to support a recovery of market confidence. Q. EBRD is supporting the rehabilitation and expansion of the electricity distribution network in Tbilisi with a 25 million USD loan to Telasi. In your opinion, what is the potential of energy sector development and which projects will be financed under the 25 million USD loan? A. EBRD extended 25 million USD to JSC Telasi to finance the company’s investment needs for 2010 and 2011. Telasi’s investment programme principally consists of the rehabilitation and expansion of its medium and low voltage network and the buildings and equipment at its substations as well as the introduction of a SCADA system (supervisory control and data acquisition) at medium voltage substations’ level to enable remote monitoring over the network. The main purpose of these investments is to improve the quality and reliability of supply and reduce losses in the distribution network. Development of the energy sector in Georgia will offer Georgia an alternative source of electricity supply and substantially contribute to security of supply. Georgia has huge potential for energy resources, mostly from renewable energy. The Government’s key strategic objectives also are: i) increase energy security; ii) increase the reliability and quality of electricity supply in Georgia; iii) increase electricity trade in the Caucasus through the creation of an electricity hub for energy exchanges with neighboring countries (i.e. Turkey, Armenia and Azerbaijan).

Natalia Smirnova, Associate Director

Fitch Ratings:

Main Challenge to be increase in competition The FINANCIAL “Solid economic growth (Fitch forecasts GDP to increase by 5% in 2011) provides quite a favourable backdrop for the development of the banking sector. Asset quality metrics should continue to improve as some old problem loans are recovered and banks increase issuance of new credit,” Natalia Smirnova, Associate Director and James Watson, Managing Director of Fitch Ratings said to The FINANCIAL. “The main challenge faced by banks is likely to be an increase in competition, especially for high-quality borrowers which are relatively limited on the Georgian market. This could put some pressure on margins, and could also potentially increase risk appetite at some banks, which may seek growth in more risky segments,” Fitch Ratings directors told The FINANCIAL.

“The main challenge faced by banks is likely to be an increase in competition, especially for high-quality borrowers which are relatively limited on the Georgian market.” According to Fitch Ratings the funding of further loan growth is also an important challenge. Although banks have accumulated significant liquidity which can be partially reallocated into loan portfolios in 2011, the sector’s loans/deposits ratio was a high 114% at end-2010, suggesting limited capacity for lending to grow too far ahead of customer balances. According to Fitch, “The generally solid capital and liquidity positions of Georgian banks were important strengths that helped them weather the crisis”. “At end-2010, notwithstanding strong growth during the year, the system’s regulatory capital adequacy ratio remained a relatively high 17.4%. Continued on p. 20


CMYK

20

HEADLINE NEWS & ANALYSIS

FINANCIAL

MARCH 28. 2011 | FINCHANNEL.COM

best georgian banks Fitch Ratings

Main Challenge to be increase in competition Fitch Ratings is operating in 150 countries with 50 offices worldwide. The company has been operating in CIS countries for 15 years already. Fitch covers corporate, banking, insurance, international public finance and sovereign sectors. The company rates 249 issuers in the CIS region, within which 122 are financial institutions. Fitch Ratings at present rates six of the 19 banks currently operating in Georgia: Bank of Georgia, TBC Bank, Liberty Bank, ProCredit Bank (Georgia), VTB Bank (Georgia) and Basisbank.

Q. In your opinion, what was a good lesson for Georgian banks to learn from the financial crisis? A. The crisis forced many banks to reconsider their assessment of credit risk and, to a lesser extent, refinancing and liquidity risk. However, the considerable international assistance received by the Georgian economy in general and some banks in particular limited the impact of the crisis, and hence perhaps also the degree to which the crisis will result in changes in risk management practices. Q. Finding external funding for further lending is still the case for Georgian banks. In your opinion, how should banks create more reserves? A. Although refinancing risks for the sector have reduced markedly as a result of funding made available by international financial institutions, the sector’s overall dependence on wholesale borrowing, as reflected in the loans/deposits ratio, remains high. Relatively low income and savings levels are constraints on deposit growth, although very rapid deposit expansion in 2010 has helped to rebalance banks’ funding structures.

Continued from p. 19

Furthermore, Basel capital ratios are usually markedly higher than regulatory ones for Georgian banks, mainly because of the additional regulatory risk weighting applied to foreign currency lending. Banks also remain very liquid, with about one third of the system’s balance sheet held in liquid assets, Fitch Ratings, taking into account ongoing loan growth, it is likely that both the capital and liquidity positions of Georgian banks will moderate slightly in 2011, but we are not expecting a critical deterioration in these metrics, given the current strong positions and quite stringent regulation. According to Fitch Ratings the two largest banks, Bank of Georgia and TBC Bank, jointly account for around 60% of system assets and are both of high systemic importance. Bank of Georgia’s Long-term Issuer Default Rating (IDR) was upgraded to ‘B+’/ Stable Outlook from ‘B’ in August 2010, reflecting improvements in the Bank’s standalone credit profile. TBC’s Long-term IDR, which is also ‘B+’/Stable, is driven by potential support from the Bank’s international financial institution shareholders. VTB Bank Georgia’s and ProCredit Bank Georgia’s ‘BB-’ IDRs are driven by potential support from their majority shareholders: Russian state-controlled VTB Bank and Germany’s ProCredit Holding AG. In the beginning of March 2011, we revised the Outlooks on these banks’ IDRs to Positive from Stable, following the revision of the Outlook on Georgia’s sovereign’s ratings to Positive. The ‘B’ Long-term IDR of Liberty Bank is underpinned by potential support the Bank could receive from the Georgian authorities due to its important social function in distributing pensions and social benefits in the country. The ‘B-’ Long-term IDR of Basisbank reflects the stand-alone strength of the Bank. The rating was upgraded from ‘CCC’ in August 2010”.

In their interview with The FINANCIAL, Natalia Smirnova, Associate Director and James Watson, Managing Director of Fitch Ratings analysed the Georgian banking sectors, before and after the crisis period challenges and outcomes. Q. Which are the most active banks in the Georgian banking sector currently? Which banks would you name the most active in crediting corporate and physical clients? A. After the quite serious stress which Georgian banks underwent in 2008-2009, when new credit was very limited, in 2010 we observed a resumption in bank lending, with system loans growing by 21%. Within the sector the pace of growth varied from bank to bank, depending on how quickly banks recovered from the crisis and were able to adjust their strategies, and the extent to which the crisis impacted their risk appetites. Bank of Georgia and TBC both demonstrated above sector average loan growth in 9M10, while Liberty, KOR Standard and HSBC have all grown rapidly from low bases. This in particular applies to Liberty, which has pursued aggressive growth, primarily in the retail sector. Q. How would you evaluate the performance of the Georgian banking sector in 2010? A. After two years of losses, 2010 was a profitable year for Georgian

High Dollarization

Natalia Smirnova, Associate Director

“The Georgian banking system continues to operate in what is still a relatively small and concentrated, low income emerging market economy”

banks. This was driven first of all by reduced credit costs, which in 20082009 had weighed on the profitability of the banking system. Revenue generation has also strengthened on the back of more active lending and still solid net interest margins. Q. What were the main challenges the banks had to face after the post war and post crisis period? A. In Georgia, as in many banking systems globally, banks initially faced funding challenges and then subsequently more deep-seated asset quality problems. Georgian banks coped with the funding challenges in part due to generally quite strong liquidity positions pre-crisis, which helped them withstand deposit outflows in August 2008 and in the first half of 2009. In addition, TBC and Bank of Georgia benefited from the ability to refinance much of their foreign debt with longer-term facilities made available by international financial institutions. The extent of asset quality problems varied from bank to bank in Georgia, but tended to be higher at those institutions which had lent most heavily to the real estate and construction sectors. Most banks had relatively little experience pre-crisis of dealing with such an asset quality downturn, and so often needed to retrain staff or import skills from shareholders or consultants to help manage loan the workout and recovery process. Q. What are the major weaknesses of the banking sector currently? A. The Georgian banking sector remains highly dollarized, with more than 70% of loans provided in foreign

currency. This makes Georgian banks very vulnerable to exchange rate volatility and gives rise to potentially significant additional credit risk. More generally, the Georgian banking system continues to operate in what is still a relatively small and concentrated, low income emerging market economy. Q. How competitive are capital ratios and financial indicators of Georgia compared to other emerging markets? A. Capital ratios in the Georgian banking sector are higher than in most other emerging markets, which is positive for creditors, but from the perspective of equity investors can weigh on banks’ return on equity. In terms of other financial indicators, Georgian banks’ net interest margin remains relatively high, which in part reflects the still quite early stage of development of the market and the risk premium charged to lenders by banks. Q. What is the potential of Georgian banking sector development compared to other emerging markets of the world and to neighbour countries like Armenia, Azerbaijan, Kazakhstan, Ukraine, Russia? A. The level of Georgian banking sector penetration, as measured by its loans/GDP ratio, is significantly lower than in larger CIS countries, such as Russia, Kazakhstan and Ukraine, but broadly in line with Armenia and Azerbaijan. This suggests significant growth potential for Georgian banks in the medium term, however the quite narrow base of the Georgian economy and limited sources of longterm funding, in particular in local currency, are constraints.

A. The high share of loans provided in foreign currency is a direct result of banks’ funding structures, which comprise mainly foreign currency deposits and international borrowings. In the long-term, an increase in GEL deposit funding is likely to be dependent on a sustained period of moderate GEL inflation and a significant differential between the interest rates offered on local and foreign currency deposits. Q. The high interest rates on deposits make it attractive for foreign investors to open deposits in the country. In your opinion, in the long run will it lead to increased volume of deposits in the country? A Fitch does not expect non-resident deposits to become a significant source of funding for Georgian banks in the foreseeable future. Interest rates on other forms of foreign funding (e.g. bilateral and syndicated loans) are subject to very different dynamics to those on the local deposit market. In Georgia, as in most other emerging markets, deposit and loan rates increased markedly at the beginning of the crisis as banks sought to retain their customer funding and became more risk averse in respect to their lending. However, as the crisis has abated, so rates have returned to close to pre-crisis. Q. The leading banks in Georgia provide similar offers on deposits and loans. In your opinion, why are Georgian banks developing in the same direction? A. The relatively close alignment of interest rates at different banks is essentially a result of competition between them. Banks may offer somewhat higher or lower deposit rates than the market depending on their loan growth plans and liquidity positions, or may offer somewhat lower loan rates in an attempt to acquire new clients. Q. In your opinion, how real is it that Georgian banks will develop niche markets and serve clients from niche markets? (i.e. special services only for children, for students) A. Banks will continue to be innovative in their attempts to design deposit and other products for particular customer groups. However, relatively low income groups, such as students and pensioners, are unlikely to constitute a significant proportion of sector deposits or loans in the medium term.

Stathis Kyriakides CFA, Assistant Vice President - Analyst at Moody’s Investors Service Cyprus Ltd “Moody’s rates the two largest banks in Georgia (Bank of Georgia and TBC Bank) which combined account for a market share of above 50%. The two banks’ respective Bank Financial Strength Ratings (BFSR) are D-, their long- and short-term Global Local Currency (GLC) deposit ratings are Ba3/Not-Prime, and their respective long- and short-term foreign currency deposit ratings are at B1/Not-Prime (constrained by the sovereign ceiling for such deposits in the country). In January 2011 Moody’s changed the outlook on the two banks’ BFSRs to stable from negative. This was driven by: expectations that credit conditions in the country will continue to stabilize; reduced pressures on the bank’s capitalization in light of improved profitability and easing asset quality pressures; as well as easing political pressures both domestically and regionally. At the same time the two banks’ foreign currency deposit ratings were upgraded to B1 from B3 in line with the ceiling assigned for such deposits in Georgia while their respective GLC deposit ratings were affirmed at Ba3/NotPrime with a stable outlook “ “ A key challenge for Georgian banks in 2011 will be to ensure that as credit conditions recover, their loan underwriting criteria remain sufficiently strict. Excessive credit growth could lead to loan quality pressures further down the line. After periods of retrenchment, during which banks focus on addressing balance sheet problems, improving economic conditions often lead to a quick resumption of strong growth as banks seek to strengthen their franchise, potentially ahead of the competition. The challenge for Georgian banks would be to ensure that such growth is in line with their risk management capabilities and to continue to upgrade their competences maintaining them commensurate to the level of risk they undertake. In addition given that, during downcycles, loan quality deterioration tends to be more exaggerated in countries at Georgia’s stage of development, banks should ensure that they maintain their capitalization at high levels (particularly as rapid growth consumes capital).” “The combination of prompt international aid and central bank action was sufficient to address immediate liquidity and funding strains, arising from the run on deposits that ensued the military conflict with Russia in August 2008. In addition, Georgian banks subsequently had to cope with the impact of the global credit crisis in late 2008 and the recession in 2009. The collective effect was damaging to local banks’ loan quality and substantial losses, both in 2008 and 2009, exerted pressure on solvency. Legacy loan quality problems remain, though pressures have started to ease off”. “Overall improving economic conditions have benefitted the banks. Lower loan loss provisioning charges and a resumption of growth, has allowed Moody’s rated banks to report good profitability levels in 2010. Moody’s ratings scale in descending order of credit strength: Aaa, Aa1, Aa2, Aa3, A1, A2, A3, Baa1, Baa2, Baa3, Ba1, Ba2, Ba3, B1, B2, B3, Caa1, Caa2, Caa3, Ca, C. Moody’s is an essential component of the global capital markets, providing credit ratings, research, tools and analysis that contribute to transparent and integrated financial markets. Moody’s Corporation is the parent company of Moody’s Investors Service, which provides credit ratings and research covering debt instruments and securities, and Moody’s Analytics, which offers leading-edge software, advisory services and research for credit analysis, economic research and financial risk management. The Corporation, which reported revenue of 2 billion USD in 2010, employs approximately 4,500 people worldwide and maintains a presence in 26 countries.


CMYK

FINANCIAL HEADLINE NEWS & ANALYSIS

21

FINCHANNEL.COM | MARCH 28. 2011

best georgian banks Letter to Editor EUROPEAN UNION

DELEGATION TO GEORGIA The Head of DelegationTbilisi, 24 March, 2011 PD/tm (2011) Mr Zviad Pochkhua Editor in Chief The Financial Dear Mr Pochkhua, While reading your newspaper, I came across an interview with Mr Bendukidze, former Minister of Economy of Georgia and Chairman of the Board of Trustees at the Free University of Tbilisi. I appreciate the interesting ideas developed in the interview with respect to the future of Georgia and its perspectives. As a friend of Georgia, I would wish to see a bright future for Georgia too. However, as Ambassador of the EU to Georgia (Head of Delegation of the European Union to Georgia), I would like to make a point on the aid which Mr. Bendukidze would deem “a poison pill” and list a few examples below, that give an impression on the nature of the aid:

What you Need to Know before Starting Work at a Bank By NINA BURJANADZE The FINANCIAL

I

t is the common perception that to be a bank employee means strictly defined working hours, an early wake-up, strict dress code and professional behaviour. Sometimes such rules scare job seekers away, except for those who enjoy living according to an orderly regime. We tried to find out what the exact regulations are at Georgian banks to help jobseekers compare those to other companies they might be working for. As a rule operators at banks and some other staff members have limited access to the internet. So if you have decided to work in a banking institution you can forget about chatting online and using social networks during work hours. At KSB Bank employees can only visit webpages which are related to their responsibilities,” Gvantsa Gusharashvili, KSB Bank, told The FINANCIAL. Though TBC Bank workers still have standard internet access at the front desk and in the back office as well, that provides mainly email services. “Because of the needs of an effective working process, we are currently improving internet access for all bank personnel,” said Natia Gotsadze from TBC Bank. With just a few slight differences, the dress code in all Georgian banks is similar. First impressions count. No jeans, no beard, no tattoos - the dress code is a very important part of the inner regulation of the banks. If you look and behave like a highly trained and well-groomed professional, you will win the respect and loyalty of valued clients. Women tellers at the front desk wear a jacket and a tie, or only tie of a specific colour, which identifies their company. Trousers and closed toe shoes are mandatory. Workers must follow a classic style. Any

visible tattoos on arms must be covered by their shirt. Take out any visible body piercings. Ladies are not allowed to wear transparent, sparkly, motley clothes or show any décolleté. As for men thick, knitted sweaters with logos and high throats are not allowed. White socks, shorts, ‘skinny’ or colourful trousers are also against the rules. “Dress code control is the responsibility of the directors of departments and branches. They have the right to comment on employees’ attire so that it complies with the Bank’s standards. Employees of TBC Bank must wear clothes corresponding to the business environment at the front desk. There exist some departments in the bank, like the back office, where there isn’t a strict dress code,” stressed Gotsadze. Two years ago the rules were the same for front desk and back office workers, from Monday to Friday. As the staff of the back office have no contact with the customers and meetings are very rare with the personnel of other offices, the rules were changed. At KOR Standard Bank rules are comparatively liberal. “We have an exception for our employees on Saturday. They can wear more casual clothing, even jeans, on that day,” said Gvantsa Gusharashvili, KSB Bank. “It isn’t obligatory for male workers in our bank to be clean-shaven. There are no restrictions regarding one’s beard or long hair, if both look nice and tidy. Although hair must be bound,” added Gusharshvili. “Each worker of the bank has to obey the rules. We don’t make any exception for religious or ethnic minorities,” said Gotsadze. Be on time and of course sober that’s an inevitable and inexcusable rule for each worker at the bank. “We strictly control the working hours of our employees. Being late is completely unacceptable and our management have sanctions to eradicate such cases. The first time we give just a warning to the em-

ployee. If this is repeated though then we must fire him/her from the bank,” said Nino Bendeliani, VTB Bank of Georgia. “If the employee doesn’t come on time, more than three times a month, we cut off a significant amount of his salary,” Natia Gotsadze, TBC Bank, told The FINANCIAL. “Respecting working hours and being on time are included in the general discipline norms of the Bank. But we also understand if there are exceptional circumstances for a worker being late to work,” said Tekla Gurielize, Procredit Bank of Georgia. Successive customer service is a complex process, with the management leading, as, Giorgi Tsutskiridze, Executive Director of Bank’s Association says, Georgian Banks are actually carrying out a rebranding policy. They try hard to offer their customers all positive elements in the level of their customer service and don’t make customers wait a long time. Many banks have guide assistants in every branch ready waiting with a helpful smile. Workers at the front desk of TBC Bank can take a one hour break according to their planned timetable. The other employees in the branch offices, as well as in the head office have a break from 14:00 to 15:00, according to Gotsadze. “As for smoking, we don’t regulate or have time restrictions on this, a worker can smoke any time he finds a couple of free minutes,” said Gotsadze. Neither KSB nor VTB Bank set restrictions for coffee or smoking breaks. “Coffee and smoking break are neither regulated nor restricted. We have special smoking zones at the offices. Workers can arrange smoking or coffee breaks according to their work and free time,” noted Bendeliani, VTB Bank. The management and executive systems of Georgian banks consider classic and decent dressing to be adequate and no need in setting up any uniform style at the banks.

With the grant funding of over € 10 million from the European Union, three turbines of the Enguri hydro power plant (HPP) were rehabilitated during 2006-2009. In 2011, a new grant amounting to €5 million was allocated for the rehabilitation of the Enguri/Vardnili HPPs. The grant has facilitated the EBRD loan of Euro 40 million to improve power water operational safety and enhance the environmental benefits of the Enguri HPP and downstream Vardnili HPP cascade. To help generating additional revenues from the rehabilitated Enguri/Vardnili HPPs, the European Union has granted further € 8 million for the construction of the Black Sea energy transmission line. When completed, the line will enhance the energy security of Georgia and allow for additional generation of electricity to be exported to Turkey. The grant has facilitated the EIB loan of Euro 80 million to finance the extension and upgrading of Georgia’s high voltage transmission network and its interconnection with the electricity grid in neighbouring Turkey Following the 2008 Russia-Georgia war, the total of € 61.5 million was granted to Georgia for 2008-2010 as direct budget support to improve living conditions of all Internally Displaced Persons (in fact, with only €1 million for Technical Assistance). Additional € 43, 5 million was granted for 2010-2013 for further improvement of living conditions of all IDPs. I would refrain from calling this kind of help “poisonous”. I very much hope that Mr. Bendukidze would have shared my opinion had he known the above mentioned facts. Yours respectfully, Philip Dimitrov Ambassador

8 in 10 homeowners in UK missing out on an early mortgage finish The FINANCIAL -- Research by Barclays has found that 84 per cent of homeowners could be missing out on the opportunity to shave years off their mortgage by overpaying by even small amounts. The lender is urging those homeowners who are not overpaying to start if they can afford to whilst interest rates – and many tracker mortgage monthly repayments - are still low. Research conducted with over 1,000 borrowers found that only 10 per cent of homeowners said they are currently overpaying on their mortgage, while just a further 6 per cent said they planned to start overpaying this year. It also found that 24 per cent said they aim to pay off their mortgage early, with over half of these (56 per cent) saying they hope to reduce their mortgage term to 15 years or under. The research found the ‘average’ overpayment is currently £200.82, which on an average mortgage of £150,000 over 25 years could see the term reduced by 7 years and 3 months. Even as little as £50 can have a huge impact – an extra £50 per month on the same typical mortgage would reduce the term by 2 years 4 months Andy Gray, head of mortgages at Barclays, added: “We’ve seen just a modest increase in the amount borrowers are overpaying on their mortgage in the first two months of this

year compared to the same period last year. We are still experiencing low interest rates and mortgage affordability is at its best levels for more than a decade so we would urge borrowers who can afford it, to start overpaying now, as putting an extra £100 to their mortgage each month will pay off their mortgage four years earlier and reduce the amount of interest that is paid. Most mortgages allow a generous 10 per cent overpayments per year so rounding your repayments up to a few pounds more a month is a really good habit to get into if you can afford it and will reap its rewards when you are mortgage free years earlier than planned!” “Even with the reality that interest rates will start to rise at some point, many borrowers are likely to be able to afford a little more than they think. A homeowner on a typical £150,000 mortgage tracking at 2.49 above base rate would see their monthly mortgage payments increase by around £20 a month for each 0.25 increase in base rate. Borrowers will therefore benefit overpaying by as little as £50. “I’d urge all homeowners to review their current mortgage arrangements to ensure their repayments remain affordable throughout 2011 and beyond and to ensure they have a contingency plan when interest rates start to increase. This could be as simple as remortgaging.”


