Bank and finance market outline

Lali Chagelishvili

President of Georgian National Bank Roman Gotsiridze met Klaus Glaudit – Vice President for financial issues of the European Department of German Reconstruction Credit Office

On June 2005 German Reconstruction Credit Office project was launched in Georgia and initiated the perspectives of collaborating with Georgian bank system. The initial step covers the problem connected with deposit insurance of Georgian National Bank, namely the elaboration of draft agenda on systems of deposit insurance of Georgian National Bank. Initial capital will be provided by Foundation of Deposit Insurance by ch. With the amount of 3, 5 million Euro. Through establishing the mentioned system Georgian finance market will be much more secured.
Ch is planning to implement social types of projects. E.g. taking active part in the creation of private pension and house construction sector foundation. Following the evaluation of the president of Georgian National Bank the fulfillment of these projects will help enhance Georgian finance market.
Georgian reconstruction credit office has performed investments in private and finance sector in Georgia. It is “Pro Cradit Bank” auctioneer. Besides, it has close cooperation with “Georgian Bank” and “TBC”. It finances projects in energy, social, health care and environmental sphere.
According to the Head of Finance-Credit and Currency Policy Commission of Georgian National Bank, maximum annual percentage rate has increased on inter bank credit, deposit auctions. Specifically from 2 % to 3 % in 7-day inter bank auctions and relatively from 5 % – 6%, 6 %-7 %, and 6 % – 8 % in 28, 56 and 84-day inter bank and credit auctions. In REPO auctions maximum annual rate grew from 4 % to 5%. It’s worth mentioning that this fact is strongly connected with public expend policy activation for the second half of 2005.
Percent rate increase in inter bank credit auction is to some extant caused by the withdrawal of Trasure obligation auctions of the Ministry of Finance. It was discontinued due to high percent rate 6 weeks ago. Stock currency circulation in inter bank credit auction decreased by 23 million lari and equaled to 82, 5 million USD in first half of 2005.
In the first part of 2005 Georgian National Bank bought 17, 5 million dollars and sold 17, 2 million dollars in the stock market.
The high circulation indicators in the auctions in the first half of 2004 are due to the large scale intervention.
Regarding Euro circulation dynamics – the indicator in 2004 equaled to 730 000 Euro. This year’s indicator is 1, 9 million Euro from which the deal of 1, 1 million was made in June
According to the official statistics the number of commercial banks has considerably decreased. Namely In 1992 there were 242 banks operated in Georgian financial market licensed by National Bank. 173 from them were liquidated. 11 banks were transformed into other types of organizations, 20 commercial banks became branches and 10 banks joined other commercial banks.
Nowadays there are 20 commercial banks in bank market. Regardless of the decreasing number of banks some indicators like whole assets of the bank, capital and deposit range have considerably increased.
Net profit and net percent revenue in the bank annually increases.
The most demand was depicted on bank auctions
13 companies introduced their auctions for sale in 50th session of Georgian stock foundation on June 12. The deal was made only with 4 companies – Georgian Bank, “Tbilgvino”, “Transmsheni” and the bread factory # 4
Total dimension of obligations equaled 2 621 and total amount – 9 365, 50 Lari
The most demand was as usual on auctions of “Georgian Bank”. The amount of the deal on obligations was equivalent to 4 850 Lari.
Treasure obligation selling process was discontinued in June in the financial market of Georgia. Last sale was depicted on June 7 of 2005 in the National Bank. The percent rate was 18 % which is the highest rate in CIS countries. Treasure obligations are sold with less percent in Kazakhstan. Here the percent rate is 8 %.
As stated in Georgian National Bank, the Ministry of Finance is working on new provisions. That will enable general citizens to buy treasure obligations.
Based on the information of the Ministry of Finance the rule on purchase of treasure obligations will be determined in one month.
Credit resource auction deal amount equaled to 100 000 GEL. 3 Commercial banks participated in 7-day auction. Annual percent rate was equivalent to 4 %.
Tbilisi inter bank stock market embraced second rate exchange market into stock system.
According to Tamaz Khomizurashvili – Deputy General Director of Tbilisi Inter bank exchange market, present operations facilitate the process of dealing for each party represented.
TBSB will guaranty the fulfillment of the announcements on exchange deals as in case of contract term violation the bank taking part in the operation will be charged by stock markets. This is 5 % of the announced deal. – said Khomizurashvili to “Prime News” agency.
Giorgi Tsutskiridze – executive director of bank association of Georgia, while speaking with Prime News mentioned that after affirming national currency rate by fixing, real dealing was made in money market which caused inaccuracy with official currency rate.
“Today will be arranged the third second rate exchange market dealing in TBSB. First dealing was arranged on Friday of last week” – Vakhtang Khomizurashvili informed the Prime News.
In REPO auction
50 000 lari value – nominal price treasure obligations were sold in REPO auction. The price equaled to 47401.49 GEL and annual percent rate was 3 %.
In accordance with the information of Georgian National Bank, obligations are sold in agreed price in REPO with special repurchase permission. The party having large amount of money grants economic unit for temporary utilization.
Georgian National Bank has taken 2000000 GEL nominal price treasure obligations for the Ministry of Finance. 50000 GEL value announcements on 500 treasure obligations by one commercial bank were presented in the auction.
Through observing the condition of July 1, 2005, deposit obligation of the bank system was increased by 13.3 million GEL – by 2.6 million Lari of national currency. Deposits in foreign currency were increased by 4, 3 million US Dollars. It’s worth mentioning that the growth is on the account of national and foreign currency valid deposits. At present deposit obligations has raised by 63.2 million GEL and equaled to 959.2 million GEL.
The structure of deposits with national currency is very much like the previous one and 80% goes to legal entities. Dominated deposits in foreign currency were increased by 40.5 million USD and equaled to 405.3 million USD.
Bank deposit indicator has grown from 74.3 % to 2.9 % unit in one year and equaled to 77.2 % at the end of May.
Last year (January – June) crediting by national currency has increased by 64 million GEL and equaled to 194 million GEL, when last year crediting by national currency has increased by 37.1 million GEL.
66% of loans given by Georgian banks in national currency goes to legal entities, 74 % is short-term loans. The growth of long-term loans was noticeable. It equaled to 51 million GEL from the beginning of the year.
Credits given in foreign currency has raised by 19 %. 67 % was long-term loans, 74 % credit resource went to legal entities. There was considerable growth in giving loans in foreign currency from the beginning of the year. USD loans indicator has decreased by 3 unit and equals to 82.7 % against 85.7%
Bank systems manage economic crediting with relatively low percent rate compared to previous period. Previously loans in national currency were given in 22% on average, which is 3, 2 % unit less than last year’s (May) indicator. Crediting of legal entities equaled to 19 %. Crediting in foreign currency has decreased equaling 16.5 % rate against 202 %. Loans given to legal entities equaled to 14, 6 %.