The Messenger, Georgia
March 30 2005
Georgian bank takes first commercial loan
Loan, backed by Germany’s KfW, to support lending to small and medium
sized entrepreneurs
By Christina Tashkevich
Lasha Papashvili, Birte Moerke and
Grigol Katsia
Bank Republic announced on Tuesday that it had concluded an agreement
on a five year, USD 4 million credit line with the international
commercial bank Commerzbank International S.A. on March 15.
Chairman of the bank’s Board of Directors Grigol Katsia said the deal
“is unprecedented in the Caucasus region – when a private foreign
commercial bank agrees to lend to a Georgian bank.” So far the
Georgian banking sector has been able to borrow money only from
international donors and development institutions.
The deal was concluded within the framework of a Credit Guarantee
Fund established by the German development bank KfW in Georgia. The
Fund allows Georgian bank to borrow on international capital markets,
with the Credit Fund acting as guarantor of 90 percent of the loan.
“This deal gives local banks the possibility to cooperate with
leading international banks,” Katsia said on Tuesday, adding that the
agreement would help Bank Republic to develop and strengthen
positions in international markets.
Manager of the Credit Guarantee Fund Birte Mörke told journalists
that this agreement would give Bank Republic access to the
international capital market.
“Bank Republic will in turn use this loan to offer loans to small and
medium enterprises in Georgia,” she told The Messenger, while
Chairman of the Bank Republic Supervisory Board Lasha Papashvili
added that the agreement could lead to the creation of jobs in
Georgia.
“It can create new working places which the country needs right now,
not only in small and medium businesses but in the bank itself,”
Papashvili explained, adding that as a result of the new loan the
bank will be able to announce several new products, which will in
turn call for a staff increase.
“What is important is that these loans allotted to financing small
and medium businesses will form a middle class in the country,”
President of the Banks’ Association Zurab Gvasalia said to The
Messenger, adding that the formation of a middle class will serve as
a guarantee of stability in the country.
In the shorter term, Gvasalia says this agreement will increase the
prestige of the Georgian banking sector. “When a leading bank forms
such relations with a Georgian commercial bank this points to good
prospects [for the banking sector],” he said.
Frankfurt-based Commerzbank is one of the world’s 20 largest banks
and is one of the leaders in Eastern Europe and Central Asia.
The Credit Guarantee Fund has also partnered with Bank of Georgia as
well as with three banks in Armenia. The same type of project is soon
to be launched in Azerbaijan.
Among the Bank Republic’s another cooperation partners is the
International Finance Corporation (IFC). In 2004 the bank became a
pilot company to take part in the IFC’s Corporate Governance
enhancement project.
The bank also cooperates with the Savings Banks Foundation for
International Cooperation (SBFIC)