Will “Bank of Georgia” buy “Bank Republic”?

Nino Arveladze

The unprecedented phenomenon that has taken place in the Georgian banking sphere – distribution of shares of “Bank of Georgia” at London Stock Exchange turned it into !1 bank in the country.

It is an undoubtedly major achievement that will introduce certain changes in the sector. How the bank has achieved success, whether it is planning to purchase another large bank and is the market always right? Mr. Vladimer Gurgenidze – the Chairman of the Supervisory Board of “Bank of Georgia” is speaking on the mentioned issues.
– Mr. Gurgenidze, if it is possible, tell us what concrete amount of shares was distributed at London Stock Exchange and how many of them you are going to distribute in future?
– We are not going to increase the volume since, for the time being, we see no necessity in it. I have to say that the demand exceeds the supply by five times.
What has stipulated for a high level of demand?
– It is immodest, but it was stipulated by our good work.
– Does the matter concern the management factor?
– “Bank of Georgia” is a profitable and rapidly growing one.
– Information is being spread that it is going to “swallow” one of the large banks, presumably it is “Bank Republic”.
– “Bank Republic” is ruled out, it has already been bought by “Societe Generale” bank.
– Generally speaking, how truthful is this information?
– I unambiguously do not confirm the information spread about “Bank Republic”.
– Does that mean that the matter concerns another bank?
– In general we are holding many negotiations both in Georgia and outside it. It is our characteristic feature.
– “Bank of Georgia” has become !1 bank in Georgia. After this fact they say that one of large banks has serious problems with liquidity. In your opinion, how much will the volume of investments in Georgia increase, even as a result of the interest of the French? How will we interest foreign investors in Georgia by the much-talked-of London affairs?
– Of course the interest to Georgia will increase, the sector is a growing and profitable one, it annually increases by 50%, which, naturally, evokes interest.
– How do you like lari’s exchange rate? Do you think that it is the golden mean or not?
– I like any exchange rate determined by the market.
– Is the market free in your opinion?
– It is as free as it is possible in a small country in view of an open economy.
– Experts believe that lari’s exchange rate creates rather big problems to the export, especially taking into account the fact that the amount of scrap metal is decreasing.
– My opinion is always the same – the market is right.
– The market is right, but, in spite of it, there is a force that directs it, the National Bank in this case.
– It depends on a player.

A short review of “Bank of Georgia”
“Bank of Georgia” is a joint-stock company that was formed on the basis of former state “Binsotsbank” on 24 October 1994.
“Bank of Georgia” was twice conferred “The Best Georgian Bank” award.
The bank’s vision – to become the best recognized financial service company in Georgia.
“Bank of Georgia” is the best full service bank in Georgia that offers clients commercial and investment, assets management, insurance, leasing and card services. It is the largest bank in the country that possesses about 24.0% of the market’s total amount of securities and it renders services to about 380 thousand clients. The bank is divided into four strategic business units – Single Bank (SB), Corporate and Investment Bank (CIB) as well as Securities and Management units. In each of them “Bank of Georgia” holds the 1st or the 2nd place on the market. In the first half of 2006 the profit of the bank network made up 11 million GEL and the cost of its shares and the total securities was 107 million GEL and 609 million GEL. In June 2006 the bank’s ROAE and ROAA was 22.2% and 3.7%.

The bank’s strategy
– Consolidation of the leading position on the domestic banking market;
– Further increasing of banking activities;
– Consolidation of the position with the purpose of selling of other financial services;
– Diversification of activities, including the fund base and loan portfolio;
– Perfection of the risk management policy and procedures;
– Actively get down to sensible striving for regional enlargement.
High-profile clients
– City Administration of Tbilisi
– Millennium Changes Georgia
– Tbilisi Metro
– Pompetrol
– Lukoil
– Georgian Railway
– Magti GSM
– Geocell
– Poti port
– Batumi port

“Sakartvelos Ekonomika” magazine has carried out an expert inquiry concerning the person of the year in the economy in 2006. The criteria were introduction of modern management and growth dynamics.
Rating of the Georgian firms on the international market
Contribution made to the Georgian economy in 2006
Inculcation of technical and economic innovations in the Georgian business
Leading position in the own field
Named as the person of the year in the economy was
1. Lado Gurgenidze
2. Director General of Geocell – Osman Turan
3. Director General of pharmaceutical firm PSP – Gocha Gogilashvili
The most rapidly growing bank
1. Bank of Georgia
2. Standard Bank
3. Silk Road Bank
The most rapidly growing insurance company
1. GPI Holding
2. BCI
The most rapidly growing trading network
1. Goodwill
2. GMC
3. Populi