22

HEADLINE NEWS & ANALYSIS

FINANCIAL

MARCH 28. 2011 | FINCHANNEL.COM

best georgian banks

Radiation could Halt the Import of Cars and Agriculture Products from Japan, China

PERSONAL RADIO OF BUSINESS

GEORGIAN GETTING PREPARED By NINA BURJANADZE The FINANCIAL

W Advertiser: Radio Commersant. Contact FINANCIAL Ad Dep at marketing@finchannel.com

CMYK

hat threats could come from the radiation emerging from the Fukushima nuclear power plant of Japan? Could the radiation reach Georgia and how ready is the state to resist such a disaster? Some experts believe the threat is real and we should be prepared for it. The main way of radioactive waste spreading to other continents is by wind. Except for wind, atmospheric sediments such as rain can pour condensed emanation into the ground. Theoretically there is no threat that radiation could reach Georgia, scientists and experts believe. Georgia is 7,000-8,000 thousand kilometres away from Japan. So wind could only spread an insignificant amount of radioactive molecules to Georgia.

Besides, atmospheric sediment comes to Georgia mostly from the North Caucasus and Black Sea. The threat is not so much in that, but in the goods we import from eastern countries including Japan. Tea products are one of the risk factors. “Tea bushes take in an especially high quantity of radioactive waste from na-

ture,” said Liana Jervalidze, Researcher and Analyst on the Caspian Area Energy and Environment Policy. “We import tea and some other agricultural products from China. The crop taken this year isn’t dangerous. Plural crops which will be sewn in the coming year, could take high quantitative radioactive waste from the ground. So from 2013 more control will be necessary while importing agricultural products from eastern countries,” said Javelidze. Japan produced cars are another risk factor. 25% of the Georgian auto market is occupied by Japan produced cars from overseas import. Japanese cars amounted to 22% of the total number of imported cars in 2010, i.e.10,038 units or 68 million USD worth according to the national statistics office of Georgia. In January of 2011, the number of cars imported from Japan amounted to over 1,000 units, (that of 6 million USD worth).

Read full report on your mobile phone or on finchannel.com

Advertisement

VESTEL-BIG FOREIGN INVESTOR’S TRAINING

O

n 23-24th of March in Holiday Inn Vestel organized trainings for distribution network’s managers and consultants with over 100 attendants. On 23rd of March first part of the meeting was successfully completed. Before the meeting started distribution network representatives from different countries (Georgia, Azerbaijan, and Kazakhstan) had a chance to examine exhibited Vestel’s newest household appliances and other technologies. Everybody took their chances to examine Vestel’s hi-tech pieces of art: Television sets and refrigerators, gas-ovens and home cinema Special attention was paid to Vestel’s newest 55’’ 3d television set and MAESTRO REFRIGERATOR which’s world’s largest MP3 Player. They were stealing everyone eyes in the conference room. At the same time near the entrance interviews were recorded. First to talk to the journalists was Vestel’s durable products marketing co. president Eren Ataman. He talked about the event and company’s plans for the future. CEO of Matex Georgia, official distributor of Vestel in Georgia CENGЭZ MATARACI was also attending the event. Worth noticing was the friendly atmosphere in the room, the managers and consultants of distribution networks from different cities, towns and even countries were chatting friendly, discussing Vestel’s products and sharing their sale experiences. In a few minutes deputy director of Matex Georgia went on a stage and greeted them soon to introduce first speaker Eren Ataman. Eren Ataman greeted the audience in Georgian language

fle for participants and happy winners will be going home with their new Vestel televisions, gasovens, washing machines, vacuum cleaners and micro-waves. This is how productively the first day of Vestel training ended in Holliday Inn and participants can’t wait to see how tomorrows sales training will go…

which caused laud applauses. He briefly described how the training would go during these two days, on the first there would be introduction and detailed description of Vestel production process and its new products, as for the sales trainings it would take place the next day. He expressed his hopes that these trainings would help to further improve the distribution network representative’s productivity. At the end of his speech Eren Ataman reminded the attending audience that they are not his guests but his business partners and they share the same success. The audience saw Eren Ataman of with loud applauses and cheers soon to greet the following speaker Volkan Oflaz, whom they liked straight away after he too greeted them friendly in

Georgian. Volkan Oflaz started his speech by reviewing the basic facts about Vestel, about its paramount success in this little time and expressed his hope that Vestel will continue to further develop with this quick temps. He showed the attending audience in how many countries Vestel has its shops and offices and how impressive its sales figures are. Next was the short video about Vestel city and its massive factories, you could see how automatized the production is and how synchronically the factories work. After this he started to talk about the productivity of Vestel’s factories, they plan to produce 9 million television sets this year, which is a gigantic figure

only 3-4 companies in the world will be able to keep up with. Up till present Vestel has produced more than 100 million television sets. After Volkan Oflaz left the tribune 4 more speakers took his place one after the other, they were talking about specific lines of production and their specifications, technical details and ways how to keep all this information in active memory to be able to inform customers fully when necessary. Audience was actively writing down notes and asking questions about Vestel’s current and possible future products. Comments were made that Vestel is working on a new 3D television set which can be watched without special glasses! The evening ended with raf-

Short information about Vestel: Vestel is Turkey’s largest exporter of electronics and white goods company which ownes 21% electronics market share in Europe. Vestel is also one of World’s largest electronics and white goods company, which alone accounts for 83% of television set production in Turkey. Vestel group is comprised of 24 companies, operating in manufacturing, technology development, marketing and distribution fields in the consumer electronics, IT, digital technologies, and household appliances, with 3.7 billion turnovers. Vestel together with its own subsidiary brands such as Techwood and Finlux, has a significant share in the European market of consumer electronics and home appliances, in particular TV sets. Vestel also has a subsidiary brand Vestfrost, which is popular in the Nordic countries. On Georgian market Vestel entered in 2004 year. Today Vestel has 20 showroom and 60 sales point over the country: in Tbilisi, Rustavi, Kutaisi, Batumi and Kobuleti. During the year Company plans to open 4 more show rooms. Vestel also planned to open 1000 m2 concept showroom in Tbilisi.


CMYK

FINANCIAL HEADLINE NEWS & ANALYSIS FINCHANNEL.COM | MARCH 28. 2011

23

best georgian banks

“Banking Sector will Sustain and Support Economic Growth in 2011,” NBG Continued from p. 2

Q. In your opinion, how attractive is the Georgian banking sector for potential investors? A. As of 31 December, 2010, banks with foreign capital participation accounted for 94.1% of the system’s total assets and 91.6% of the system’s total capital. Strategic investors, including European and regional banking institutions, as well as IFIs are well-represented in the banking system of Georgia. The country’s two largest banks have foreign shareholders, Bank of Georgia, which is listed on the London Stock Exchange, and TBC Bank, which is owned by IFIs (EBRD, IFC and DEG). Other foreign equity holders in the Georgian banking sector are international and regional strategic investors, such as Procredit Group, SociétéGénérale, Liberty Investments Holding, HSBC, Bank VTB, Dhabi Group, PrivatBank, BTA Bank, International Bank of Azerbaijan, Halyk Bank of Kazakhstan and Ziraat Bank and others. Banks, which are majority-owned by local investors, are Cartu Bank, Basis Bank, Bank Constanta and Progress Bank. Overall, increasing international ownership has been a supporting factor in shaping a liberal, competitive and resilient local banking market. So, I would say that the market is pretty attractive, but at the same time very competitive. Q. Annual inflation reached 12.3% in January, 2011. The mentioned inflation exceeds theNBG’s target level. What tools does the NBG use for dealing with inflationary pressure? A. NBG’s target is 6%annual inflation in a medium term.It is worth mentioning here that 6% inflation target does not mean thatin the short tern inflation will not deviate from the target level. Due to the lag in the impact of the monetary policy instruments, the NBG considers and targets forecasted inflation rather than current changes in the price level. On the back of rising expected inflation, the NBG started to tighten monetary policy in June 2010, when inflation was still low. The NBG employed several monetary policy tools to target inflation: interest rates, minimum reserve requirementsand open market operations. In line with Basel III stance on the importance of macroprudential policy, the NBG tightened liquidity and capital adequacy requirements. NBG employs a set of strategies for different underlying causes of inflationary pressures as some of the antiinflationary measures may, under certain scenarios,have counterproductive impact.

More than 40% of Georgian CPI basket is food, therefore,the increase of food prices due bad harvest, domestically and worldwide, has larger effect on Georgian CPI compared to the countries where share of food is lower. It should be mentioned that some countries use so called core inflation as an inflation target, which excludesfood and energy prices. Central banks do not react to increased prices due to supply shock, if it does not influence inflationexpectations. The response to such types of shocks means to reduce crediting economy and decrease its growth rate, and when the external shock is

three times on the sale side and three times on the purchase side. The exchange rate is defined by the foreign exchange market, which involves many participants, including anyone who converts its currency. The market forces guarantees that exchange rate is in the equilibrium, which, in turn, is important for economic growth and macroeconomic stability. Moreover, the Georgian currency hasbecome more flexible since March 2009, when NBG switched to a modern intervention method - foreign exchange auction. Since then, the short term fluctuations have increased, which guarantee the major

In an emerging market, such as Georgia, rapid accumulation of domestic capital can only be achieved at the expense of consumption and quality of living. Consequently, many fast growing emerging markets access external sources of funding to compensate for low domestic savings rate and accelerate the growth of the economy.

over, then to move to expansionary policy. If the shock has a short-term character, the action of the central bank will increase the volatility in the economy, including unnecessary fluctuations in employment. To sum up, NBG has preemptively responded to a probable demand-side increase of inflation. As a result, the share of non-exogenous factors in the 12.3% inflation rate is quite low – less than 3 percentage points.As for other factors causing increase in price level, they are of a temporary nature, and the NBG will not react to themfurther unless the inflation expectations increase. Consequently, we pay relevant attention tobuild the NBG credibility further, which is the foundation for the right inflation expectations. As I have mentioned, if the inflation expectations do not increase, NBG will not need totighten monetary policy and price stability willbe achieved with less social costs. Since adopting the inflation targeting regime, the NBG has much more instruments and influence on prices than it had under the monetary targeting regime. NBG is ready to use all of its available tools asnecessary. Q. In February, the GEL depreciation against the USD reversed, and since then Lari has been appreciating. Did this happen because of the NBG intervention? A. Georgian currency is freely floating and, consequently, NBG interventions in theforeign exchange market are minimal. Since the beginning of the year, NBG intervened only sixtimes,

macroeconomic function of the exchange rate – shock absorption. As a result, GEL isstable in the long run, without NBG interventions. Q. The main initiative of NBG was Larization in 2010. However, the share of GEL has not changed significantly. In your opinion, what steps should be undertaken to increase the share of GEL in deposits as well as loans? A. Larization is not amandatory process, butan opportunity for individuals to take loans and open deposits in the desired currency. If an individual gets itssalary in GEL, it is more convenient for him/herto get a loan in thelocal currency. In such

to bring in more deposits in the national currency and be less dependent on more risky sources for financing credit activities, such as loans from external sector or deposits in a foreign currency. The development of the GEL market should be noted separately. The developed money market creates the opportunity to bring capital into the local market for commercial banks, supports the reduction of dependency on external sources and,hence, the decrease of dollarization. In 2010, there was significant increase in the GEL money market; however, the market is still atthe early stage and we continue reforms for farther development. Our approach is forLarization to make this as an irreversible process. The reforms conducted by NBG guarantee creation of a favourable environment for Larization, bringingthe desirable outcome in the near future. Q. What is the attitude of NBG towards advertising transparency? What outcomes did NBG activities bring from this side? A. One of the NBG’s key priorities is to ensure maximum transparency of financial institutions’ communication and interaction with customers.In 2009, the NBG drafted an action plan with the purpose of gradual strengthening of consumers’ rights at the financial sector. Within the framework of the action plan, the NBG has recently approved The Rule on the Disclosure of Information. The rule regulates and defines disclosure requirements in the course of contractual and subsequent relations. In accordance with the provisions of the rule, banks have to discloseeffective interest rates including all finance charges, the rights of parties to

If the inflation expectations do not increase, NBG will not need tighten monetary policy and price stability will be achieved with less social costs

a way, the individualwill be protected from exchange rate risk. High dollarization carries many problems for the country’s economy. The goal of the NBG is to make long term and low interest GEL loansmore accessible. Larization is a long term goal of NBG, as it is impossible to decrease dollarizationin the short term. To decrease dollarization, NBG is working in several directions, such as thesupport of GEL money market development, incentivesfor commercial banks to find resources on local markets. NBG aims to stimulate commercial banks with market methods, so that they actively work in local markets

amend important terms of the contract and other material termsof a contract with a consumer. It is the NBG’s medium term plan to amend the rule to define disclosure requirementsduring the client acquisition process, including advertising and advisory practices. A newly formed consumer protection division will monitor the protection of consumer rights, collect and publish statistics in this area, answer calls on consumer hot-line and provide recommendations. Depending on the problems identified, the division will also facilitate and promote relevant legislative changes. Q. How protected and

confidential isinformation about client held at thebank? A. The Law of Georgia on The Activities of Commercial Banks defines bank secrecy principles and rules. Specifically, Art. 17 of the law states that it is prohibited to disclose or reveal confidential information. The definition of such confidential information includes information available at the bank about client’s accounts and account balances. Therefore, commercial bank is responsible for confidentiality and non-disclosure of this sensitive information with the exception requiring banks to disclose such information upon the delivery of relevant court decision. Q. What was the total financial aid received by the NBG in the last two years for developing the banking sector, and what activities were conducted within its framework? A. NBG is a long-term partner of numerous international financial organizations and donor institutions. Over the course of the past several years, a number of important initiatives aimed at strengthening prudential regulation have been implemented with the help of our international partners. Some of these initiatives are assistance in developing mechanisms for hedging bank’s OCPs and stress testing (International Monetary Fund), assistance in the assessment of banks’ and non-bank institutions’ investments and acquisitions (World Bank), development of the policy for capital adequacy charge for interest rate and equity risks (World Bank), implementation of the consolidated supervision (Asian Development Bank), IFRS transition (Asian Development Bank), enhancement of risk based supervision (Asian Development Bank). Another initiative that we would like to highlight was implemented with the help of the World Bank in 2010. The aim was to bring regional supervisors together for a workshop to discuss postcrisis prudential responses and their efficiency. Sharing experience with our regional colleagues and partners promoted exchange of information and improved understanding of best practices in supervisory responses to banking shocks. NBG received significant financing from the USAIDand technical assistance from the World Bankfor implementing modern interbank paymentssystem. With the initiative of NBG and financial assistance of ATTF and the Luxembourgish Government experts were invited toconductseries of seminars in the risk management and Basel II implementation fields. We gratefully appreciate support from our international partners.

GEORGIAN HOUSES MISSING CONTEMPORARY ELEMENTS By NINA BURJANADZE The FINANCIAL “Almost 90% of the houses built recently in Georgia are 2 story classical constructions with a cellar and mansard,” said Zurab Dvalishvili, Architect-Designer of Building Company Felix. “In comparison to a triangle roof, which is common in our country, modern architecture dictates the trend towards flat cover and large vitrage.” “Very rarely, rich people in Tbilisi ask for contemporary con-

structions. Normally, we get orders for typical classical buildings with gravures, carvings, a small size vitrage and balconies for each room separately. At the beginning of the projecting, customers often plan a large vitrage, which is expensive enough. After estimation of the expenses customers then make the decision to save money. Sometimes the decision comes to have a large terrace on the first floor,” said Dvalishvili. Read full report on your mobile phone or on finchannel.com

THE UK BUSINESSES RECOMMENDED TO INVEST IN GEORGIA By KOKA KALANDADZE The FINANCIAL

R

estoring investor confidence still remains the primary job of the Government of Georgia, now the focus is on the United Kingdom. As well as 30 large British companies, like BP and HSBC which successfully operate on the Georgian market, there are plenty of others who might be willing to expand to Georgia, an investment-driven economy. For this purpose Nigel Peters, Director of the Central Asia & Trans Caucasus Business Information Group (CATBIG) visited Georgia last week. Having had a good overview of the country’s business environment, he’ll be returning to the UK presenting investment opportunities to over 800 companies (members of CATBIG) interested in expanding in the region. Read full interview on your mobile phone or on finchannel.com


CMYK

24

best georgian banks

HEADLINE NEWS & ANALYSIS

FINANCIAL

MARCH 28. 2011 | FINCHANNEL.COM

Advertiser: Vellagio. Contact FINANCIAL Ad Dep at marketing@finchannel.com


CMYK

FINANCIAL HEADLINE NEWS & ANALYSIS FINCHANNEL.COM | MARCH 28. 2011

25

financial news on mobile

Scan code to read the story on your mobile phone FROM REAL TO DIGITAL WORLD

NOKIA READER

Point and shoot your camera phone at a mobile code to connect directly to the FINANCIAL article on mobile website. All you need is a code reader for your camera phone and you are in on the fun.

If you have a Nokia N82, N93, N93i, N95, N95 8GB, E66, E71, E90 or 6220 Classic (APAC variants) you will find the Nokia Barcode Reader preinstalled on your device, ready to scan mobile codes around you. For Nokia N78, 6210 Navigator, N96 and 6220 Classic (non-APAC variants) you can download the application from Nokia website for free.

Applization in Georgia

Kakha Bendukidze: Poison Pill for Georgia

IPHONE QR READER If you a iPhone, feel free to browse on iTunes a free QR reader application. It takes 3 minutes to download.

Art War

Why Americans Should Invest in Georgia?

Smartphoto to break

Segmented Biz: Children

Rewriting The Story Tourism Industry of Georgia Radisson in TBS

Facebook Harming Your Life and Career

Nearly 18 million

Most Popular websites in Georgia

New Destinations from Lufthansa

Why and Where ?

Invest or Not in Georgia?

