The First British Bank in Georgian Banking Sector

Nino Arveladze

Large foreign banks’ interest towards Georgian banking sector has increased during the last years. Foreign investment share in total capital of commercial banks reached 58% In 2006 and 67 % in the first half of 2007.

Foreign investors considered the country’s stable economic growth to be the reason for increased interest towards Georgian banking sector. Georgian residents and non-residents have equal opportunities to invest in commercial banks founded in Georgia. Although increased risk indicators both: economic and political are worth noting.
Let us introduce you a new representative of Georgian financial sphere:
British investment company Monte Cristo Capital Ltd considered Georgia to be an attractive place for investment. It has acquired control stack in Bank Tetri and the First British Bank entered our banking sector. Mr. Adam Cleary, General Director of the First British Bank and Mr. Nugzar Pipia, Chairman of Supervisory Board talk about the new bank.
– Mr. Cleary, please tell us about the bank that has entered Georgia; what assets and liabilities does it have?
– We have bought the bank, named Bank Tetri; acquired its control stack, as a result of which the bank has totally changed. We view Georgia and its banking sector optimistically and we believe that we have growth perspectives in the future. We intend to direct on corporate and the type of individual clients that have high income. We also plan to offer our customers advice from investment banking point of view.
– Do you consider Georgian banking sector to be competitive? What attracted you the most on Georgian market?
– It definitely is competitive, although Georgian Economy, that has become liberal and flexible, is the most attractive. All these leads to important economic growth and number of opportunities are created for financial institutions. In spite of the fact, that retail banking sector is highly developed in Georgia, there still are other free points on market that may be developed. We seek for right place on the market. Our strategy will differ from that of large banks, as they do their business well. We have quite ambitious new plans. We’ll soon start publicizing our new products and we hope to attract new clients soon.
– Does the bank plan to make large investments in any field of Georgia in the future?
– There are different interesting sectors in Georgia. Direct function of a bank is to give credits to promising businessmen. Construction or real estate business is quite attractive but this is something that a bank should not do. Other attractive businesses are: agriculture, transport, building and construction materials, although the only possible relation to the mentioned spheres is to give loans and provide financial support to projects. Investment funds invest in different sectors. As for bank, it should give credits.
– How many branches does your bank have?
– This is the head office of the bank and it is the only branch at this stage. We will definitely discuss different possibilities for opening branches. As I have already mentioned, our strategy is not a big network and many branches. The implementation of our objective does not require number of branches.
– When did the bank open in Georgia and do elections and political situation influence your activities?
– Political situation in Georgia and elections do not change our plans. The Bank continues its operations. People expect elections and results – it is quite normal, but I personally do not see any sign of negative impact.
– Will the First British Bank affect Georgian banking sector? Do you consider any of banks to be your major competitor?
– There is a simple reason, we are all banks. Therefore, each bank is our competitor, as it is theoretically possible that all banks implement one and the same project. Although it’s worth noting, that a market is large and everyone may do their own business. High competitiveness raises chances for attracting customers; it encourages innovations and gives us an opportunity to offer new products to customers. As for major competitor, I don’t think I can distinguish any of them.
Nugzar Pipia:
– Mr. Nugzar, how did the idea of indorsing the First British Bank to Georgia originate?
– The idea arose in London. Investment Company Monte Cristo Capital Limited wished to start business in Georgia. Company representatives visited Tbilisi in May of this year. Meetings with Prime Minister, Minister of Economic Development of Georgia, President of National Bank, businessmen and representatives of different Banks operating in Georgia were arranged. The visitors studied Georgia, they went to Poti and Zugdidi as well. Banking Sector was marked to be one of the most interesting spheres of activity at meetings. Later, it was decided to buy acting bank, as establishing new bank would take a great deal of time. We have purchased Bank Tetri that had three shareholders. Two of them sold their shares. The main shareholder was “Tbilaviaservice” and its Director General, Mr. Pantiko Tordia owning 68% of shares. Investment Company acquired control stack and became the owner of 67% of shares. Mr. Pantiko Tordia stayed as an individual and own 33% of shares. The First British Bank has founded on the basis of Bank Tetri. As for its name, this is the first British bank on Georgian market. Although HBC Bank has entered Georgia, it does not operate yet due to license issues.
– Active advertisement campaign for the First British Bank hasn’t started yet.
– Everything is being prepared. It’s worth noting that the beginning of our activity coincided with famous November events. Accordingly, TV advertising campaign has been postponed for a while. Besides, Bank Tetri was a small Bank. It occupied the seventeenth place out of 18 banks according to capital. In December or January we intend to make emission by means of share capital as we plan to be in the top ten banks. Quite active advertising campaign will start after that. The Bank is able to give credits; it has free money in the National Bank. We have been buying National Bank’s securities for a month and a half and receive only 5-6% out of them. As for real prices of credits, it is well known to everyone.
– Is the Bank able to make all operations at the moment?
– We have all kinds of operations, except utility bills. We do not have network and the only branch may not be enough.
– Does the Bank plan to open branches throughout Georgia?
– Yes, exactly. The first place we’ll open a branch will probably be Poti, Batumi and Tbilisi.
– Do you think elections and changes in government will affect your plans?
– Bank has an English capital. There is an attractive climate for business in Georgia. The west pays the greatest importance to this fact. I can not state that political situation will have negative influence on Banks’ plans.