The FINANCIAL -- Bank of Georgia, Georgia’s leading bank has signed a USD 90 million subordinated loan agreement with the International Finance Corporation (IFC). The long term financing will help increase the Bank’s role in diversifying Georgia’s economy, expand access to finance and boost sustainable growth.
IFC, a member of the World Bank Group, is providing a 10-year subordinated loan, including USD 20 million mobilized from the European Fund for Southeast Europe (EFSE), to help expand financial services in Georgia, where banking penetration remains low, and increase the flow of credit to micro, small, and medium enterprises (MSMEs).
It was one of the largest debt transactions for Bank of Georgia. “This subordinated loan facility, which qualifies as Tier II Capital under the Basel 2 framework, will improve the overall capitalization of the bank and support our growth without compromising capital ratios,” said Irakli Gilauri, CEO at Bank of Georgia.
The financing will help Bank of Georgia, a long-term IFC partner in the region, expand its already large MSME customer base and encourage growth in its retail banking business. It will also contribute to the bank’s strategic goal of supporting entrepreneurship in Georgia.
“The loan package will help Bank of Georgia finance more smaller businesses, which are a driving force for development but often lack the capital to grow,” said Jan van Bilsen, IFC Regional Manager for the South Caucasus.
“This project is yet another step forward in implementing our strategy in Georgia – one pillar of which focuses on mobilizing our partners’ resources to help expand the financial sector, boost access to finance, and reduce poverty,” said Bilsen.
Bank of Georgia is the leading Georgian bank, based on total assets with a 36.9%
market share, total loans with a 34.7% market share and client deposits with a 32.5% market share as of 31 March 2015, the data includes Privatbank’s market shares. The Bank offers a broad range of corporate banking, retail banking, wealth management, brokerage and insurance and healthcare services to its clients.
As of 31 March 2015, the Bank served approximately 1.5 million client accounts through one of the largest distribution networks in Georgia, with 219 branches, the country’s largest ATM network, comprising 554 ATMs, 2,245 Express pay (self-service) terminals and a full-service remote banking platform and a modern call center.
Georgia became an IFC member in 1995. Since then, IFC has provided a total of about USD 665 million in long-term finance, including USD272 million mobilized from partners, supporting 51 projects across various sectors. In addition, IFC has supported trade worth more than USD 292 million through its trade finance program. IFC has also implemented a number of advisory projects focused on private sector development.