How to Make Tbilisi Germans more Greener? eager than ever to travel

Making Georgian Business International

Fitch Ratings of Georgian Banks


CMYK

26

HEADLINE NEWS & ANALYSIS

MARCH 28. 2011 | FINCHANNEL.COM

best georgian banks TBC BANK TBILISI BRANCHES Tbilisi #9 Service Center in Zahesi (Customs Terminal) 0125, 105 A, Mshvidoba St. Vake Branch #1 0179, 41, Abashidze St. Central Branch 0179, 11, Chavchavadze Ave. Chavchavadze Branch #1 0179, 29/31/33, Chavchavazde Ave Vera Branch 0179, 31, Melikishvili St. Parliament Service Center 0118, 8, Rustaveli Ave Mtatsminda Branch 0105, 1, Rustaveli Ave. Rustaveli Service-Center 0108, Marriot hotel Rustaveli Branch #1 0108, 44, Rustaveli Ave. Mtatsminda Branch #2 0105, 22, Leselidze St. Rustaveli Branch #2 0105, 52, Rustaveli Ave. Avlabari Branch #1 0103, 2, Ketevan Tsamebuli Ave. Varketili Branch #1 Javakheti St. Isani Branch 0120, 67, K. Tsamebuli Ave. Vazha-Pshavela Branch #2 0186, 73, Vazha-Pshavela Ave. Vazha-Pshavela Branch #1 0160, 11, Vazha-Pshavela Ave Saakadze Branch 0160, 6, Shartava St. (Saakadze Sq.) Saburtalo Branch 0160, 12, Al. Kazbegi Ave. Tbilisi Central Service Center 0112, Vagzali Sq. 2 Agmashenebeli Branch #1 0102, 138, Agmashenebeli Ave. Marjanishvili Branch #2 0102, 16, Marjanishvili St. Tamar Mepe Branch 0112, 7, Tamar Mepe Ave. Head Office & Marjanishvili Branch 0102, 7, Marjanishvili St. Tsereteli Branch #2 0119, 73a, Tsereteli Ave. Didube Branch 0119, 117, Tsereteli Ave. Digomi Branch in shop («My House») 0131, Agmashenebeli Alley, 12th km, furniture shop «My House» Digomi Branch in “Goodwill” 0131, 1, Parnavaz Mepe Ave. (Hypermarket Goodwill) Nadzaladevi Branch 0180, 109, Dadiani Ave. Gldani Branch 0172, Mukhiani Settlement, Plot 1/6 Tbilisi Airport Service Center 0158, Tbilisi National Airport

TBILISI ATMS Vazisubani Vazisubani III dstr., II Blk. Sanzona 50, Guramishvili Ave. Nikora Store Vake 11, Chavchavadze Ave. Vake Branch 1, Tamarashvili St. Pharmacy “36.6” 34, Chavchavadze Ave. Trading Center “Pixel” 7, Kipshidze St. 41, Abashidze St. Vake Service Center #1 29, Chavchavazde Ave. TBC Bank Branch 59, Paliashvili St. “Simba” Supermarket 50, Chavchavadze Ave. 15, Phaliashvili St. Aversi Pharmacy Vera 7, Kostava St. 36, Kostava St. Cinema “Amirani” 8/1, Akhvlediani Ave 18, Melikishvili St. 60, Barnovi St. “Fresh Market” 31, Melikishvili St. TBC Bank branch Mtatsminda 13, Rustaveli Ave. Hotel «Tbilisi Marriot» 11, Rkinis Rigi Acura Billiard Room 5, Rustaveli Ave. Rustaveli Cinema 4, Freedom Square 22, Leselidze St. TBC Bank branch 52, Rustaveli Ave. TBC Bank branch 44, Rustaveli Ave. TBC Bank branch 1, Rustaveli Ave. TBC Bank branch Avlabari 84, K. Tsamebuli Ave. 2, K. Tsamebuli Ave. TBC Bank branch Navtlugi 2, Cholokashvili St. “36.6” Pharmacy Varketili 34a, Kakheti Highway 44, Javakheti St. (Varketili Metro) Varketili 3, 4th m/r. Javakheti St. TBC Bank branch Isani-Samgori 39a, Moscow Ave. 169, Khmelnitski St. Supermaket “Isani” subway station 67, K.Tsamebuli Ave. TBC Bank branch Saburtalo 40, Vazha Pshavela Ave. ESM Tbilisi 67, Vazha Pshavela Ave. «Nikora» Shop 68, Kostava St. Public Television Building 22, Bakhtrioni St. 53, Saburtalo St. Nikora store 12, Al. Kazbegi Ave. At Saburtalo Branch 74, Kostava st. Shop “Caesar” Z. Zhvania Sq., 45, Gamsakhurdia Ave. “PSP” Pharmacy 1, Nutsubidze St. 52, Vazha-Pshavela Ave. Mobi Shop Riverside named after H. Aliev At Wissol gas station Turn at 4th Plateau of Nutsubidze 179, Nutsubidze St. “PSP” Pharmacy 26, Kazbegi Ave. Shop “Planeta Z” Vazha-Pshavela V Blk, 4 Bld. 29, Gamsakhurdia Ave. Shop “Okaidi” 6, Shartava St. 4, Gamsakhurdia Ave. 11, Vazha-Pshavela Ave TBC Bank Branch 11, Mitskevichi St. Supermarket 29b, Kazbegi Ave. 73, Vazha-Pshavela Ave. TBC Bank branch 11/5, Dolidze St. Supermartket “Mango” Chugureti 39, Chitaia St. Aversi Pharmacy 7, Marjanishvili St. Marjanishvili branch 19 Tsabadze St. Trade center «Pasazhi» 8, Tsabadze St. Trade center «Kidobani» 4, Khetagurov St. Humana Pharmacy 16, Marjanishvili St. TBC Bank branch 4, Chubinashvili St. Aversi Pharmacy Didube 73a, Tsereteli Ave. At #2 Didube Branch 114, A. Tsereteli Ave. «Coca-Cola» 117, Tsereteli Ave. At Didube Branch 82, Tamar Mepe Ave. “MedService” Pharmacy 1, Tsereteli Ave. Trading Center “Panda” 7, Tamar Mepe Ave. TBC Bank branch 138, Agmashenebeli Ave.

TBC Bank branch 12, Kereselidze St. “Megaline” Trading Center Digomi Digomi District 3/2 Digomi District II BLK. Building 7 Digomi District, 3rd blk. D. Agmashenebeli Alley “Lukoil” Gas station Didi Digomi Entrance of Didi Digomi Trade center GOODWILL 12th Km, Agmashenebeli Alley. Shop “Chemi Sakhli” Nadzaladevi 106, Ts. Dadiani Ave. Nadzaledevi Branch 321, Ts. Dadiani Ave. Aversi Pharmacy 144, Ts. Dadiani Ave. Supermarket Temka Temka, 10th Block, BLD. 2. Gldani Gldani District 1st blk. Supermarket “Bingo” Akhmeteli Metro Trading Center “Mariami” Mukhiani Settlement, Plot 1/6 TBC Bank branch Mukhiani Mukhiani III MKR, Dumbadze Ave., BLK.5a Mukhiani II M/R, Noneshvili St., BLk. 5 “Red A” Pharmacy Avchala 3, Sarajishvili St. “Alfa Express” Ortachala 39, V. Gorgasali St. 28, Gorgasali St. Airport Tbilisi International Airport

REGIONAL ATMS Samtredia 5, Chavchavadze S. Lagodekhi 1, Cholokashvili St. Beko Zestaphoni 39, Agmashenebeli St. Natakhtari Natakhtari Brewery Tsnori 2, Stalin St. Zugdidi 32(30) Z. Gamsakhurdia Ave. TBC Bank branch Gori 13, Stalin Ave. TBC Bank branch Bakuriani 26, Agmashenebeli St. Pharmacy “Red A” Gudauri Bar “Gagieti” Sighnaghi 1, Lolashvili St. TBC Bank Branch Agara 1, Cholokashvili St. Mtskheta 11a, Samkhedro St. Shop “Nikora” Kobuleti 500 a, Agmashenebeli St. Rustavi 14, Megobroba Ave. Rustavi Branch 19, Rustavi Highway, bld. 2 Aversi Pharmacy M.I.A. Service Agency 12/14, Meskhishvili St. Supermartket 15, Kostava St. “Aversi” Pharmacy Telavi 27, Rustaveli St. Telavi Branch 3, K. Tsamebuli St. Shop “Limbo” Borjomi 121, Rustaveli St. TBC Bank branch Kutaisi 59, Tamar Mepe St. 21a, Chavchavadze Ave. 98, Youth Ave. 3, Automsheni St. 47/1-3 Agmashenebeli Ave. and Dumbadze St. crossroads 1, Nikea St. “Nikeos” Supermarket 35/1a, Paliashvili and Columbia Missouri St. TBC Bank branch 14, Grishashvili St. Pharmacy 62, Chavchavadze Ave. TBC Bank branch Batumi 44, Chavchavadze Ave. Nikora Store 37, Zubalashvili St. TBC Bank branch 78/80 Javakhishvili St. 63, M. Abashidze St. 14a, Inasaridze St. 30, Agmashenebeli St. 57/59, Era St. TBC Bank branch 10, Rustaveli St. TBC Bank branch Khelvachauri 21a, Agmashenebeli St. Poti 22, D.Agmashenebeli St. 13 Lagrange St. Nikoladze Square. 18, Samegrelo St. 15/3 Gegidze St. TBC Bank branch

BANK OF GEORGIA TBILISI Mtatsminda-Krtsanisi 3 Pushkin Str. 4 Leselidze Str. 38 Tabukashvili Str. 7 Pushkin Str. 1 Vekua Str. 3 Pushkin Str. Vake-Saburtalo 24 Kostava Str. 29 Vazha-Pshavela Ave. 7 Kipshidze Str. 14 Gamsakhurdia Ave. 22 Bakhtrioni Str. 72/12 I.Abashidze Str. 70 Kostava Str. Sheraton Metheki Palace 10 Melikishvili Ave. 62 Chavchavadze Ave. Mtatsminda-Krtsanisi 8 Rustaveli Ave. (Parliament) 38 Tabukashvili Str. 19 Rustaveli Ave. 4 Freedom Square (Courtyard Marriott) Metro Station “Tavisuplebis Moedani” Metro Station “Rustaveli” 3 Vekua Str. (Populi City) 37 Gorgasali Str. Ortachala Radisson SAS Iveria Hotel Isani-Samgori 10 Ketevan Tsamebuli Ave. 80 Ketevan Tsamebuli Ave. 7 Kalaubani Str. Airport Metro Station “Avlabari” Metro Station “300 Aragveli” Metro Station “Samgori 1” Metro Station “Samgori 2” Metro Station “Varketili” Metro Station “Isani” Temqa Block 10, Bulding 25 44 Moskovi Ave. Vazis ubani block 4 (“Populi”) Vake-Saburtalo 41 Vazha-Pshavela Ave. 23 Chavchavadze Ave. 70 Kostava Str. 16 Gamsakhurdia Ave. 7 Petritsi Str. Melikishvili Str. 10 Gldani-Nadzaladevi 39 Tsotne Dadiani Str. 5 Tornike Eristavi Str. (“Electroplast”) Shopping Mall “Mariami”, Gldani Metro Station “Akhmeteli” Metro Station “Grmagele” Metro Station “Nadzaladevi” Metro Station “Sarajishvili” Metro Station “Guramishvili” Mukhiani, Block 4, Bulding 4 34 Tsotne Dadiani Str., Bulding 8

Metro Station “Elektrodepo” Vake-Saburtalo 1a Bulachauri Str. Metro Station “Politeknikuri Instituti 1” Metro Station “Politeknikuri Instituti 2” Metro Station “Vazha-Pshavela” Metro Station “Sameditsino Instituti 1” Metro Station “Sameditsino Instituti 2” Didube-Chugureti 99 Tsereteli Ave. 18 Tamar mefis Ave. 60 Tsereteli Ave. 83/23 Davit Agmashenebeli Ave. 142 Davit Agmashenebeli Ave. 19 Tsabadze Str. (“Pasazhi”) 12 Kereselidze Str. 1st turn (“Megaline”) 137 Tsinamdzgvrishvili Str. 127 Davit Agmashenebeli Ave. Metro Station “Vagzlis Moedani” Metro Station “Vagzlis Moedani 3” Metro Station “Tsereteli” Metro Station “Didube” Metro Station “Marjanishvili” 3 Vagzali Str. Gldani-Nadzaladevi Gladni 1 Vekua Str., Block “a” 38 Guramishvili Ave. Batumi 58 Memed Abashidze Str. 18 Zubalashvili Str. 11 Ninoshvili Str. (Hotel “Intourist Palace”) Ozurgeti 18 Guria Str. Zugdidi 90 Rustaveli Str. 54 Kostava Str. Poti 30 Davit Agmashenebeli Str. 2 Parnavaz Mepe Str. Kutaisi 17 Tsminda Nino Str. 1 Tsereteli Str. 56 Chavchavadze Str. 124 Rustaveli Str. Tskaltubo 11 Avaliani Str. Tkibuli 55 Gamsakhurdia Str. Terjola 4 Shotadze Str. Chiatura 16 Ninoshvili Str. Gori 14 Stalini Str. Bakuriani 1 Mta Str. Khashuri 2 Dzneladze Str. Akhaltsikhe 25 Kostava Str. Rustavi 8 Baratashvili Str. 10 Megobroba Str. 23 Kostava Str. Tetritskaro 37 Tamar Mepe Str. Tsalka 71 Kostava Str. Marneuli 65 Rustaveli Str. Gardabani 76 Davit Agmashenebeli Str. Bolnisi 110 Sulkhan-Saba Str. Gurjaani 12 Noneshvili Str. Zestaponi 59 Agmashenebli Str. Senaki 78 Chavchavadze Str. Kvareli 34 Chavchavadze Str. Kobuleti 1 Ninoshvili Str. Akhalkalaki 35 Nalbandiani Str. Telavi 6 Chavchavadze Str. Kaspi 78 Stalini Str. Batumi Airport 21 Agmashenebi Str. Signagi 15 9 Aprili Str. Poti Kokaia Alley 1 Str.(Customs “Dasavleti”) Gori 3 Stalini Str. (Populi) Kutaisi 143 Rustaveli Str. (Populi) Khelvachauri 82 Agmashenebi Str. Sagarejo 17 Agmashenebeli Str. Batumi 10 khimshishvili Str. (Hotel “Marina”) Borjomi 1 Rustaveli square Samtredia 21 Javakhishvili Str. Khulo 16 Abashidze Str Batumi 3 Settlement Tamari Tskneti 3 Rustaveli Str. Mtskheta 12 Samkhedro Str. Lanchkhuti 101 Zhordania Str. Sachkhere 4 Agmashenebeli Str. Keda 13 Tbel Abuseridzis Str. Batumi 58 Memed Abashidze Str. Gardabani Martkopi (Vaziani) Gori 43 Samephos Str. Kaspi 2 Farnavazis Str. “Kaspicementi” Rustavi 70 Mshenebelta Str. “Rustavcementi” Tbilisi Kakheti Highway 112 km. (Lilo) Holiday Inn Hotel Batumi Rustaveli Str. 28 “Batumi Sheraton” Rustavi Tsiteli Khidi Highway 21 km

ATM’S TBILISI Vake 8 Mtskheta Street 12 eristavi street 72/12 Abashidze Street 48 Chavchavadze Avenue 22/23 Chavchavadze Avenue 22/23 Chavchavadze Avenue 62 Chavchavadze Avenue 50 Chavchavadze Avenue 52 Chavchavadze Avenue 22 Chavchavadze Avenue 78 Chavchavadze Avenue 7 Kipshidze Street 9a nafareuli street 13 Kipshidze Street 2 Berdzenishvili Street 41 abashidze street 81/9 Abashidze Street 3 Tamarashvili Street Tamarashvili Street 16 Phaliashvili Street Tskneti 3 Rustaveli Street 2 Rustaveli Street Saburtalo 67 Vazha-Pshavela Avenue 41 Vazha-Pshavela Avenue 41 Vazha-Pshavela Avenue 2 Vazha-Pshavela Avenue 27b Vazha-pshavela avenue 27a Vazha-Pshavela Avenue 17 Vazha-Pshavela Avenue 27 Vazha-Pshavela Avenue 72 Vazha-Pshavela Avenue Vazha-Pshavela Avenue, II Block 35/37 Shartava Street 7 Shartava Street 21 Dolidze Street vakhushti bridge Saakadze square Samedicino Vazha-Pshavela Politeqnikuri 1 Politeknikuri 2 17a Saburtalo Street 37 Saburtalo Street 70 Kostava Street 70 Kostava Street 26 maisi street 1 26 May square Kostava Street 44 Khazbegi Avenue 10 Khazbegi Avenue 13 Khazbegi Avenue 14 Khazbegi Avenue 12 Khazbegi Avenue bagteriofagi 8 a mitschkevichi street

FINANCIAL

19 Gamrekeli Street 23 kandelakis street 43 Gamsakhurdia Avenue. gagarini 16 Gamsakhurdia Avenue 2 Gamsakhurdia Avenue 14 Gamsakhurdia Avenue 1a Bulachauri Street 3 mk.2 kv. Nucubidze 175 Nutsubidze Street 221 Nutsubidze Street 25 nutsubidze street Nutsubidze plato III mr. II kv 1 Sandro Euli Street 13 Bakhtrioni Street 22 Bakhtrioni Street 6 Phanaskerteli Street 16 Chikovani Street 25 Kavtaradze Street 4 Gabashvili Street 5 Jikia Street Mtatsminda 2 Freedom Square mtawminda square 3 Pushkin Street 3 Pushkin Street 3/1 Pushkin Street 3 Pushkin Street Tavisuplebis Moedani 7 Pushkin Street 4 Freedom Square 12 Chanturia Street Rustaveli 16 Rustaveli Avenue 8 Rustaveli Avenue 19 Rustaveli Avenue 37 Rustaveli Avenue 2 Leonidze Street 22 Leselidze Street 4, Leselidze Street 38 Tabukashvili Street 2 Baratashvili Street 7 Ingorokva Street GTC 8 Erekle II Street 13 Savteli Streer 20 Akhvlediani street 1 Vekua Street 40 Khetagurovi street rose squire rose squire Vera 28 petriashvili street 25 Kostava Street 24 Kostava Street 44 Kostava Street 1 Khorava Street 10 Kekelidze Street 8 Kuchishvili Street 50 Gogebashvili Street 13 Melikishvili Street 10 Melikishvili Street 10 Melikishvili Street Gldani-Nadzaledevi 2 gudamakhari street Gldani V m/r Block14 Gldani III m/r 2 Khizanishvili Street 2 Dadiani Street 7 Dadiani street 34 Dadiani Street 151 Dadani Street 21 Sarajishvili Street Sarajishvili Grmagele Guramishvili 38 Guramishvili Avenue 33a GuramiSvili avenue 84 Guramishvili Avenue 7 Guramishvili Avenue 84 Guramishvili Avenue Peikrebi street Mukhiani, IV m/r, 4 block Dumbadze str IV m/r, Block 5 Nadzaladevi Nadzaladevi metro Square 15 Khizanishvili Street 31 Khizanishvili Street metro axmetelis mimdebare. mariami metro axmetelis mimdebared 1 Vekua Street 1 Vekua Street Akhmeteli Temka 10 Kv, Block 25 Temka samshobiaro saxli # 5 mimd 34 Khosharauli Street Didube-Chugureti 8 tsabadze street 17 Uznadze Street 1 Tsereteli avenue 60 Tsereteli Avenue 55 Tsereteli Avenue 95 Tsereteli Avenue 110 Tsereteli Avenue 99 Tsereteli Avenue 118 Tsereteli Avenue 118 Agmashenebeli Avenue 127 Agmashenebeli Avenue 80 Agmashenebeli Avenue 96 Agmashenebeli Avenue 1 Agmashenebeli Avenue 89/24 Agmashenebeli Avenue 86/90 Agmashenebeli Avenue 15 Tamar Mepe Avenue 10 Tamar Mepe Avenue 20 General Kvinetadze Street 5 marjanishvili street Marjanishvili 83/23 Agmashenebeli street 1 Chitaia Street 19 Tsabadze Street, pasage 2 Chkheidze Street Tbilisi central Tsereteli Vagzlis moedani 2 Vagzlis Moedani 1 Vagzlis Moedani 2 19 Agladze Street 2 Vagzlis Moedani 95 Tsinamdzgvrishvili Street 137 Tsinamdzgvrishvili Street Mtkvari Left Riverside (mushtaedi) 1 chaladze street Digomi 8 chachava street Military Base (vashlijvari) Digomi II kv. 5 Block Digomi Block V, I a Building 11 George Balanchini Street Agmashenebeli alley II km Agmashenebeli alley 9 km. Agmashenebeli alley Didi Digomi way. Digomi village way (vashlijvari) 8 Petritsi Street 7 Petritsi Street 10/12 Godziashvili Street Vashlijvari Agmashenebeli alley 13 km 6 gelovani avenue 5 Lubliana Street Isani-Samgori Isani Samgori 1 Samgori 2 Varketili Varketili 3, IVm/r, near by 410 Building 1 Khomleli street 64 Javakheti street Vazisubani IV m/r I block, petefi str. Vazisubani IV m/r I block 2 Landia street 300 Aragveli Kakheti Highway 21km 60 Kakheti Highway Military Base (alekseevka) Military Base (alekseevka) AIR 3a Khomleti Street 10 Ketevan Tsamebuli Avenue 80 Ketevan Tsamebuli Avenue 51a Ketevan Tsamebuli Avenue 4 Kiziki Street Airport Airport Airport Military Base (vaziani2) 7 Kalaubani Street 7 Kalaubani Street 14 Kalaubani Street 39 Moscow Avenue 17 chichinadze street 44 Moscow Avenue 10 Telavi Street Avlabari Avlabari Metro Square 8/10 Chekhov Street 23 Shuamta Street 155 bogdan khmelnitski street 6/4 Naftlukhi Street Atskuri, isnis metros mimdebare Kairo & Javakheti Street 64 Melaani Street 1 Abdushelishvili street 122 Kakheti Highway market lilo 113 gakhokidze street 38 Kakheti Highway Krtsanisi 41 Gorgasali Street 39 Gorgasali Street Military Base (krtsanisi)2 Military Base (krtsanisi) 16 Gorgasali Street 16 Gorgasali Street 6 Gorgasali Street 77 Gorgasali Street 117 Gorgasali Street

37 Gorgasali Street 19/2 Rustavi Highway 7 a krtsanisi street 10 Gulua Street Kodjori military base Mtskheta 23 arsukidze street Bebriscixis mimdebared 12 samxedro street Gudauri Rustavi 10 Megobroba Street 16 Mshenebelta Street 16 Kostava Street 23 Kostava Street 4 Shartava Street 8 Baratashvili Street 4 mshvidoba street 4 mshvidoba street 14 gagarini street Gardabani 25 agmashenebeli street 76 Agmashenebeli Street Marneuli 65 Rustaveli Street Old Military Area Bolnisi 113 Sulkhan-Saba Street Tsalka 71 Kostava Street Tetri tskaro 37 Tamar mepe Streer Telavi 60 Agmashenebeli Streer 6 Chavchavadze Street 2 erekle II street 6 Erekle II Street 9 Agmashenebeli Streer Lagodekhi 3 zakatala street 45 rustaveli street 15 9 April Street 1 kudigori street 34 Chavchavadze Street 12 Noneshvili Street 17 Agmashenebeli Streer Khashuri 190 borjomi street 2 Dzneladze Street Gori 2 Ertoba Street 14 Stalini Street 26, Chavchavadze street Ckhinvali highway 43 Samepho Street 68 Samepho Street Military Base, tskhinvali highwat Military Base, tskhinvali highwat Kaspi Rustaveli Street 78, Stalini Street Akhaltsikhe 66 Rustaveli Street 25 Kostava Street Military Base 35 Nalbandiani Street 35 Nalbandiani Street Borjomi 143 Rustaveli Street 1 Rustaveli Square 1 Mta Street Kutaisi 17 Tsminda Nino Street 59 a Chavchavadze Avenue 56 Chavchavadze Avenue 124 Rustaveli Street 36 Grishashvili Street 17 Tsminda nino Street (Beeline) 141 Rustaveli Street 12 Javakhishvili Street 75-77/47 Ninoshvili Street & Agmashenebeli Street 98 Asatiani Street 31 Paliashvili Street axalgazrdobis I shesaxvevi Military Base Tsereteli street 1/2 16 Chavchavadze Avenue 17 Tsminda Nino Street Terjola 4 shotadze street Samtredia 21 Javakhishvili Street Chiatura 16 Ninoshvili Street Sachkhere Agmashenebeli street 17 gomarteli street Tskaltubo 21 Rustaveli Street Zestafini 59 Agmashenebeli Street 27 Agmashenebeli Street 2 Chanturiai Street Sakarkhno and Staroselski street Tkibuli 13 tabukashvili street 55 Gamsakhurdia Street Khoni 12 tavisufleba street Poti 30 Agmashenebeli Street 30 Agmashenebeli Street 52 Agmashenebeli Street 24 Rustaveli rkali 11 Chanturia Street 2 Pharnavaz mefe Street 1 Kokaia Alley nabada new port Senaki military base 78 Chavchavadze Street 168 Mshvidoba Street Zugdidi 54 Kostava Street 90 Rustaveli Street 89 Agmashenebeli Street 31 gamsakhurdias street 91 Rustaveli street Anaklia Chokatauri 20 dumbadze street Ozurgeti 18 Guria Street 2 takhaishvli street Lanchkhuti 101 Jordania Street Batumi 71 abuseridze street 132 pushkini street 48 gorgiladze street 32 Era Street 11 Ninoshvili Street 2 Maiakovski Street 17 Gogebashvili Street 51 Baratashvili Street 41 Baratashvili Street 10 Khimshiashvili Street 10 Khimshiashvili Street 16 Chavchavadze Street 39 Chavchavadze Street 20 Gamsakhurdia Street 29 tavdadebuli Street 77/88 Chavchavadze Street 47 Gamsakhurdia Street 21 Agmashenebeli Street 14 Inasaridze Street Airport 82 Era Street 105 a Lermontovi Street 8 Baratashvili Street Tamari living area 58 M.Abashidze Street 58 M.Abashidze Street 2 vazha-pshavela street 2 vazha-pshavela street 6 rustaveli street Khelvachauri adila village 82 Agmashenebeli Street 60 Agmashenebeli Street Angisa Village 118 Agmashenebeli Street 1 Agmashenebeli Street 1 Ninoshvili Street 275 Agmashenebeli Street Bobokvati Daba Chakvi 41 tamar mepe street Keda 13 abuseridze street Khulo 16 Abashidze Street Shuakhevi 5 Rustaveli street

BANK REPUBLIC TBILISI Central Branch 2 Grigol Abashidze str. 24 hour Chavchavadze SC (#1 SC of Central Branch) 13 Chavchavadze ave, 24 Hour Airport SC (#2 SC of Central Branch) Tbilisi International Airport

VIP SC 33 Paliashvili str. Didube SC (# 4 Central Branch SC) 10th building, Tsereteli Ave. Pekini SC (#5 Central Branch SC) 28 Pekini Ave. Isani SC (#7 Central Banch SC) 6/2 Navtlughi str. Aghmashenebeli SC (#8 Central Branch SC) 112 Aghmashenebeli Ave. Vaja- Pshavela SC (#13 Central Branch SC) 71 Vaja-Pshavela Ave. Digomi SC (#17 Central Branch SC) Ib block, I Micro District, Dighomi Tel: +(995 32) 518515 Digomi SC ( Building of city Court of Tbilisi) (#16 Central Branch SC) VI km David Aghmashenebeli alley Sanzona SC (#18 Central Branch SC) 34 Guramishvili Ave. Ortachala SC (#20 Central Branch SC) 37 Gorgasali str. Mukhiani SC (#21 Central Branch SC) 8b Block,IVa Micro district Dadiani SC (#24 Central Branch SC) 34 Dadiani Ave. Delisi Branch 47 A.Kazbegi Ave. Tamar Mepe SC Tbilisi, 10 Tamar Mepe Ave. Gldani Branch 20 Khizanishvili str. #1 Gldani Branch SC (Ghudushauri Clinic) 18/20 Lubliana str. #3 Gldani Branch SC (Police Office) 8 Gulua str. Varketili SC (#23 Central Branch SC) 29/31 Aerodrome Settlement

REGIONS 22. Rustavi SC (#10 Central Branch SC) 20 Megobroba Ave. Rustavi SC #6 Gldani Branch SC (Police Office) 21 Mshenebelta str. Telavi SC (#14 Central Branch SC) 4 Marjanishvili str. Sighnaghi SC ( #15 Central Branch SC ) 1Tamar Mepe str. Kvareli SC (#22 Central Branch SC) 13 RusTaveli str. Zestaphoni SC (#19 Central Branch SC) #59 Aghmashenebeli str. Kutaisi Branch 6 Grishashvili str. #2 Kutaisi Branch SC 19b, Sulkhan Saba str. Kutaisi Samtredia Branch 2 Razmadze str. Zugdidi Branch 34 Zviad Gamsaxurdia Ave. #1 Zugdidi SC (Police Office) 1 Parizis Komuna Str. Poti SC #9 Central Branch SC 50 Aghmashenebeli str. Batumi Branch #6 Kutaisi str. Batumi Branch 24 hour SC #4 Batumi Branch SC # 24 Gogebashvili Batumi Aiport SC #2 Batumi Branch SC Batumi International Airport Central Branch #11 S/C Freedom Square 2 leonidze st. Central Branch #25 S/C Gori 14 Chavchavadze st. Vake 2 Gr.Abashidze Str. 13 Chavchavadze Ave. 33A Paliashvili Str. 1 Chavchavadze Ave. 49b Chavchavadze Ave. 50 Chavchavadze Ave. 2 Mosashvili Str. Mrgvali Bagi Mtatsminda 27 Kostava Str. 38 Kostava Str. 32 Br/Zubalashvili Str. 20 Rustaveli str. 31 Rustaveli Ave. 9 Pushkini Str. 20 Gogebashvili Str. 8/10 Erekle II Str. 14 Shardeni Str. 2, Leonidze Str. 4 – 9aprili st. 24 Gorgasali Str. 24 Gorgasali Str. 37 Gorgasali Str. 8 Gulua str. Saburtalo 75 Kostava Ave. 16 Kazbegi Ave. 47a Kazbegi Ave. 2 Gamsakhurdia Ave. 23-25 Gamsakhurdia Ave. 28 Gamsakhurdia Ave 45 Gamsakhurdia Ave. 6 Shartava Str. 19 Nutsubidze Str. 179 Nutsubidze Str. 13 Bakhtrioni Str. 11 Dolidze str. Building 4/5 34 Vaja Pshavela Ave. 48 Vaja Pshavela Ave. 71 Vaja Pshavela Ave. 72 Vaja Pshavela Ave. Building 1, Block of flats 7, Vaja Pshavela ave. Kavtaradze str.

BRANCH NETWORK Tbilisi Head office 37, D. Uznadze Street, 0102 Central Branch 14, G. Chanturia Street, 0108 Isani Service Center 12, K. Tsamebuli Avenue, 0103 Didube Branch 147, D. Agmashenebeli Avenue, 0112 Rustaveli Branch 16/18, Rustaveli Avenue, 0108 Vake Branch 10, I. Chavchavadze Avenue, 0179 Saburtalo Branch 21, Vazha-Pshavela Avenue, 0160 Pawn-Centre 16-18, Tamar Mepe Avenue, 0112 Regions Poti Branch 13, Rustaveli Square, 4400 Operational Division of Poti Branch 30, Alley of 9th April, 4400 Ozurgeti Branch 8, Eristavi Street, 3500 Kutaisi Branch 35, Z. Paliashvili Street, 4600 Gori Branch 49, Samepo Street, 1400 Rustavi Branch 3, Megobroba Avenue, 3700 Marneuli Branch 74, Sh. Rustaveli Street, 3000 Telavi Branch 3, G. Saakadze Square, 2200 Batumi Branch 21, L. Asatiani Street, 6000

ATM NETWORK

Tbilisi 37, D. Uznadze Street VTB Bank (Georgia) Head Office 14, G. Chanturia Street VTB Bank (Georgia) Central Branch 5, Jikia Street Magti 16/18, Rustaveli Avenue VTB Bank (Georgia) Rustaveli Branch 54, Chavchavadze Avenue Pharmacy “Aversi” 10, Chavchavadze Avenue VTB Bank (Georgia) Vake Branch 2, University Street Finance Police Building

21, Vazha-Pshavela Avenue VTB Bank (Georgia) Saburtalo Branch 33, M. Kostava, I Turning Ltd “Tbilisi Water” 3, Gotua Street Ltd “Geocell” 16/18, Tamar Mepe Avenue VTB Bank (Georgia) Pawn-Centre 4, K. Leselidze Street 15, Tamar Mepe Avenue Railway Department 76, A. Tsereteli Avenue Pharmacy “Crystal” 3, Vani Street JSC “Telasi” 147, D. Agmashenebeli Avenue VTB Bank (Georgia) Didube Branch 5, KhizanishviliStreet Metro Akhmeteli nearby territory 12, K. Tsamebuli Avenue VTB Bank (Georgia) Isani Service Center 20, Telavi Street Sheraton Metekhi Palace 42, Al. Kazbegi Avenue Abkhazian Government Building 8, Tsabadze Street Shopping Center “Kidobani” 6, Gorgasali Street Ltd “Beeline” 6/2, Navtlughi Street 9, Tsinandali Street 48a, Bogdan Khmelnitsky Street 19, Gamrekeli Street 143, Ak. Tsereteli Avenue 23, Peking Street 78, Nutsubidze Street D.Agmashenebeli Alley Regions 113, Chavchavadze Street, Batumi 21, L. Asatiani Street, Batumi Tskhinvali Highway, Gori 49, Samepo Street, Gori 13, Noneshvili Street, Gurjaani Village Zhinvali 3, G. Saakadze Square, Telavi 74, Rustaveli Street, Marneuli 8, Eristavi Street, Ozurgeti 1, Kostava Street, Ozurgeti 3, Megobroba Avenue, Rustavi 2, Mshvidoba Street, Rustavi 18, Megobroba Avenue, Rustavi 5, Tabidze Street, Poti 13, Rustaveli Encirclement, Poti 30, Alley of 9th April, Poti 64, Chavchavadze Avenue, Kutaisi

VTB BANK 35, Z. Paliashvili Street, Kutaisi 3, Rustaveli Street, Kutaisi Digomi 1b Block, 1 Micro District, Dighomi Masivi Aghmashenebeli alley 6th km. Aghmashenebeli alley 11th km Aghmashenebeli alley 18/20 Lubliana Str. 13 Petritse Str. Didi Digomi Didube-Chugureti 1 Khetagurovi Str. 2 Tsereteli Ave. Tsereteli Ave. Building 10 67 a Tsereteli Ave. 144 Tsereteli Ave. 44 Aghmashenebeli Ave. 112 Aghmashenebeli Ave. 17 Marjanishvili str. 4 Chubinashvili Str. 19 Vakhtang Bagrationi Ave. 10 Tamar Mephe Ave. 19 Tamar Mephe Ave. 19 Tsabadze st. 19 Isani-Samgori International Airport of Tbilisi International Airport of Tbilisi Kakheti highway 6/2 Navtlughi Str. 23 “Ghvinis Aghmarti” Varketili Subway Territory Varketili, Kaloubnis st. 9 Tsinandali str. 91 Ketevan Tsamebuli Ave. Opposite side 2 Ketevan Tsamebuli square 44 Moscow Ave. Vazisubani III Mik. II Block #15 Gldani-Nadzaladevi 34 Dadiani Str. 39 Dadiani str. 263 Dadiani Str. 20 Khizanishvili Str. Mukhiani, Noneshvili Str. Mukhiani, Building 8, 4a m/d Temka District, Building 10, 2 m/d, Block of flats: 25 34 Guramishvili Ave. 36 Guramishvili Ave. Subway Sadguri, Akhmeteli Theatre Territory Subway “Sarajishvili” Rustavi 6 Megobroba st. 20 Megobroba Ave. Rustavi highway 21 Kostava Ave. Batumi 2 Sulkhan-Saba Str. 131 Chavchavadze Ave. 9 Gogebashvili Str. 24 Gogebashvili Str. 30 Rustaveli Str. 31 Tavdadebuli Str. 6 Griboedovi Str. 6 Ninoshvili Str. 6 Kutaisi Str. Batumi International Airport Makhinjauri Daba Khelvachauri, 84 Agmashenebeli Ave. Kobuleti 358 Aghmashenebeli Str. Zugdidi 34 Zv.Gamsakhurdia Str. 5 Kostava Str. Kutaisi 59 Chavchavadze Ave. 60 Chavchavadze Ave. 3 Tamar Mephe Str. 19b Sulkhan-Saba str. 6 Grishashvili Str. 32 Niuport Str. 11 Kupradze str. Poti 50 Aghmashenebeli Str. 52 Agmashenebeli Str. 24 Rustaveli Str. Samtredia 28 Rustaveli ave. 2 Razmadze Str. Gori 14 Chavchavadze Str. 13 Stalinn Ave. Khshuri 1 Imereti st. Dedoflis Tskaro Baratashvili Str. Telavi 4 Marjanishvili Str. 2 Saakadze Square Gardabani 49 Aghmashenebeli Str. Zestaponi 59 Aghmashenebeli Ave. Sighnaghi 1 Tamar Mephe Str. Sarpi Sarpi Kvareli 13 Rustaveli Str. Marneuli 21, 26 May Str. Mtskheta Agmashenebeli Str. Tsnori 28 Agmashenebeli Str.

HSBC BANK GEORGIA JSC Head Office 15 Rustaveli Avenue 0108 Tbilisi, Georgia Tel: (995 32) 17 77 77 Fax: (995 32) 17 77 78 E-mail: info.georgia@hsbc.com Website: www.hsbc.ge

CARTU BANK Head office 39a I. Chavchavadze avenue Tbilisi, 0162, Georgai phone: (+995 32) 92 55 92/91/90

fax: (+995 32) 91 22 79 email: info@cartubank.ge Vake Service Center 24 I. Abashidze street Tbilisi, 0179 Georgia phone (+995 32) 25 06 14/15 fax: (+995 32) 25 06 15 email: vake@cartubank.ge Saburtalo Service Center 14b Pekini Street Tbilisi 0171 Georgia phone: (+995 32) 92 55 92 fax: (+995 32) 38 23 92 email: saburtalo@cartubank.ge Lilo Service Center 14 Yumashev street Tbilsi, 0198, Georgia phone: (+995 32) 24 11 33 fax: (+ 995 32) 24 11 34 email: lilo@cartubank.ge Mtatsminda Branch #1 Vekua atreet Tbilisi 0105, Georgia phone: (+995 32) 93 89 22 fax: (+995 32) 92 19 38 email: mtatsminda@cartubank.ge Kutaisi Branch 4 Paliashvili Str. Kutaisi 4600, Georgia Tel.: (+995 231) 4 11 48 Fax: (+995 231) 4 11 45 E-Mail: cartuk@cartubank.ge Batumi Branch 2 Griboedov Str. Batumi 6000, Georgia Tel.: (+995 222) 7 59 00 Fax: (+995 222) 7 65 04 E-Mail: batumi@cartubank.ge Gori Service Center 10/14 Stalin Ave. Gori, 1400, Georgia Tel.: (995 270) 7 76 71 Fax: (995 270) 7 76 71 E-mail: gori@cartubank.ge Telavi Service Center Chavchavadze Square Telavi 0022 Georgia phone: (995 250) 7 09 00 fax: (995 250) 7 09 01 emailtelavi@cartubank.ge Vake 39 I. Chavchavadze avenue 54 I. Chavchavadze avenue 24 I. Abashidze street 35 Tskneti Highway Mtatsminda 1 I. Vekua street 3 I. Vekua Street 4 Freedom Square 31 Shota Rustaveli avenue 17 Shota Rustaveli avenue 10 G. Chanturia street 29 K. Melikishvili avenue 52 K. Melikishvili avenue 34 M. Kostava street Ortachala 79 Gogasali street 10 G. Gulua street Saburtalo 6 Pekini street 14b Pekini street 48 Vazha-Pshavela avenue 71 Vazha-Pshavela avenue 16 Kavtaradze street L. Gotua Street 10 A. Kazbegi avenue 48 Vashlidjvari Didube-Chugureti 8/9 A. Tsereteli avenue 119 A. Tsereteli avenue 97 David Agmashenebeli avenue 154 David Agmashenebeli avenue 16 K. Marjanishvili street 31 Tamar Mefe avenue Digomi, 4th block, building 5 Isani-Samgori 14 Yumashvi Street Aiport 42 Bogdan Khmelnitski street Javakheti street Isani Bazroba Lilo 6/2 Navtlugi street 91 Ketevan Tsamebuli street 12 Meskhishvili street Gldani-Nadzaladevei Gldani „a“ micro district, building 50 3 V. Sarajishvili street 7 Sh. Dadiani Street 39a Sh. Dadiani Street Sachkhere 36 Tamar Mefe street Kutaisi 4 Z. Paliashvili street 51/2a I. Chavchvadze street Batumi 2 A. Griboedov street 4 V. Mayakovski street 44 K. Gamsakhurdia astreet 65 N. Noneshvili street 12/14 M. Abashidze Gori 10/14 Stalini avenue Telavi Chavchavadze square

CONSTANTA BANK Tbilisi Branches Sadguri Outlet Didube Outlet Gldani Outlet Isani Outlet Varketili Outlet Lilo Outlet Kvemo Kartli Region Rustavi Outlet Kakheti Region Tsnori Outlet Lagodekhi Outlet Gurjaani Outlet Shida Kartli Region Kaspi Outlet Gori Outlet Khashuri Outlet Samtskhe-Javakheti Region Borjomi Outlet Akhaltsikhe Outlet Akhalkalaki Outlet Imereti Region Zestafoni Outlet Kutaisi Outlet Samtredia Outlet Achara Region Batumi Outlet Samegrelo Region Foti Outlet

TBILISI BRANCHES: Sadguri Branch 137 Tsinamdzgvrishvili Street Didube Branch 117, Tsereteli Ave Gldani Branch The right side of the Akhmeteli Subway Isani Branch 84/86 Ketevan Tsamebuli Avenue Varketili Branch 20, Vazisubani turn Lilo Branch 2 Chirankhuli Str. Rustavi Outlet 9 Meskhishvili Street Kakheti Region: Tsnori Outlet 4 Stalin Street 4216 Tsnori, Georgia Lagodekhi Outlet 15 M. Kostava Street Gurjaani Outlet 2 Noneshvili Street Shida Kartli Region: Kaspi Outlet 2 Agmashenebeli Street Gori Outlet 2 Tskhsinvali Highway Khashuri Outlet 2 Imereti Street Samtskhe-Javakheti Region: Borjomi Outlet 145 Rustaveli Street Akhaltsikhe Outlet 6 Ketskhoveli Street Akhalkalaki Outlet 19/1 Rustaveli Street Imereti Region: Zestafoni Outlet 27 Agmashenebeli Street Kutaisi Outlet 95 Rustaveli Street Samtredia Outlet 10 Rustaveli Street Achara Region: Batumi Outlet 91 Era Street Samegrelo Region: Foti Outlet 21 Agmashenebeli Street


CMYK

FINANCIAL HEADLINE NEWS & ANALYSIS

27

FINCHANNEL.COM | MARCH 28. 2011

best georgian banks

Jsc Bank Constanta SHAREHOLDERS: “Constanta Plus LLC” – 67.5%, “OikoCredit” - 12.8%, Tamar Lebanidze – 8.0%, Levan Lebanidze – 4.9%, Zviad Mirianashvili – 2.3%, George Gachava – 2.3%, Natela Turnava – 1.1%, Manana Djakhua – 0.6%, Gela Vardziashvili - 0.5%

MISSION & VISION: The Mission Bank Constanta is a full-service bank providing easily accessible and high quality financial services with special focus on micro and small entrepreneurs. We believe that by offering adequately tailored banking services we support increasing living standards of the costumers, thus creating lasting social value for communities in which we operate. The Vision Our vision is to become the bank of the first choice for micro, small and medium businesses, provide our customers with cost effective high quality and customer oriented banking services in order to support them develop their businesses, create additional jobs, improve living standards and provide their families with better future. • Int. rating & awards: M-CRIL (MicroRating International) has granted Ainternational rating to the bank for year 2009. • Number of branches: Total: 21 Tbilisi: 6 Regions: 15 • Customer groups: Small and medium businesses

LATEST DEVELOPMENTS: Changes in shareholders:

“OikoCredit”, one of the world’s largest sources of private funding to the microfinance sector, has been added to the Bank Constanta shareholder’s list in 2010.

CHANGES IN MANAGEMENT: Board of Directors December 2010 • Operations Director George Gachava moved to the position of Chief Risk Officer. Departments March 2010 • Iza Tsiklauri was appointed to the position of Head of internal Audit Department. May 2010 • Tamar Razmadze Head of Sales and Marketing Department left the Bank. July 2010 • Sales and Marketing Department was Restructured into two separate departments: Sales department and Marketing Department. • George Gogua was appointed to the position of Head of Marketing Department. • Melania Kutchukhidze was appointed to the position of Head of Sales Department. August 2010 • Credit Risk Management Division was formed as Credit Risk Management Department. Natia Pkhakadze, former Kutaisi Branch Manager, was appointed to the position of head of Credit Risk Management Department. • Received awards and participation: o MFC Membership Certificate o Mix Market - Award Certificate (2) o USAID Certificate of Recognition o MFC Certificate • New services or products offered: • In April 2011 we have launched a new rural project and are ready to assist farmers. The project is aimed at development of rural sector

Bank: JSC "Bank Constanta" Date: 31-Dec-10

Income Statement

Reporting Period N

and it enables farmers to buy by installment payments chemicals, pesticides, herbicides, fertilizers and other products of vital importance for any farmer. Besides, Bank Constanta is flexible to offer our customers grace periods up to 7 months, which means that a farmer will not pay for the above products before realization of his harvest. It is worth of mentioning that this banking product is brand new for Georgia’s banking sector and there is no analogue of installment payments of such a type. And this is one more proof that our strategy is to provide the market with customer oriented banking products. • Plastic cards – from June 2011 • ATMs – from May 2011 • Public campaigns and charity: Tree-planting Action in Tserovani By “Bank Constanta” – December 2010 Supporting Georgian Folk Music – Art Gene 2010 – June/ July 2010 Member of Smart Campaign

PRODUCTS, SERVICES AND RATES Deposits and payment: We have already launched our new depository system with the highest interest rate – 17% p.a.. Currently all our branches welcome consumers to open Term, Cumulative, On-call and Child Deposits Loans: Mortgage loans, consumer loans, credit cards etc Currently there are 9 different types of loans provided by Bank Constanta. The loans are primarily available for small and medium business owners and entrepreneurs.

THE TYPES OF LOANS ARE: • Mini Loans; • Express Loans; • Business Loans; • Agricultural Loans; • Seasonal Loans; • SME Loan • Employee overdraft • Pawn Shop Loan • Mini Loans: Mini loan is ideal as for regular business owners also for entrepreneurs involved in agricultural and touristic business activities. This type of loan is intended to increase working capital, purchase fixed assets and further expand borrower’s business. It is also possible to receive consumer loan based on the revenues generated from the active business. The loan is disbursed with a third-party guarantee. The amount varies from 60 to 1200 USD and from 100 to 2000 GEL. Annual interest rates vary from 36% to 48% depended on amount and risk analysis. For Mini Loan minimum 3 month working experience is required. • Express Loans: This type of loan is ideal for small business owners*, who are short in time and need unsecured money resources to expand their business activities. Express loans are intended to increase working capital, purchase fixed assets and further expand borrower’s business. It is also possible to receive consumer loan based on the revenues generated from the active business. The loan is disbursed with a third-party guarantee. The amount varies from 1201 to 10000 USD. Under certain circumstances 3-month grace period may also apply. Express loans are confirmed within 1 business day. Annual interest rates vary from 24% to 48% depended on amount and risk analysis.

*Minimum 6 months of business experience is required. • Business Loans: Business owners* searching for the ways to increase working capital, purchase fixed assets and further expand their business activities can find this type of loan very helpful. The amount varies from 1201 to 30000 USD and can be borrowed for 60 months. Business loans are secured loans, which mean the lender will take a security interest in borrower’s property. Under certain circumstances 6-month grace period may also apply. Business loans are confirmed within 3-5 days. Annual interest rates vary from 16% to 48% depended on amount and risk analysis. *Minimum 6 months of business experience is required. • Agricultural Loans: This type of loan is designed for those having business in agricultural sector*. By using Agricultural loan, borrowers can purchase agricultural equipment/machinery, all other necessary materials and/or expand their business activities. The loan amount varies from 600 to 30000 USD. Agricultural loans can be borrowed for 60 months and are usually confirmed within 3-5 days. Annual interest rates vary from 23% to 48% depended on amount and risk analysis. *Minimum 6 months of business experience is required. • Seasonal Loans: For those operating their businesses in the sector of tourism* and wishing to expand their activities. Seasonal loan enables customers to enjoy flexible payment option and notable grace period. Seasonal loans are intended to increase working capital, purchase fixed assets and further expand borrower’s business. It is also possible to receive consumer loan based on the revenues generated from the active business. Seasonal loans are confirmed within 3-5 days. Annual interest rates vary from 18% to 48% depended on amount and risk analysis. *Minimum 6 months of business experience is required. • SME Loan: SME Loan is intended to stable, high turnover businesses that are searching for the ways to increase working capital, purchase fixed assets and further expand their business activities. The amount varies from 30000 to 200000 USD and can be borrowed for 60 months. SME loans are secured loans, which mean the lender will take a security interest in borrower’s property. These types of loans are confirmed within 3-5 days. Annual interest rates vary from 15% to 48% depended on amount and risk analysis. • Employee overdraft Employee Overdraft is intended for Bank Constanta staff only. Maximum amount of overdraft is limited to 90% of employee’s monthly net salary. Interest rate is accrued on monthly bases and represents 24%. Maturity of overdraft depends on duration of employee’s contract with employer. These types of loans are confirmed within 1day. • Pawn Shop Loan Pawn Shop Loan is consumer type of loan that has fast disbursement period and strong collateral such as jewelry and gold. The amount varies from 50 to 1000 USD (100 – 2000 Gel) and can be borrowed for 6 months. Annual interest rates vary from 36% to 42%. • Banking Guarantees Bank approves a guarantee to ensure compliance with the obligations specified by the contract. The terms of guarantee are the following: Amount $ 60 - $ 200 000 up to 60 months; Interest rate vary from 4% to 7%; Guarantees are approved within 3 to 5 days.

GEL

FX

Total

83 505 2 615 873 0 221 652 0 11 210 0 3 199 79 2 376 684 3 049 0 1 621 2 700 999

24 549 14 525 097 0 7 174 251 0 236 497 16 992 87 737 44 642 6 942 532 22 445 0 0 14 549 646

108 053 17 140 970 0 7 395 903 0 247 706 16 992 90 937 44 721 9 319 216 25 495 0 1 621 17 250 645

312 0 0 0 58 760 0 59 071 2 641 928

314 0 12 359 0 5 307 298 0 5 319 972 9 229 674

626 0 12 359 0 5 366 058 0 5 379 043 11 871 602

359 332 792 111 432 779 0 0 0 495 147 -242 525 -224 14 687 658 055 1 284 472

1 262 525 1 483 052 220 526 0 0 0 0 0 0 0 1 106 019 2 368 545

1 621 858 2 275 163 653 305 0 0 0 495 147 -242 525 -224 14 687 1 764 075 3 653 017

1 366 106 553 864 6 882 910 130 689 1 258 605 2 180 020 12 372 194 -11 087 722

0 108 473 0 0 0 0 108 473 2 260 072

1 366 106 662 337 6 882 910 130 689 1 258 605 2 180 020 12 480 667 -8 827 650

-8 445 794

11 489 746

3 043 952

Interest Income 1 2 2,1 2,2 2,3 2,4 2,5 2,6 2,7 2,8 2,9 3 4 5

Interest Income from Bank's "Nostro" and Deposit Accounts Interest Income from Loans from the Interbank Loans from the Retail or Service Sector Loans from the Energy Sector Loans from the Agriculture and Forestry Sector Loans from the Construction Sector Loans from the Mining and Mineral Processing Sector Loans from the Transportation or Communications Sector Loans from Individuals Loans from Other Sectors Loans Interest and Discount Income from Securities Other Interest Income Total Interest Income

Interest Expense 6 7 8 9 10 11 12 13

Interest Paid on Demand Deposits Interest Paid on Time Deposits Interest Paid on Banks Deposits Interest Paid on Own Debt Securities Interest Paid on Other Borrowings Other Interest Expenses Total Interest Expense Net Interest Income

Non-Interest Income 14 14,1 14,2 15 16 17 18 19 20 21 22 23

Net Fee and Commission Income Fee and Commission Income Fee and Commission Expense Dividend Income Gain (Loss) from Dealing Securities Gain (Loss) from Investment Securities Gain (Loss) from Foreign Exchange Trading Gain (Loss) from Foreign Exchange Translation Gain (Loss) on Sales of Fixed Assets Non-Interest Income from other Banking Operations Other Non-Interest Income Total Non-Interest Income

Non-Interest Expenses

31

Non-Interest Expenses from other Banking Operations Bank Development, Consultation and Marketing Expenses Personnel Expenses Operating Costs of Fixed Assets Depreciation Expense Other Non-Interest Expenses Total Non-Interest Expenses Net Non-Interest Income

32

Net Income before Provisions

24 25 26 27 28 29 30

33 34 35 36

37

Loan Loss Reserve Provision for Possible Losses on Investments and Securities Provision for Possible Losses on Other Assets Total Provisions for Possible Losses

Net Income before Taxes and Extraordinary Items

40

Taxation Net Income after Taxation Extraordinary Items

41

Net Income

38 39

627 003 0 73 678 700 680

X X X 0

-9 146 475 -41 270 -9 105 204

11 489 746

-9 105 204

11 489 746

11 489 746

627 003 0 73 678 700 680 2 343 271 -41 270 2 384 542 0 2 384 542

Bank: JSC "Bank Constanta" Date: 31-Dec-10

Balance Sheet

Reporting Period N 1 2 3 4 5 6,1 6,2 6 7 8 9 10 11 12

ASSETS Cash Due from NBG Due from Banks Dealing Securities Investment Securities Loans Less: Loan Loss Reserves Net Loans Accrued Interest and Dividends Receivable Other Real Estate Owned & Repossessed Assets Equity Investments Fixed Assets and Intangible Assets Other Assets TOTAL ASSETS

GEL

FX

589 467 193 756 88 535 0 0 10 921 143 -233 358 10 687 785 257 841 152 556 114 000 8 041 930 456 992 20 582 862

1 938 890 3 022 808 1 739 157 0 0 58 100 860 -1 591 979 56 508 881 836 940

0 524 027 0 0

0 1 413 069 0 0

2 566 628 58 760 224 544 0 3 373 958

63 647 385 1 204 821 12 716 0 66 277 991

Total

2 528 358 3 216 564 1 827 691 0 0 69 022 004 -1 825 337 67 196 666 1 094 781 X 152 556 0 114 000 X 8 041 930 557 995 1 014 988 64 604 671 85 187 533

LIABILITIES 13 14 15 16 17 18 19 20 21 22

Due to Banks Current (Accounts) Deposits Demand Deposits Time Deposits Own Debt Securities Borrowings Accrued Interest and Dividends Payable Other Liabilities Subordinated Debentures Total Liabilities

0 1 937 095 0 0 0 66 214 013 1 263 581 237 260 0 69 651 949

EQUITY CAPITAL 23 24 25 26 27 28 29 30 31

Common Stock Preferred Stock Less: Repurchased Shares Share Premium General Reserves Retained Earnings Asset Revaluation Reserves Total Equty Capital TOTAL LIABILITIES AND EQUITY CAPITAL

17 405 850 0 0 0 0 -1 870 266 0 15 535 584 18 909 542

X 17 405 850 X 0 X 0 X 0 X 0 X -1 870 266 X 0 X 15 535 584 66 277 991 85 187 533


CMYK

28

HEADLINE NEWS & ANALYSIS

best georgian banks

FINANCIAL

MARCH 28. 2011 | FINCHANNEL.COM

JSC TBC Bank

Photo: Irakli Kvizhinadze

SHAREHOLDERS:

CHANGES IN SHAREHOLDERS:

TBC Bank’s shares are held by six major financial institutions: IFC, DEG, EBRD, FMO, JP Morgan, Ashmore and Georgian individuals: Mamuka Khazaradze (Chairman) Badri Japaridze David Khazaradze Steffen Suhany (DEG) Mike Hesketh Emile Groot Eric Rajendra

No Changes

MISSION & VISION: TBC BANK’S VISION TBC Bank is a leading company in the region. It is distinguished by outstanding client services, constant innovations and aspiration to develop further The success of the Bank is thanks to well developed and diverse service channels, effective sales systems and the high quality of its services The Bank is known for its outstanding treatment of its employees. It creates an ideal environment for resultoriented and motivated professionals and places high value on the principles of teamwork The Bank works towards ensuring the preservation and strengthening of national cultural values, thus additionally contributing to the development of society

TBC BANK’S MANAGEMENT MISSION In order to enable TBC Bank’s management and staff to create the bank determined by the vision, mission of the management in the process of their daily activity is: To ensure a high level of client satisfaction and a sustainable increase in the company’s value.

INT. RATING & AWARDS: BANKER’s AWARD: Bank of the year 2002, 2003, 2004 ,2005, 2010 Global Finance: Best Bank 2005, 2006, 2007 Deutsche Bank’s STP Excellence Awards 2006,2007,2008,2009 ISO 9001:2000 Certificate for Quality IISO 9001:2008 Certificate for Quality B.I.D Awards International Star for Quality 2007 EBRD Award: Most Active Issuing Bank in Georgia in 2009 • TBC Bank’s Ratings • FitchRatings: B and B • Moody’s: B1 and Ba3

NUMBER OF BRANCHES: 37 branches and 7 service center

CUSTOMER GROUPS: Corporate and Retail Latest developments:

CHANGES IN MANAGEMENT: New member of the management team - George Shagidze (Deputy General Director)

RECEIVED AWARDS AND PARTICIPATION: • On 3rd December 2010 annual bank rankings were announced by Financial Times Group in London. For the fifth time TBC Bank was named as the Best Bank in Georgia among the biggest financial institutions; • European Bank for Reconstruction and Development (EBRD) named TBC Bank as the most active bank in trade finance; • International rating agency FithRatings confirmed the ratings of TBC Bank B + and B; • Moody’s Investors Service has upgraded by two notches to B1 from B3 the long-term foreign currency deposit rating of TBC Bank (TBC). At the same time, Moody’s has affirmed the bank’s D bank financial strength rating (BFSR), which maps to a Ba3 baseline credit assessment (BCA), and has changed its outlook to stable. Similarly, the bank’s Ba3 long-term global local currency (GLC) deposit rating was confirmed with a stable outlook.

• NEW BRANCHES: TBC Bank’s new service centre One more new service centre opened its doors in Tbilisi Central (2 Vagzali Square). It will serve customers 7 days a week and offer them a full spectrum of banking services. Currently 36 branches and 7 service centers of TBC Bank operate in Georgia. The Construction of Business Centre in Kutaisi is finished On December 29 TBC Business Centre was opened in Kutaisi. President of Georgia, Management of TBC Bank and government officials attended the opening ceremony. The investment made by TBC Bank for the construction of business centre consituted GEL 14 million. This is one more large-scale project implemented by TBC Bank by which the bank made a New Year present to the residents of Kutaisi. TBC Business Centre is situated on the central square of Kutaisi and represents a unique architectural building. The total space of the building is 11000 square meters. In the future a new branch of TBC Bank and a business centre will be placed here. A business centre will serve tens of companies.

NEW SERVICES OR PRODUCTS OFFERED: Deposit “My Goal” for YOUR GOALS! With the deposit “My Goal” TBC Bank offered customers one more opportunity to fullfil their wishes. This deposit is a kind of “cash-box” which will help you to accumulate money through monthly savings for a particular purpose and to increase it by accrued interest. Initial minimum deposit is not required to open the deposit and each consecutive minimum deposit is 10 GEL/USD/EUR/GBP. No cap limits are set for the deposit. In addition, each depositor can select a name for the deposit according to the purpose he/she is saving money, i.e. My Car, My Appartment, My Computer and etc. SMART CLUB for TBC Bank’s loyal customers Bonus and present just for being our client – this is the main

idea of TBC Bank’s SMART CLUB. From now on SMART CLUB will unite TBC Bank’s loyal customers and offer them the most unique and innovative service in Georgian banking sector. More precisely, the members of the club will receive various presents from the bank without making any additional and significant efforts – they will be awarded SMART points just for using our services which afterwards can be exchanged for presents at our partner stores and service providers. As a result, each purchase made with our bank card, each saving or loan will bring new, additional benefit to our customers. By awarding points TBC Bank expresses its gratitude to loyal customers and gives them additional benefits for using TBC Bank’s services. For additional information please visit special SMART CLUB website www.SmartClub.ge TBC Bank’s Smart Club is the most large-scale social media project in Georgia. The number of fans of Smart Club page on Facebook significantly increases every day and now cover 25% of the Georgian Facebook users. TBC Platinum _ Three Bank Products in One Card TBC Bank created an exclusively designed Visa credit card equipped with microchip for its VIP clients. TBC Platinum includes three different banking products: high class Visa credit card, savings account and current account. Its unique features distinguish TBC Platinum from standard credit cards: every month interest rate is accrued on the positive balance of the card: annual 6% in GEL, annual 5% in USD, and annual 4% in EUR. Additionally, upon the purchase of the card, cardholder becomes a member of Visa Platinum Club. The membership enables the client to enjoy many discounts and privileges around the world in the following areas: hotels and resorts, airline companies, travel, recreational spa centres and many more.

PUBLIC CAMPAIGNS AND CHARITY: 800 000 GEL FOR CHARITY In 2010 TBC Bank implemented significant projects in the social, cultural and public spheres, launching a number of long-term projects and actively continuing the implementation of projects begun in previous years. General information about TBC Bank’s charitable activities:

PRODUCTS, SERVICES AND RATES Please see web site: www.tbcbank.ge


CMYK

FINANCIAL HEADLINE NEWS & ANALYSIS FINCHANNEL.COM | MARCH 28. 2011

29

best georgian banks

Bank Republic, Societe Generale Group SHAREHOLDERS: • Societe Generale Group – 80%; EBRD – 10%; Lasha Papashvili – 10% • Mission & vision: Bank Republic-Societe Generale Group is one of the most successful financial institutions. The Bank is on one of the leading positions in the corporate and retail banking market of the country. Long-term growth strategy of the bank relies on its fundamental values: professionalism, innovation and team spirit. As a member of the Societe Generale Group, Bank Republic creates more value for the clients by drawing on the combined resources and expertise of the Group. Leading the socially responsible business, the strategic direction of Bank Republic is: the easy access to the banking solutions, the best and innovative products and superior quality of service. • Ambitions 2015 – new strategy; new approach thus aimed at development of Bank Republic as the Most Desirable Bank envisaging more perfection of the: • Client relationship • Transformation of operating model • Management values and employees’ development • Content and modes of communication. • Int. rating & awards: AA- by Fitch - (this is the SG HO rating which is applicable to subsidiaries as well) • Number of branches: 49 • Customer groups: Bank Republic is leading the universal business model and offers the best banking solutions and superior quality of service to both physical and legal entities.

LATEST DEVELOPMENTS: • Changes in shareholders: • No changes • Changes in management: • In Dec 2010, new CEO – Christian Carmagnolle has been appointed in BR, substituting the formed CEO – Gilbert Hie. • Received awards and participation: • One of the Leading Newspapers Georgian Times and Research company GORBI held the annual ceremony of awarding ”Best Businessmen and Company” of the year. BR was awarded in the nomination “International Recognition” and “Stable Activity”. • Public Relations Agency PROFILE awarded Bank Republic with the nomination of “Trust and Reputation”. BR was granted the medal and diploma. • BR was named as the number 1 stable Bank by the survey results made by Information Agency GBC News (Georgian Business Consulting). • Recently survey on “Which Bank You Trust” was conducted among journalists. Survey revealed BR’s position being on the second place among its competitors. • BR was awarded the Golden Brand nomination for “the Bank with the highest social responsibility” three consecutive years (2008, 2009, and 2010) by Financial and Global Idea on Annual Awarding ceremony. • New branches: No • Public campaigns and charity: Alongside the sponsorship

activities Bank Republic is socially responsible for charity issues as well. In Georgia charity is a bit like tradition versus modernist views and efficiency. BR together with charity fund Tsiskari executes various charity projects. Core directions of financing are to assist the needy families, orphanages, renovation and reconstruction of churches, monasteries and old national heritages. Foundation provides support to well-known pubic figures, professors, actors, etc. in the respect of providing with various types of financial support. Charity activities undertaken

compared to other savings. Child Deposit A long term, fixed maturity savings deposit, designed to save money for child’s education or any other purposes. Interest rate is fixed for the first two years of the deposit term and may vary thereon. Time Deposit Time Deposit allows placing funds in a fixed amount for a fixed period of time during which high fixed interest is accrued. Compared to other deposits, Time Deposit offers highest interest rates. Privileged Term Deposit Privileged Term Deposit allows placing funds for a fixed period of time during

SCAN THIS CODE TO READ EXCLUSIVE INTERVIEW WITH CHRISTIAN CARMAGNOLLE, CEO OF BANK REPUBLIC, SOCIETE GENERALE GROUP ON YOUR MOBILE PHONE. by BR and foundation Tsiskari convey Bank’s major approach towards the society and country as a whole. Besides, every year, within all the subsidiaries of SG, special Citizen Commitment Week is implemented covering various solidarity projects undertaken by each subsidiary. Bank Republic every year conducts the CCW and implemented various solidarity actions such as: blood donation – by participation of staff; exhibition of masterpieces of orphans and needy children; Participation in marathons against breast cancer; support of disabled people, etc.

PRODUCTS, SERVICES AND RATES Retail Banking:

DEPOSITS AND PAYMENT: DEPOSITS Megobari Deposit An account with no maturity and unlimited frequency of amount deposited or withdrawn. High interest is earned on untouched balance during the month. Interest is also earned on variable amounts. Withdrawals possible with banking card. On-Call Deposit An account with unlimited term. No limitations to the frequency of amount deposited or withdrawn. Interest rate is relatively low

which high fixed interest is accrued. As a special flexibility, customer is allowed to make additional installments to the deposit Convertible Deposit A fixed term deposit which gives an opportunity to exchange the full amount of the deposit from its original currency of denomination to a different one without losing already generated interest income. After the conversion, deposit continues its existence in new currency Flexible Deposit Flexible Deposit provides customer with an opportunity to deposit funds for a fixed period of time and withdraw up to 30% of deposited amount without canceling the deposit agreement, Cumulative Deposit A fixed term deposit, which gives customer an opportunity to accumulate funds through monthly savings for a desired purpose. Current Account A base account for relationship with clients. Following operations possible: local and international money transfers, currency exchange, cash transactions. Debit Cards Visa Electron The cheapest and the most widespread debit card in BR. Primarily used for payroll programs and other standard clients. Visa Classic Compared to Visa Electron provides customers with more advantages: relatively high transaction and withdrawal limits, internet

operations. Visa Gold A privileged card offered to special customers; provides a wide network of Visa International discounts at various merchants worldwide. High transaction and withdrawal limits. Interest bearing account Visa Platinum The most prestigious cards issued by BR, designed for very important existing or potential clients. Provides a wide network of Visa International discounts at various merchants worldwide. High transaction and withdrawal limits. Interest bearing account

Payroll Loans An unsecured loan that provides BR payroll customers with more flexible loan conditions compared to other consumer loans. Duration up to 36 years. Deposit Backed Loan A loan issued under guarantee of deposit placed with the bank. Duration - up to deposit maturity. Annual interest rate + 4 to deposit interest rate Overdraft A short-term, maximum 1 year non-purpose loan, which enables customer to overdraw account and to bridge a temporary lack of financial funds.

LOANS, CREDIT CARDS:

BANKING:

Credit Cards Credit Card - Dream Card A revolving credit card giving opportunity to use credit limit under condition of making periodic repayments. Release from interest payment if outstanding limit is repaid within 55 days. Loans Mortgage Loan - My Nook A mortgage loan aimed at purchase, construction or renovation of private real estate. Duration - up to 25 years. Auto Loan Formula 1 A loan determined for purchase of a new vehicle or a used private vehicle. Duration - up to 7 years Consumer Finance Loan A loan aimed at acquisition of merchandize or services at bank’s partner merchants. Available at merchant’s premises or at bank’s branches. Duration - up to 1 year. Consumer Finance Auto Loan A loan aimed at acquisition of new vehicles at bank’s partner auto dealers. Duration up to 7 years. Comfort Loan A loan issued for financing customer’s personal affairs such as: traveling, education, purchase of home furniture and fixtures, consumer electronics or other personal items/purposes. Duration up to 7 years.

Call Center: 24 hour service, Inbound and outbound calls, consultation on banking products and services, account information, banking cards help desk

INTERACTIVE VOICE RESPONSE (IVR): Allow customers to perform the following operations via telephone: balance inquiry, exchange rates inquiry, reaching a specially designated operator for card blocking Internet Banking An opportunity to perform desired banking operations at any time and place in the world via internet. Currency Exchange Cash or non-cash currency exchange operations at Bank’s commercial exchange rate. No additional commission is charged.

OTHER: Payment Checks Selling American Express Traveler’s Checks Cashing: American Express Traveler’s Checks and Banking Checks Individual Safe Deposit Boxes Individual Safe Deposit Boxes are used for storing securities, important

documents, jewelry, artifacts, and other valuables. The Safe Deposit Boxes are leased for the period chosen by the client. Bank offers various size safe deposit boxes for clients convenience.

FINANCIAL HIGHLIGHTS: • Loan Portfolio Development: Retail Portfolio has decreased by (-16) % (-37.6 mln GEL) and reached 198.9 mln GEL. The Corporate loan portfolio has decreased by 21% (60.8 mln GEL) reaching 227.5 mln GEL by the end of December 2010. Total Loan Portfolio has decreased by 19% (98.4 mln GEL) and reached 426.5 mln GEL. • Total Assets Development: During 2010 the main change in Total Assets’ structure was the reduction of Net Loans’ portion from 56% to 47%. On a Y-OY basis Total Assets has decreased by 5% (40.1 mln GEL) and reached 772.8 mln GEL. During the same period the growth rate of the Banking Industry was (31) %. • Total liabilities Development: On the Liabilities side the primary evolution took place on Deposit side. The fraction of the Total Deposits has increased from 63% to 70%. The main driver of Increase on Deposits Portfolio is our Current Accounts (13%). BR’s Borrowings has decreased by 22%. Subordinated Loans increased by 5%. • Number of clients (Juridical): 5,765 – (-2%) growth rate • Number of clients (Individuals): 178,376 – 1% growth rate • Number of Employees: 974 – (-2)% growth rate

SHAREHOLDER PROFILE: • SOCIETE GENERALE81.18% • Lasha Papashvili – 8.82% • EBRD – 10%


CMYK

30

HEADLINE NEWS & ANALYSIS

MARCH 28. 2011 | FINCHANNEL.COM

best georgian banks

JSC Cartu Bank DISTANCE BANKING: Bank Client Bank Client is a convenient, easy and safe way to simply manage your company funds from your office, without having to visit the bank. The software keeps a copy of the bank’s information on your accounts that enables you to use the core functions of the software by using the communication with the bank. By using the software, you can perform the following transactions: • Transfers in the national currency across the territory of Georgia • Transfers in foreign currency in any country of the world • Currency exchange operations • Sending a notice to the bank on any matter • Having access to the bank transactions performed on your account for any period • Having access to Georgian and foreign banks and their codes

INTERNET BANKING Advantages of Internet Banking: • Effective way of disposing your accounts • Access to your accounts from any point • Saving the time to visit the bank • A secure and reliable system to perform banking transactions • Additional benefit of SMS service • Receiving information on the new products and services of the bank Our secure and reliable Internet Banking employing modern technologies enables you: • To convert money and put it to your accounts • To promptly monitor your personal and company accounts • To pay utility and other charges • Access to and printing out account statements for any period • Access to the bank's official commercial rates for any period • Access to the codes of commercial banks operating in Georgia and SWIFT codes of foreign banks SMS Banking SMS Banking will help you to control your accounts, make a variety of bank transactions through SMS and obtain prompt information on transactions made on your accounts. With SMS banking, you can: • Fill up your and other's cell phone balance; • Check balance of card and current accounts; • Obtain information on the official currency exchange rate of GEL; • Obtain information in automatic mode on transfers on our account and sums withdrawn from your account. • Obtain information in automatic mode on transactions made on your account through POS terminal or Internet Banking.

DEPOSITS TERM DEPOSIT Save your money safely and get maximum interest income. If you open a Term Deposit account, Cartu Bank offers a high interest rate. And if you open a long-term deposit account, you’ll get even more interest earnings. • account opening and service is free • you can enjoy a high interest rate • you can choose a preferable deposit term from 3 to 24 months. If you open a Term deposit account, Cartu Bank offers for free: • Standard Internet Banking; • Free SMS Banking for three months • VISA or MasterCard plastic cards

FLEXIBLE DEPOSIT Flexible Deposit enables you: • To reliably deposit your money for a definite term. • To withdraw at any time 30% of the sum without losing the interest earnings of your remaining deposit savings. Advantages of Flexible Deposit: • With us it is free to open and serve a deposit account • With us you'll get a high interest rate • With us you can withdraw part of your money and put it back to deposit • With us you can enjoy deposit secured overdraft or loan on concessionary terms If you open a Flexible Deposit account, CARTU Bank offers for free: • Standard Internet Banking • Free SMS Banking for three months • VISA and MasterCard plastic cards

SAVINGS PLAN Open a Savings plan account with Cartu Bank and enjoy the advantages: • With us, it is free to open and serve a savings plan • With us, a small minimum payment is needed to open a savings plan • With us, each of your deposit payment accrues high interest rate • With us, you can add money on the deposit without having to visit the bank, via Internet Banking or by means of standing order • With us, you can use a deposit-backed overdraft or loan If you open a savings plan, Cartu Bank offers you for free: • Internet Banking • Free SMS banking for three months • VISA and MasterCard plastic cards

ON CALL DEPOSIT Open a on call deposit account with Cartu Bank, deposit or withdraw your money at any time you wish and get maximum interest income.

ADVANTAGES OF ON CALL DEPOSIT: • You can deposit money on or withdraw it from the account at any time you wish • Deposit term is unlimited until you request cancellation • You can add your money on the deposit without having to visit the bank, via Internet Banking or standing order If you open a On Call Deposit account, Cartu Bank offers you for free: • Internet Banking • Free SMS banking for three months Cartu Bank offers documentary operations in national and foreign currency. We can assist you in fulfilling any transaction successfully. You can enjoy: • Letter of credit • Bank guarantee • Documentary collection (for legal entities only). You manage your business; we create comfort for you through fast and quality service.

ELECTRONIC COMMERCE Develop a new business space, offer your products to more customers and boost your sales! E-commerce is a bank service enabling you to sell your products/services in the Internet and get VISA and MasterCard cards as a means of payment. We can provide consultations in designing an e-shop website, organizing the delivery of products and services and making guaranteed and secure payments. E-commerce makes it possible for you to: • Sell your services and products via the Internet; • Boost your sales in the regions

of Georgia; • Expand the area of your sales across the whole world; • Cut shop chain expansion costs; • Make your services and products ever more available for consumers. Standard package of services: • Discount in web-design studios; • Discount in mail/courier services; • Free consultations on software; • Receiving e-mail notices of each transaction made. Premium package: • E-shop with a design modification opportunity; • Consultation and training for e-shop administrators; • E-shop integration into the system; • Opening a free multi-currency account with the bank; • Installation of a full internet banking DG Pass software; • One-year SMS Banking service; • Discount in mail/courier services; • Receiving e-mail notices of each transaction made. Advantages of e-commerce: • Payments from any country of the world by using VISA and MasterCard cards; • Making fast guaranteed and secure payments; • High security provided by Verified by VISA and MasterCard SecureCode technologies; Advantages of Verified by VISA and MasterCard SecureCode technologies: • A very low risk of unauthorized transactions; • Guaranteed payment of authorized transactions; • High level of trust among consumers making online purchases. E-commerce is a facility bringing additional benefits for your customers: • Time saving; • Home delivery of products purchase; • Online card authorization in making transactions. Acquiring Cartu Bank offers POS terminal services. This is to imply an alternative method of receiving of payment for selling of goods in trade objects, in particular, the settlement via international plastic card instead of money in cash.

ADVANTAGES OF THE SERVICE: • In case of lack of money in cash, no risk of derangement of transaction is to occur. • Increased volume of sales (often, when using a card, the customer spends more than when paying in cash) • Advantageous for the customers to pay by means of POS-terminal as conversion of money into cash through ATMs is more expensive. • For trade object, it is simple to register and control cash drive as long as amounts withdrawn by POS terminals are to be directly transferred to its bank account. Advantages of Cartu Bank service: • Free POS terminal installation • Extensive experience in acquiring terminal business • The first authorized bank in Georgia to serve international VISA plastic cards • Unprecedented service of 4 cards in Georgia through 1 POS terminal: - VISA - MasterCard - Amex - Diners Club

LOANS Bank offers its clients the following credit products: • Energy Efficiency Loan • Network Business Loan • Small and Medium-sized Loan • Import Replacement Production Loan • Agriculture Development Loan • Export-Import Business Transactions Loan • Public Enterprises Privatization Loan

FINANCIAL

Bank: Date:

RC

JSC CARTU BANK 31.12.2010

Balance Sheet

in GEL

Assets

N 1

Cash

2

Cash in NBG

3

Cash in other banks

4

Securities for dealing transactions

5

Investment securities

GEL

Foreign currency

7 092 649

Total

4 553 275

11 645 924

26 270 052

4 654 413

30 924 465

44 594 871

23 485 165

68 080 036

0

2 901 124

2 901 124

18 146 542

0

18 146 542 428 159 712

6,1

Total loans

72 788 705

355 371 007

6,2

minus: reserve against possible loss of loans

-7 990 422

-54 411 400

-62 401 822

64 798 283

300 959 607

365 757 890

7 184 436

6

Net Loans

7

Inrterests and dividends due

2 589 554

8

Overtaken immovable and movablke property

6 662 187

9

Investments in authorized capital

2 072 360

10

Fixed assets and intangible assets

11

Other assets

12

Total assets

9 773 990 X

6 662 187

3

14 942 521

2 072 363 X

14 942 521

1 496 250

293 156

1 789 406

188 665 269

344 031 179

532 696 448

Liabilities 13

Bank deposits

14

Current deposits (accounts)

15 16 17

55 378

37 214 773

37 270 151

22 773 283

13 919 670

36 692 953

Call deposits

2 980 324

18 463 787

21 444 111

Time deposits

1 315 092

27 466 298

28 781 390

Issued securities

0

0

0

18

Borrowings

0

28 596 952

28 596 952

19

Interests and dividends payable

1 874 142

20

Other liabilities

21

Subordinated liabilities

22

Total liabilities

27 351

1 846 791

892 493

1 598 207

2 490 700

0

241 987 200

241 987 200

28 043 921

371 093 678

399 137 599

Share capital 23

Ordinary shares

24

Privileged shares

25

Minus: paid-in shares

26

Unissued capital

27

Total reserves

28

Retained earnings

29

Assets restatement reserves

54 716 000

X

0

X

0

0

X

0

0

X

0

5 638 034

X

5 638 034

73 204 815

X

73 204 815

0

X

0

X

133 558 849

30

Total share capital

133 558 849

31

Total liabilities and share capital

161 602 770

Bank: Date:

RI

2 2,1 2,2 2,3 2,4 2,5 2,6 2,7 2,8 2,9 3 4 5

6 7 8 9 10 11 12 13

371 093 678

532 696 448

JSC CARTU BANK 12.31.10

Income Statement

N

1

54 716 000

Interest income Interest income from banks according to nostro accounts and deposits Interest income from loans From interbank loans From loans to the tarde and service sector From loans to the energy sector From loans to the agrarian and forestry sector From loans to the construction sector From loans to the mining and processing center From loans to the transport and communications sector From loans to individuals From loans to other sectors Interest and discount income from securities Other interest income Total interest income Interest costs Interests paid on call deposits Interests paid on time deposits Interests paid on bank deposits Interests paid on own debentures Interests paid on borrowings Other interest costs Total interest costs Net interest income

in GEL

GEL

Foreign currency

1 521 040 13 854 198 0 3 920 715 32 363 540 059 2 816 571 2 168 859 18 544 527 445 3 829 642 717 803 0 16 093 041

30 438 41 583 941 0 19 337 980 155 058 982 298 8 903 496 3 719 791 398 126 4 706 798 3 380 394 0 0 41 614 379

1 551 478 55 438 139 0 23 258 695 187 421 1 522 357 11 720 067 5 888 650 416 670 5 234 243 7 210 036 717 803 0 57 707 420

411 670 117 877 4 007 0 0

892 131 2 098 214 85 326 0 23 474 012

533 554 15 559 487

26 549 683 15 064 696

1 303 801 2 216 091 89 333 0 23 474 012 0 27 083 237 30 624 183

1 112 522 1 601 842 489 320 0 0 5 3 888 364 941 393 -14 922 6 925 136 1 078 488 13 930 986

-248 769 1 953 575 2 202 344 77 265 -42 018 0

1 847 002 268 560 7 794 544 241 798 1 410 360 4 272 640 15 834 904 -1 903 918

308 339 47 104

170 881 526 324 4 066 476

2 155 341 315 664 7 794 544 241 798 1 410 360 4 443 521 16 361 228 2 162 558

19 131 172

32 786 741

31

Non-interest income Net commission and other income according to services Commission and other income according to services rendered Commission and other income from services received Received dividends Profit (loss) from dealing securities Profit (loss) from investment securities Profit (loss) from currency operations Profit (loss) from currency restatements Profit (loss) from property sales Non-interest income from other bank operations Other non-interest income Total non-interest income Non-interest costs Non-interest icosts from other bank operations Bank development, consulting and marketing costs Bank personnel costs Fixed assets maintenance costs Depreciation and amortization costs Other non-interest costs Total non-interest costs Net non-interest costs

32

Net profit before reserve allocations

13 655 569

33

Loss from impairment of loans Loss from impairment of investments and securities Loss from impairment of assets Total loss from impairment of laons

10 966 983 196 1 784 274 12 751 453

Pre-tax profit before incidental income and expenses Profit tax Pre-tax profit Incidental income (expenses) Net profit

904 116 3 052 486 -2 148 370

19 131 172

0 -2 148 370

19 131 172

14 14,1 14,2 15 16 17 18 19 20 21 22 23

24 25 26 27 28 29 30

34 35 36 37 38 39 40 41

Total

863 753 3 555 417 2 691 664 77 265 -42 018 5 3 888 364 941 393 -14 922 7 654 111 5 155 835 18 523 786

0 728 975 4 077 347 4 592 800

X X X 0 19 131 172

10 966 983 196 1 784 274 12 751 453 20 035 288 3 052 486 16 982 802 0 16 982 802


CMYK

FINANCIAL HEADLINE NEWS & ANALYSIS FINCHANNEL.COM | MARCH 28. 2011

Bank of Georgia Bank of Georgia is the leading Georgian bank offering a broad range of corporate banking, retail banking, wealth management, brokerage and insurance services to its clients in Georgia, Ukraine and Belarus. Bank of Georgia is the largest bank in Georgia by assets, loans, deposits and equity, with 36.2% market share by total assets (all data according to the NBG as of 31 December 2010). The bank has 142 branches and more than one million retail and corporate current accounts. Bank of Georgia on a standalone basis reported Q4 2010 Net Income of GEL 30.0 million, (up 26.7% q-o-q), which compares to the standalone Net Income of GEL 7.8 million in Q4 2009. In Q4 2010, Total Operating Income (Revenue) on a standalone basis grew by 6.9% q-o-q to GEL 80.1 million, (up 28.5% y-o-y), driven by 4.4% q-o-q increase of Net Interest Income to GEL 54.8 million, (up 22.4% y-oy) and 12.5% q-o-q growth of Net Non-Interest Income to GEL 25.3 million, (up 44.1% y-o-y). The growth of the Bank’s standalone Revenue items is the result of the increase of the Bank’s loan book on both quarterly and full year basis, while increased lending and overall business activity translated into the 3.1% qo-q growth of Net Fees and Commission Income to GEL 11.8 million, (up 36.3% y-oy) and 34.0% q-o-q increase in Net Income from Documentary Operations to GEL 3.2 million, (up 44.3% y-o-y). In Q4 2010 the Bank’s Net Foreign Currency Related Income on a standalone basis grew 19.3% q-o-q to GEL 9.7 million, up 5.1% y-o-y. Bank of Georgia’s standalone Q4 2010 NNOI grew to GEL 45.0 million, an increase of 12.4% on a quarterly and 57.1% on a yearly basis, a result of improved operational efficiency and cost containment measures implemented by the Bank. In Q4 2010, Total Recurring Operating Costs increased by 0.5% q-o-q to GEL 35.1 million (up 4.2% y-o-y), as the Bank’s standalone Personnel Costs declined by 3.8% q-o-q, predominantly due to the decrease in bonus related expenses resulting in the decrease of Personnel Cost/Income ratio to 23.5% in Q4 2010 from the same ratio of 26.1% in Q3 2010. As a result, Bank of Georgia achieved standalone positive operating leverage of 10.9% on a consecutive q-o-q basis and 31.1% on a y-o-y basis. Bank of Georgia’s standalone Cost/ Income ratio decreased to 44.0% in Q4 2010 from 49.0% in Q3 2010 and from 58.0% in Q4 2009. Due to the combination of Loan Book growth and increased efficiency, Profit Before Provisions grew by 71.6% y-o-y to GEL 44.9 million, up 17.4% q-o-q. The Bank’s Net Provision Expense on a

standalone basis decreased from GEL 9.9 million in Q3 2010 to GEL 9.5 million in Q4 2010. On a full year basis, Bank of Georgia reported strong standalone results with a record Net Income of GEL 91.0 million, which almost tripled compared to the standalone Net Income of GEL 30.8 million in 2009. Revenue grew 12.2% y-o-y to GEL 283.5 million, driven by 7.1% y-o-y increase of Net Interest Income and 26.2% increase of Net Non-Interest Income, and more than offset the 9.0% y-o-y growth of Recurring Operating Costs to GEL 133.2 million, in line with the increased lending and expansion of business activity during the year. As a result of improved operating leverage, NNOI grew 15.2% y-o-y to GEL 150.3 million. Net NonRecurring Costs of GEL 5.1 million remained largely flat compared to previous year. Net Provision Expense in 2010 amounted to GEL 38.3 million, compared to GEL 89.6 million Net Provision Expense in 2009, reflecting the improved credit quality on the back of improved economic environment in Georgia. As of 31 December 2010, Bank of Georgia’s Total Assets on a standalone basis reached GEL 3.9 billion, up 12.1% q-o-q, up 38.9% y-o-y. Bank of Georgia’s standalone Net Loan Book increased 14.4% q-o-q (up 37.1% y-o-y) to GEL 2,205.6 million driven by 21.9% q-o-q increase of the Corporate Net Loan Book to GEL 1,190.7 million up 44.0% y-o-y and 7.0% q-o-q growth of Retail Net Loan Book to GEL 974.3 million, (up 32.2% y-o-y). Standalone NPLs stood at GEL 81.2 million and represented 3.5% of the total gross loan book, a decrease from the same ratio of 4.7% in Q3 2010, when the NPLs amounted to GEL 96.5 million on a standalone basis. As of the year-end 2010, the Bank’s Client Deposits in Georgia amounted to GEL 1,808.5 million, representing an increase of GEL 296.1 million, or 19.6% during Q4 2010, up GEL 681.7 million, or 60.5% y-o-y. The growth of Client Deposits was primarily driven by the Corporate Client Deposits, up 25.8% q-o-q and 71.2% y-o-y, while Retail and Wealth Management Deposits grew 9.4% q-o-q and 43.8% y-o-y and 19.6% q-o-q and 60.4% y-o-y, respectively. As of 31 December 2010 Bank of Georgia on a standalone basis held its record high market share of 36.2%, 35.9%, and 32.2% by total assets, gross loans, and client deposits, respectively in Georgia. Since the year-end 2009, the Bank gained market shares of 3.2% by assets, 4.1% by gross loans and 3.9% by client deposits7.

31

best georgian banks

ProCredit Bank Georgia MAIN SHAREHOLDERS

100% of the bank’s shares is owned by ProCredit Holding AG (Frankfurt, Germany).

MISSION & VISION: ProCredit Bank Georgia is a development-oriented fullservice bank. We offer excellent customer service and a wide range of banking products. In our credit operations, we focus on lending to very small, small and medium-sized enterprises, as we are convinced that these businesses create the largest number of jobs and make a vital contribution to the economies in which they operate. Unlike other banks, our bank does not promote consumer loans. Instead we focus on responsible banking, by building a savings culture and long-term partnerships with our customers. Int. rating & awards: On August 6, 2010 Fitch Ratings, a leading global rating agency, assigned ProCredit Bank Georgia rating “BB-”, which is the best and highest possible rating in Georgia. Number of branches: ProCredit Bank Georgia has 58 branches all over the country. Customer groups: The ProCredit group comprises 21 target group-oriented financial institutions. It focuses on developing countries and transition economies in three regions: Eastern Europe, Latin America and Africa. The bank aims to be the accessible, trusted, socially responsible bank for local small businesses and “ordinary” people who live and work in the area. In its lending business, the bank focuses on small and medium-sized enterprises. At the same time ProCredit Bank provides retail banking services to ordinary people, with a focus on low-income families. In this way the bank aims to be a long-term banking partner for our target groups. By providing socially responsible products, the bank aims to contribute to the economic development of the countries in which it works.

LATEST DEVELOPMENTS: New Head Office ProCredit Bank celebrated the “Richtfest” (roof-topping) ceremony at the construction site together with employees and partners, following the German tradition. The modern 12 000 sq. m. building, being constructed on Kazbegi avenue, with an adjoining park and underground parking facility, will be completed by 2012. It will serve three functions: of the head office, a training centre and a new central branch of the bank.

YOUNG BANKERS’ PROGRAM ProCredit Bank is the first in the Georgian banking sector to introduce “Young Bankers Program.” This new initiative is aimed at supporting recent graduates and last year university students from all over Georgia in acquiring

theoretical knowledge and practical experience in banking, giving them unique opportunity to start their career in the banking sector, particularly in ProCredit. “Young Bankers Program” is intended for 20 participants and lasts for 6 months.

ONE STOP BANKING, NEW BRANCH CONCEPT ProCredit Bank shared an important novelty to its clients: the One Stop Banking service. The new service will allow clients to perform transactions faster and receive and pay small amounts of cash not necessarily at the cash-desk but with a client advisor. All transactions will be done conveniently in one place, making it more efficient and enjoyable for the clients to use banking services. There will also be separate meeting rooms for more privacy, where clients can receive consultations and be served individually.

PRODUCTS AND SERVICES To its main target group – small and medium businesses, ProCredit Bank offers the following products and services: Business loans: up to USD 10,000, up to USD 30,000, from USD 30,000, agro loans, visa business card, ebanking, money transfers, standing orders, documentary operations. Business loans are used to finance: Working capital, fixed assets, real estate; Or are used for personal purposes: Consumer purposes, housing renovation, real Estate. Anyone who is running a business, for instance: trade, export-import, transportation or other services, production, etc. can qualify for business loans from ProCredit Bank. To small and medium businesses, the bank offers the following types of deposits: Term Deposit, Flexible Deposit, Savings Plan. To individuals, ProCredit Bank offers: Utility payments, deposits, loans, plastic cards, travelers cheques, overdraft facilities, e-banking, money transfers, standing orders. The following types of deposits are offered to individuals: Term Deposit, Flexible Deposit, Savings Plan, Savings Account, Child Deposit, “My Piggy Bank” Deposit.

According to Audited Financial Statements IFRS Total Assets Gross Loan Portfolio Liabilities to Customers Total Liabilities Total Equity Operating income Operating Expense Profit before tax net profit

31‐Dec‐10               863 559                591 464                480 492                741 637                121 922                  82 024                  57 576                  24 448                  20 869

JSC VTB Bank (Georgia) • The major shareholder of “VTB Bank (Georgia)” is the Open Joint Stock Company “VTB”. • VTB bank’s mission is to provide world-class financial services for a sustainably better future for our customers, our shareholders and our society • International Agency Fitch Ratings published updated ratings on 4 March 2011. VTB Bank Long-term Credit Rating in Foreign Currency is the BB- Rating forecast of VTB Bank (Georgia) has been changed with "Positive" instead of "Stable". • VTB Bank has 17 Bank points. • On August 9, 2010 EBRD ceased to be the shareholder of JSC “VTB Bank (Georgia)” • Also, there have been changes into the management of JSC “VTB Bank (Georgia)”. Along with the new members of the managements in 2010 the new financial director Elena Narozhnaya was assigned. • Together with the other new products JSC “VTB Bank (Georgia)” introduced new product “VTB Private banking”. VTB Private Banking is an exclusive banking service which has been developed in order to provide a high standard of specialized service for our special clients. • In 2010 JSC “VTB Bank (Georgia)” supported many cultural and sports events, being their active sponsor. Also in 2010 the Bank participated into many charity actions, cooperating actively with the foundation “Iavnana” and being involved into the projects by other charity organizations. • In 2010 the bank together with the foundation “Iavnana” has sponsored many charity actions. • JSC “VTB Bank (Georgia)offers various types of accounts: Demand Account – max 4% Mobile Account – max 5% Comfort Account – max 8% Growing Account – max 11% Growing plus Account – max 11.5% Child Account – max 12.5% Term Account – max 12%

• Loans: Consumer loan Premium consumer loan Mortgage loan Universal mortgage Student loan Deposit secure loan • Banking: On-line banking, internet banking, direct debit, foreign exchange;

“VTB Bank (Georgia)”, JSC 31.12.2010

Balance Sheet Foreign Lari ASSETS currency Cash 11 035 514 7 702 927 Due from NBG 5 260 603 9 478 126 Due from Banks 5 113 722 10 948 920 Dealing Securities 0 0 0 Investment Securities 31 379 229 Loans 60 051 611 171 788 033 Less: Loan Loss Reserves -1 606 407 -28 826 688 Net Loans 58 445 204 142 961 345 Accrued Interest and Dividends Receivable 780 402 1 805 382 9 931 377 X Other Real Estate Owned & Repossessed Assets Equity Investments 94 200 0 28 230 569 X Fixed Assets and Intangible Assets Other Assets 14 033 499 1 665 829 TOTAL ASSETS 164 304 319 174 562 529 LIABILITIES Due to Banks 285 100 35 437 53 789 492 35 267 577 Current (Accounts) Deposits Demand Deposits 10 031 526 11 348 667 Time Deposits 7 727 283 59 847 129 0 0 Own Debt Securities 0 68 700 009 Borrowings Accrued Interest and Dividends Payable 414 103 3 666 390 2 323 462 Other Liabilities 8 955 929 0 21 273 600 Subordinated Debentures Total Liabilities 81 203 433 202 462 271 SHAREHOLDERS' EQUITY X Common Stock 148 042 701 X Preferred Stock 0 0 X Less: Repurchased Shares X Share Premium 0 X General Reserves 0 -94 280 579 X Retained Earnings Asset Revaluation Reserves 1 439 022 X X Total Shareholders' Equity 55 201 144 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 136 404 577 202 462 271

Lari Total 18 738 441 14 738 729 16 062 642 0 31 379 229 231 839 643 -30 433 094 201 406 549 2 585 784 9 931 377 94 200 28 230 569 15 699 328 338 866 848 320 537 89 057 069 21 380 193 67 574 412 0 68 700 009 4 080 493 11 279 391 21 273 600 283 665 704 148 042 701 0 0 0 0 -94 280 579 1 439 022 55 201 144 338 866 848


CMYK

32

HEADLINE NEWS & ANALYSIS

MARCH 28. 2011 | FINCHANNEL.COM

best georgian banks

JSC Basisbank SHAREHOLDERS: EBRD Tsikhistavi Zurab Mildiani Eldar Nishnianidze Zaza Ambroladze Murman Maziashvili Archil Soselia Ketevan Nizharadze Taras Petriashvili Gia Vachnadze George Meladze Goderdzi Maziashvili Tengiz Tavberidze Tamar Ambroladze Amiran Bokolishvili Irakli Nizharadze Konstantine Gogitidze Natalia

and residential areas, the rest of 3 branches are in regional areas with well developed infrastructure and business sectors.

15.00% 13.92% 9.89% 8.51% 6.58% 6.33% 5.62% 4.58% 4.57% 4.44% 4.42% 4.38% 3.45% 1.94% 1.48% 1.43% 1.23%

CUSTOMER GROUPS: Basisbank provides full package of banking services, for private and corporate customers. Latest developments: Changes in shareholders: CEO – Zurab Tsikhistavi has been appointed as the Chairman of the Supervisory Board Changes in management: Corporate Director – David Tsaava has been appointed as an Acting CEO

MISSION & VISION:

NEW BRANCHES:

OUR MISSION: To contribute to development of business relations in the society based on confidence and mutual benefit. To commit to development of stable and successful society based on traditional values. Bank is oriented to promotion of modern education in Georgia. To take care of the bank’s employees.

In October 2010 Basisbank opened its another service center at 5, Politkovskaya (Jikia) Street. Also the new head office has been opened situated at 1, Tsamebuli str.

NEW SERVICES OR PRODUCTS OFFERED:

OUR VALUES:

Since 2010 till the present days has been a profitable period. New products have been created: “Useful business loan”, Seasonal business loan”, payments from fast payment machines, automatic transfer services, “Useful auto loan” and mortgage loans in GEL “Your mortgage”.

BENEFITS Relation with Basisbank provides benefit. REASONABILITY In operations and style of the bank. RESPONSIBILITY Acknowledgement of liability. LOYALTY Orientation to the long-term relations.

PUBLIC CAMPAIGNS AND CHARITY:

INT. RATING & AWARDS:

The bank’s scope and priority is the educational sector from the point of view of social responsibility. Undergraduates of Ilia State University have been granted with personal computers by the bank’s educational fund. The science conference has been held at Shota Rustaveli State University supported by Basisbank, where along with Georgian scientists, participated

Fitch Ratings: LONG – TERM BSHORT - TERM B OUTLOOK – STABLE International Partners: EBRD, World Business Capital, OPIC, USAID Number of branches: The network is structured so that 14 offices are located in the central part of capital city and at places of active business

JSC BTA Bank “Neofofit-rilsji” University representatives as well. With financial support of Basisbank the conference materials were published in the form of brochure. The bank’s CEO David Tsaava and Georgian minister of Science and Education – Dimitri Shashkin have presented the library of the Public school N45 of Tbilisi with books. With the support of Basisbank “Architectural Rewards 2010” rewards ceremony has been held; Also the 1st telecommunication event „TMG – Telecom Meeting in Georgia“ has been held; The company “Tbil elite house” with Basisbank support has finished building of an apartment house. The best sportsman of 2010, David Ziraqashvili has been awarded with 5000 GEL. Basisbank financially contributed in charity event - “Heroes of Imedi” held in “Tbilisi Marriot” The bank participated in the “Iavnana” charity event held in Barcelona

PRODUCTS, SERVICES AND RATES Deposits and payment: Term Deposit, Increasing Future Deposit, Demand Deposit, Child Deposit, Useful Deposit, Increasing Saving Deposit. Debit Cards. Maximum Interest rate 14.5% in Gel.

MISSION & VISION:

LOANS: Your Mortgage, Useful Mortgage, Useful Auto Loan, Consumer Loan, Student Loan, Business Loans, Credit cards. Interest rate from 16%

BANKING: Internet Banking, SMS Banking, Tele-banking, Express Transfers, Cash Collection, Direct Debit, Foreign Exchange , Documentary Collection, International Guarantee.

GEL

FX

Cash

5 045 154

6 408 502

11 453 656

2

Due from NBG

4 006 286

13 976 485

17 982 771

3

Due from Banks

10 463

5 168 626

5 179 089

4

Dealing Securities

5

Investment Securities

6,2 6

Loans Less: Loan Loss Reserves Net Loans

7

Accrued Interest and Dividends Receivable

8 9 10

Fixed Assets and Intangible Assets

11

Other Assets

12

TOTAL ASSETS

INVESTBANK MANAGEMENT GOALS:

• To meet and focus on clients’ needs; • To retain high level banking service together with financial growth; • To provide financial credibility and stable development; • To meet the level of demand in mechanisms of bank management and internal control; • To conduct banking activity in accordance with international standards and experience. Our efforts are aimed at solving problems facing the Bank, developing services we can provide to our clients, and minimizing capital management risks.Our aims are to create comfortable and beneficial conditions for the activity of corporate bodies and individuals both residents and non-residents of Georgia, to launch new banking products and to develop individual relations with clients in order to understand their demands better.

LATEST DEVELOPMENTS: • Changes in shareholders:

MANAGEMENT: General Director - Giorgi Gzirishvili Director - Iva Sikharulidze

PRODUCTS, SERVICES AND RATES Please provide us with a brief description of the products and services offered by your bank. Indicate rate of interest. Deposits and payment: Savings accounts, business cards etc Loans: Mortgage loans, consumer loans, credit cards etc Banking: On-line banking, money market & derivatives, cash collection, internet banking, direct debit, foreign exchange Insurance: Life insurance, property insurance etc

ASSETS

0

0

0

N

0

9 249 802

1

Cash

18 890 537

46 833 092

65 723 629

2

Due from NBG

3

Due from Banks

4 5

-673 830

-1 548 004

-2 221 834

18 216 707

45 285 089

63 501 796

in lari

Reporting Period GEL

FX

335 901

Total

1 257 421

1 593 322

36 836

169 748

206 584

120 684

436 004

556 688

Dealing Securities

0

0

0

Investment Securities

0

0

0

9 821 740

1 630 006

11 451 746

118 478

373 929

492 407

Other Real Estate Owned & Repossessed Assets

7 443 595

0

7 443 595

6,2

-289 297

-136 709

-426 006

Equity Investments

2 689 865

0

2 689 865

6

Net Loans

9 532 443

1 493 297

11 025 740

12 741 434

0

12 741 434

7

Accrued Interest and Dividends Receivable

1 148 523

46 815

8 143 316

1 173 363

9 316 679

8

Other Real Estate Owned & Repossessed Assets

67 665 099

72 385 993

140 051 092

9

Equity Investments

10

Fixed Assets and Intangible Assets

Due to Banks

404 143

6 879

411 021

6,1

Loans Less: Loan Loss Reserves

11

Other Assets

12

TOTAL ASSETS

Current (Accounts) Deposits

21 449 200

15 528 526

36 977 725

15

Demand Deposits

11 927 723

15 026 145

26 953 867

13

Due to Banks

16

Time Deposits

6 411 711

24 348 802

30 760 513

14

Current (Accounts) Deposits

17

Own Debt Securities

0

15

18

Borrowings

2 097 525

17 673 796

19 771 321

16 17

Own Debt Securities

18

Borrowings

19

Accrued Interest and Dividends Payable

20

Other Liabilities

21

Subordinated Debentures

19

Accrued Interest and Dividends Payable

20

Other Liabilities

22

• CHANGES IN MANAGEMENT:

Balance Sheet

14

21

1. KSN Foundation, Lichtenstein - 72%; 2. TRENDFOR HOLDING LTD, UK - 28 %.

Bank: INVESTBANK Date: 30.09.2010

9 249 802

LIABILITIES 13

• Credit Line; • Loans for Small and Medium Business Development; • Overdraft; Banking: • Internet Banking; • Direct Debit; • Foreign Exchange; • Standing Order; • SMS Banking; • Mail Banking; • Cash collection; • Money market & Derivatives; • Plastic Cards. Insurance: • Life Insurance; • Property Insurance. Other: • Money Transfers; o Western Union; o Faster; o Contact; o Anelik; o Express Money. • Utility Payments; • Bank guarantee; • Payroll Services.

Total

1

6,1

Investbank’s mission is to create a strong, sustainable and credible financial institution by means of teamwork, with support of the clients, business partners and stakeholders. At the time of establishing the bank and defining its development strategy, Investbank management set the goal to establish a flexible and dynamic banking institution that fully satisfies local and foreign entrepreneurs and individuals demands and requirements, providing civilized and favorable environment for their activities.

• To protect shareholders’ and clients’ business interests;

Reporting Period

USD/EUR for min. amount 7.50% / 5.50% / 5.00%, Difference between balances 2.50% / 2.00% / 1.50%; • Increasing Savings Deposit GEL/USD/EUR for 12 months 12.00% / 8.50% / 8.00%; • Demand Deposit - GEL/ USD/EUR for 12 months 4.00% / 3.50% / 3.00%; • Child deposit - GEL/USD/ EUR - 13.75% / 9.75% / 9.75%; • Flexible deposit - GEL/USD/ EUR for 12 months 12.50% / 9.25% / 9.00%; • Safe Deposit - GEL/USD/ EUR for 12 months 11.50% / 8.25% / 8.00%; Loans: • Consumer Loan – max. 42 month starting from 18%; • Auto Loan – max. 42 month starting from 18%; • Credit Card – max. 24 month 30% or 36%; • Business Loan – max. 42 month 16%-18% in GEL, 60 month 14%-24% in USD;

JSC Investbank 1. KSN Foundation, Lichtenstein - 72%; 2. TRENDFOR HOLDING LTD, UK - 28 %.

Balance Sheet ASSETS

• JSC BTA Bank KZ, JSC “Silk Road Financial Group” • Number of branches: 8 Latest developments Management: Director General - Kairat Kenzhegarin Risk management Director - Irakli Kakabadze Corporate Director - Alexsander Dzneladze Number of clients (Juridical)-- 3065 Number of clients (Individuals)--20408 New services or products offered: o Credit Card –“Placti card”; o Credit Card –“Placti card + (plus)” for customers involved in the payroll services; o Money Transfer – Express Money; Deposits and payment: • Term Deposit – GEL/USD/ EUR for 12 months 12.50% / 9.25 / 9.00%; • Savings Deposit – GEL/

SHAREHOLDERS:

Bank: Basisbank Date: 31-Dec-10

N

FINANCIAL

Subordinated Debentures Total Liabilities

128 629

1 266 954

1 395 582

1 275 326

133 605

1 408 931

0

0

0

43 694 255

73 984 706

117 678 962

EQUITY CAPITAL

7 085 0

1 195 338 X

7 085

X

538 268

0

538 268

0

234 293

41 211

275 504

11 954 033

3 444 496

15 398 529

LIABILITIES

22

25

171

196

273 411

940 830

1 214 241

Demand Deposits

37 102

114 198

151 300

Time Deposits

10 000

873 275

883 275

0

0

0

162

6 483

6 645

10 737

6 068

16 805

0

0

0

331 437

1 941 025

2 272 462

Total Liabilities

0

EQUITY CAPITAL

23

Common Stock

5 911 765

0

5 911 765

24

Preferred Stock

0

0

0

23

Common Stock

17 120 000

X

17 120 000

0

0

0

24

Preferred Stock

0

X

0

5 612 353

0

5 612 353

25

0

X

0

99 794

X

99 794

25 26

Less: Repurchased Shares Share Premium

27

General Reserves

6 220 286

0

6 220 286

28

Retained Earnings

1 818 437

0

1 818 437

Asset Revaluation Reserves

Less: Repurchased Shares

26

Share Premium

27

General Reserves

349 758

X

349 758

28

Retained Earnings

-4 443 485

X

-4 443 485

2 809 289

0

2 809 289

0

X

0

30

Total Equty Capital

22 372 130

0

22 372 130

30

Total Equty Capital

13 126 067

X

13 126 067

31

TOTAL LIABILITIES AND EQUITY CAPITAL

66 066 385

73 984 706

140 051 092

31

TOTAL LIABILITIES AND EQUITY CAPITAL

13 457 504

29

29

Asset Revaluation Reserves

1 941 025

15 398 529


CMYK

FINANCIAL HEADLINE NEWS & ANALYSIS

33

FINCHANNEL.COM | MARCH 28. 2011

best georgian banks

JSC Progress Bank SHAREHOLDERS

Our Mission is to provide superior, proactive banking services. Our vision is to become the bank of choice for corporates, medium businesses and upmarket retail customers

Kechagmadze) • New services or products offered: Child Deposit, Progressive Deposit, Increasing Deposit, • Public campaigns and charity: Progress Bank is not primary involved in the charity events; However Kala foundation, which is a group member of Kala capital (the same group that owns progress bank), provides charity events.

• Number of branches: 1 • Customer groups: Corporate, SME, Retail

ANALYSIS BY SEGMENT:

LATEST DEVELOPMENTS:

Corporate Loans - 2,859,987, SME Loans - 2,857,173, Retail – 4,101,975. • Average balance sheet and net interest: Total Assets – 13,923,026, Net Interest Income - 1,740,857 • Total equities and liabilities: Total equity - 11,199,241, Total Liabilities - 2,723,785 • Analysis of changes in net interest income: In the last six

“Kala Capital” Ltd

MISSION & VISION:

• Changes in shareholders: No Changes • Changes in management: No Changes (Chief Executive Officer - Konstantine Sulamanidze; Chief Operations Officer - Akaki Kordzadze; Chief Risk Officer – Ilia

months we have stable growth in net interest income which is caused from loan portfolio growth. Change in Net interest income in comparison with June 2010 is the following: 23% in July, 9% in August, 2% in September, 15% in October, 25% in November and 29% in December • Number of clients (Juridical): 142 • Number of clients (Individuals): 612 Deposits and payment: Deposits: Term Deposit, Saving Deposit, Child Deposit, Progressive Deposit, Increasing Deposit. Payments: SWITF, Western Union Loans: Consumer loans, auto loans, mortgage loans, loans for businesses (for SME and Corporate clients) Distance banking: Internet Banking (www.v-bank.ge) Other: Safe boxes

16 Rustaveli Ave. 17 Akhvlediani Str.

146 Agmashenebeli Ave., T/Fax: +91 02 49 Email: info@kenari.ge

Tel: 519 966

15 Lubliana Str., Tel: 51 00 01; Fax: 53 00 44 info@zarapxana.ge www.zarapxana.ge

78 Chavchavadze ave.; Tel.: 225 626 / 235 626; reception@primefitness.ge

1 Brother Kakabadze Str., Tel: 92 29 45; Fax: 92 29 46; tk@mcdonalds.ge

37 Chavchavadze Ave.; Tel.: 91 30 26; 91 30 76

5 Chavchavadze Ave., Tel: 22 44 17; 8 77 22 99 22 plasticsurgerygeo.com

3 Vashlovani Str.; (“Super Babilon” oposit) Tel.: 98 90 86

HOTEL “O. GALOGRE”

KALAKURI

BUSINESSTRAVELCOM

HOTTEST TOURS

TEL: 999662

13 Shavteli Str. Tel: 365 365 www.gmcgroup.ge

43 Abashidze Str. Tel: 22 60 18

For advertising please contact: 877 741 700 marketing@finchannel.com

4, Freedom Square, Tel: 779 100

13, Rustaveli Avenue.; Tel.: 779 200

8, VAKHTANG GORGASALI STR. BATUMI GEORGIA Tel: 888 222 7 48 45 info@hotelgalogre.com www.hotelgalogre.com

Radisson Blu Iveria Hotel Rose Revolution Square 1 T: +995 32 402 200; F: +995 32 402 201 info.tbilisi@radissonblu.com radissonblu.com/hotel-tbilisi

Tel: 439494 Addr: 13 Shavteli Str. info@ambasadori.ge; www.ambasadori.ge

Tel: (+995 32) 50 99 99 Mob: (+995 95) 25 99 99 D.Agmashenebeli ave.#154 www.green-office.ge

Tel: (+995 32) 77 20 20 Fax: (+995 32) 77 21 20 Addr: 20 Telavi Str. www.sheraton.com/tbilisi The tickets are available at tbilisi international airport freedom square 4 courtyard marriott hotel, 1st floor Tel: 400 400; 400 040

36 Al. Kazbegi ave. Tbilisi, 0177, Georgia Tel/Fax: 29 43 43 info@intercontinental.ge www.intercontinental.ge

www.sheraton.com/tbilisi

LUCA POLARE

LE MARAIS

THAI

Tel: 888 222 2900

GEORGIA PALACE HOTEL

Addr: # 12 Eristavi Str. (at the round garden) # 34 Leselidze Str. Phone: 99 03 99 8 74 74 25 25 info@lucapolare.com www.lucapolare.com

32 Abashidze Str. Tel: (+995 32) 22 40 83

Addr: # 35 Abashidze Str. Phone: 22 17 70 www.thai.ge

Tel: (+995 32) 242400 Fax: (+995 32) 242403 Kobuleti, Georgia E-mail: info@gph.ge www.gph.ge Addr: 275 Agmashenebeli Ave.

Berika International LTD GSA for Czech Airlines in Georgia Phone: +995 32 227941 Fax: +995 32 222941

Tel: (+995 32) 988 988 Fax: (+995 32) 988 910 E-mail:gmt@gmt.ge www.gmt.ge Addr: 4 Freedom Square

Georgian Real Estate Management The Green Building, 6 Marjanishvili Street, 0102 Tbilisi, Republic of Georgia Tel: (+995 32) 43 30 77 Fax: (+995 32) 43 30 79 www.firstbrokerage.ge E-mail: info@firstbrokerage.ge


CMYK

34

HEADLINE NEWS & ANALYSIS

FINANCIAL

MARCH 28. 2011 | FINCHANNEL.COM

music art

Anita Rachvelishvili, La-Scala’s Georgian Mezzo Soprano Long, black curly hair, strict but at the same time very tender - a view of this beautiful Georgian lady would convince you that she is the best Bizet’s Carmen ever. Anita is the youngest opera singer to have opened a season at the La Scala Theatre. By TAKO KHELAIA The FINANCIAL

I

started to sing in my childhood. I was singing Pop and Soul music. My family thought I had talent and decided that I could be involved in opera art as well. I was 16 years old when my father decided to search for a good voice teacher in Tbilisi, who would prepare me for passing entrance exams to the Conservatoire. We found Mrs. Mzia Davitashvili, who was a former opera performer. She was a fascinating soprano and she started giving me lessons, preparing me for the Conservatoire. Mzia was a great teacher and in a very short period, she taught me everything that a young singer could learn.” “I started lessons in September and I had to pass exams for the Conservatoire in July. Fortunately I passed the exams and became a student of the Conservatoire. Manana Egadze became my teacher there. She taught me for 6 months. After that I decided to go to Europe and pass exams to enter the La Scala Theatre Academy. “Unfortunately my teacher Mzia Davitashvili died before I had started studying at the La Scala Theatre Academy, she would have been so very happy to see my success. The La Scala Theatre Academy is the best place to receive the chance to get noticed in the big theatre and to represent yourself. It gives you big professional experience, but it’s not as good for a singer who wants to study how to sing. There are many of the famous faces of opera art, but unfortunately as teachers they can’t transfer their knowledge to their students that well.” “It was really hard for me to study at the academy for 2 years, I even lost my voice during one period, but fortunately my friends’ and my future husband’s teacher often gave us lessons and that’s what helped me so much. The Academy is a great exhibition of talented singers which can afterwards stand in the right way and start performing in big theatres. I was playing many small and different roles at the La Scala Theatre.” In April 2008 Rachvelishvili was in front of the great conductor Daniel Barenboim. He was looking for an artist for the role of Mercedes in the opera Carmen. “Barenboim made me sing nearly all of the songs of Carmen. A few months on from this event I was notified that I was going to sing at the premiere of Carmen on the opening of the season in 2009. It appeared that Barenboim was really impressed with my voice and my appearance, as I looked very like Carmen. During the meeting, the theatre director told me the following words: “Over 1 month we have listened to many Carmens, but neither

Barenboim nor I want anyone except you to sing Carmen”. It was a great happiness for me and a big step forward in my career. I had to perform at one of the world’s biggest and most famous theatres in the main role of Carmen.” “It was huge responsibility for me. I started serious preparation for this role. Even during my time in Tbilisi, I had prepared some parts of this role, but of course the level of preparation in Europe is much higher. They emphasize more on pronunciation of words in Italian or French languages and it’s a very important factor. Due to improving pronunciation and studying the French language, the La Scala Theatre sent me in Paris, France to the pianist of Maria Callas. She is an old woman, who plays the piano herself, her name is Janine Rice and she works on improving one’s master of the French language and develops pronunciation.” “I worked with her for two months. She is a fascinating piano player. I was pretty much practiced when I started rehearsals at the theatre. I was also meeting the conductor before starting the rehearsals. I worked hard with the great drama theatre director Emma Dante, who was staging opera for the first time. Working with a director of drama theatre gives you much more than working with just an opera director, who emphasizes more on the general aspect of the play. The drama theatre director works much on the character itself. It was a great experience for me.” According to Rachvelishvili,

when she went out on stage on 7 December for the opening of the season she was very calm as she had practiced much and was prepared for the performance. “I stayed so calm on the stage, due to the fact that I was so prepared. I wasn’t nervous at all. I remember that Italian and French newspapers noted that I had iron nerves. They noted that I wasn’t nervous about anything or else I just couldn’t realize the importance of what was happening around me at the time. I was actually very aware of the situation around me. It was a big risk for me, because if any small detail had gone wrong my career would have ended on the very day it began.” “I was well prepared for the performance and I felt much support from the theatre, conductor and my colleagues. Even my colleagues remained quite sceptical about my debut on stage, but after seeing how hard I was working they began to support me and gave me some good advice. It was a very beautiful, unforgettable debut which will stay in my memory and my life for a long time. I think that the main determiner of my success was my preparation. Everyone has talent in different areas, but there are people who just don’t develop it, they are lazy. At the other end of the spectrum there are people who try hard and work hard to achieve their aim. I am sure that those who work hard always achieve their goals.” “My husband is represented in the same sphere as me, which helps me so much in every aspect. It’s very important that you

have another person with you who completely understands your profession and you. Our work is very hard, we are always traveling in different parts of the world and we are often quite far away from each other. At the moment he is in America where he is singing Tosca. We haven’t seen each other for a long time. A person with a different profession might not understand all these aspects, but we understand each other so well. When I am tired he knows how to help me and before a concert he knows how to make me calm.” New York is the favourite city of Rachvelishvili, while performing in front of viewers. She says that that city has very exceptional viewers who greatly respect opera. “My favourite city where I enjoy being and playing in the theatre is New York. The viewers there are very generous and they stand up after the end of the play and applause. Germany is also a nice place to perform; viewers are very emotional on the whole, as opposed to in Italy as Italians are always very critical. It’s very hard to sing in Italy, they even go so far as to whistle if they don’t like the play. Of course this fact hasn’t happened in my case, I performed my debut in Italy, people respect me there, I have many admirers there and am in close contact with them.” “My favourite plays are Carmen, Werther - Charlotte’s Aria, and Dalila’s Aria. At the age of 26 I am singing only French operas, I have very limited repertoires. The mezzo sopranos of Verdi have to sing more dif-

ficult arias and it’s too early for me to sing such kinds of arias. At the moment I am working on French operas and I like Werther and Dalila very much.” “I will make my Dutch debut in my first performance of Dalila in Samson et Dalila at the Concertgebeouw in Amsterdam on 21 May, which will be broadcast by radio in nearly all European countries. I look forward to my performance as Dalila’s Aria is really difficult. Then I will come back to Rome to my Maestro where we will practice much on my plays. After Rome I will come back to La Scala to prepare for Gioacchino Rossini - The Italian Girl in Algiers. It’s a very beautiful role and I look forward to performing this difficult role.” “I also have a visit to Spain with the Orfeo ed Euridice opera of Christoph Willibald Gluck. It’s an old opera and I am singing a man’s role. A mezzo soprano sings Orfeo’s role, it’s a kind of tradition. After my Carmen debut in New York in January, the theatre gave me 5-6 new contracts. Two of them will be Carmen and in 2012-2013 I will be back with a role as Carmen in New York’s Metropolitan Opera. I will also play The Italian Girl in Algiers in New York together with two Russian operas Boris Godunov and Prince Igor.” Rachvelishvili is also planning some debuts in German theatres with the same roles. She will have concerts with the maestro Barenboim, who will play the piano. She has also planned a Russian and German music concert. “I was the first Georgian singer to have opened a season at the age of 25 in La Scala and performed Carmen. Many Georgians have sung important arias there, but I was the youngest singer who opened a season in the main role. During the La Scala Premiere, a delegation from Georgia visited us. We hosted the Minister of Culture and even President Mikheil Saakashvili visited our 4th play.” “There are many famous, Georgian opera singers abroad like Nino Suruladze, Nino Machaidze, Lado Ataneli, Gia Gagnidze and many others. All of them are very good and successful singers with beautiful voices and they know how to sing. People all around the world have started talking about Georgia. My colleagues abroad are really enthusiastic about Georgian opera singers, it’s a talent that God gave us as present.” “The concert which will take place at Rustaveli Theatre on 29 March was planned in November when Nika Memanishvili arrived at La Scala to see my Carmen role. He attended the play and was fascinated, so it was at that time when we decided to hold a concert in Georgia together with the Georgia state philharmonic orchestra and choir with Nika Memanishvili.” “I had the idea to perform Tamar Salukvadze’s compositions at the concert. She is a young, really talented, in my view world-level composer who is not so famous and I decided to perform her vocal music at our concert. I have known Tamar for a long time already and I have performed some of her compositions at the Tbilisi Conservatoire. I offered Nika Memanishvili to perform Georgian music in the first part of the concert. French music will be represented in the second part. It was Nika’s idea to perform some parts from the play Carmen together with other compositions at the concert.” “I am very happy that I am here in Georgia and for me as a Georgian singer organizing a

solo concert here is a really big responsibility. I know that almost all tickets have been sold and many people will come. I am nervous because Georgian viewers are very critical and are awaiting something exceptional from a singer who performs abroad. I hope I will justify their hopes, because I am working very hard for this concert.” Rachvelishvili is happy to be performing at a concert together with Nika Memanishvili, she thinks he is a gorgeous conductor. She says that Memanishvili breathes together with the singer. There is a great harmony between the singer, conductor, choir and orchestra. “I hope that Nika will have more support in his future projects, because cultural development is really important. The country’s cultural development means the country’s economic development. It reflects so much on people’s intellectual development. People should visit concerts. I am happy that the ticket price for this concert is pretty normal and starts from GEL 530. I know that Georgians have economic problems but they have managed to buy tickets regardless, because they want to listen to a great orchestra with great choir, see a professional conductor and listen to a professional singer.” “A singer should work hard on their development, they should never stop. My aim is to work hard and sing as long as I can. I want to perform different repertoires after 10 years, which will be harder I know, but I will manage it,” Rachvelishvili said. Rachvelishvili says it does not matter how often you travel, nothing compares to your home. “Returning home is always an opportunity to take a deep breath and have a rest. I love Georgia very much. I want to tell Georgians to remain more positive and hopeful for the future. I know that Georgians have material problems, but if a person wants something enough then he/she can definitely achieve it. If we have the desire to develop, we will reach our goal. The world has started to notice us, when just a few years ago they didn’t even have any information about the country.” “During the last 2 years many things have changed. When I was flying to Georgia before I only saw Georgians or Turkish people on the plane, but now I can see French, German, Italian, American and even South Africans. Many foreigners are visiting Georgia which makes me very happy. I am trying hard to make foreigners interested in our country. I have a kind of authority and many people in the world are acquainted with me. I am always speaking about our culture, our cuisine, wine and everything that our country has. We have lots of things but unfortunately we ourselves don’t respect them enough.” “I can assure you sure that there is no other nation or people in the world like Georgians. We are very honest and hospitable and everyone notices it. My husband when he visited Georgia for the first time last year was shocked and amazed by our hospitality. Unfortunately most Georgians have lost hope. I know that everything will be ok. If I managed to achieve success and if many other Georgians from different spheres have also achieved it, we all can stay positive for the future.” “There are only 5 million people in Georgia, that is seen as a small dot on the world map, but this country has many great people,” Placido Domingo told Anita during her premiere at La-Scala.


CMYK

FINANCIAL HEADLINE NEWS & ANALYSIS FINCHANNEL.COM | MARCH 28. 2011 SANCHO

23, Akhvlediani Str. Tel: (+995 32) 982598

SANTA FE

20, Akhvlediani Str. Tel: (+995 32) 935848

COFFEE GE

27, Abashidze Str. Tel: (+995 32) 225066

TOUKAN

8, Kiacheli Str. Tel: (+995 32) 996553

CARAVAN

10, Purtseladze Str. Tel: (+995 32) 996691

PREGO

2, Vazha pshavela Ave. Tel: 373610 7, Paliashvili Str. Tel: 25 22 58 25, Tarkhnishvili Str. Tel: 25 25 16

35

| places we strongly reccommend to visit | DISCOVERY

PICASSO

Hangar Bar

VERA STEAKHOUSE

SEGAFREDO ZANETTI ESPRESSO

TSISKVILI

37, Kostava Str. Tel: (+995 32) 983767

26, Chavchavadze Ave Tel: (+995 32) 223677

DUBLIN IRISH PUB

BUFFALO BILL

SIANG-GAN

40, Chavchavadze Ave. Tel: (+995 32) 294230

13 Taktakishvili Str. Tel: 891198398 20 Rustaveli Ave. Tel: 891193968 19 Petriashvili Str; 7 Pekini Str.

8, Akhvlediani Str. Tel: (+995 32) 984467

Belle Ville

4, Vashlovani Str. Tel: (+995 32) 989086

16, Akhvlediani Str. Tel: (+995 32) 936052

# 20 Shavteli Str. Tel: (+995 32) 93 10 80

Beliashvili Str. Tel: (+995 32) 530797

41, Gamsakhurdia Str. Tel: (+995 32) 379688

Better seen than heard

ENGLISH TEE HOUSE

26, l.Kiacheli Str. Tel: (+995 32) 93 65 53

French - European bar-restaurant Pleasant and cozy atmosphere High quality service, live music every day

4

2 24/

Better seen than heard

Entree

dining

DONUTS

10/12, Abashidze Str. Tel: (+995 32) 253985

5, Marjanishvili Str. Tel: (+995 32) 941620 32, Paliashvili Str. Tel: (+995 32) 221109

4 Freedom Square, Tel: 54 70 30 E-mail: tbilisi.fs@citadines.com

Prospero’s Books 34, Rustaveli Ave. Tel: (+995 32) 923 592

www.citadines.com

DZVELI SAKHLI

LITERATURULI CAFÉ 64, Paliashvili Str. Tel: (+995 32) 250669

2, Tarkhnishvili Str. Tel: (+995 32) 444546 31, Pekini Str. Tel: (+995 32) 313057 22, Abashidze Str. Tel: (+995 32) 220276 36, Kostava Str. Tel: (+995 32) 990746

3 Mtkvari Right Embankment. Tel: 365 365 www.gmcgroup.ge


CMYK

36

HEADLINE NEWS & ANALYSIS

best georgian banks

FINANCIAL

MARCH 28. 2011 | FINCHANNEL.COM

We offer amongst the best rates for corporate and trade financing. As the world’s local bank we have unique experience, knowledge and resources to help your business. HSBC Bank Georgia is a member of HSBC Group, one of the world’s largest financial and banking institutions. For borrowers this means paying amongst the lowest interest rates available in Georgia and for traders working with one bank on both sides of international transactions, which reduces costs and related risks whilst increasing profit. Find out how we can support your business at www.hsbc.ge

Advertiser: HSBC. Contact FINANCIAL Ad Dep at marketing@finchannel.com

Best Georgian Banks  

Best Georgian Banks_The FINANCIAL

Advertisement