OREANDA-NEWS. January 11, 2009. The EBRD and the IFC, a member of the World Bank Group, are providing Bank of Georgia with a financial package worth up to US200 million to help the leading bank in the Caucasus region manage the effects of the global financial crisis, reported the press-centre of EBRD.

The two international financial institutions will provide US 100 million each, including subordinated and subordinated convertible loans of up to US 50 million to support the bank’s capital base, and a senior loan of US 50 million to provide longer-term liquidity that will allow the bank to continue lending to retail clients and small and medium enterprises, two key client bases that will drive economic growth in Georgia.

After several years of successful integration into the world economy, Georgia is now also affected by the impacts of the global financial crisis. Access to international and local funding has become more difficult for Georgian banks and companies.

Varel Freeman, EBRD First Vice President, said the “swift reaction by international financial institutions demonstrates our preparedness to stand by our partners in times of needs. The EBRD is ready to support structurally sound clients to overcome the current crisis. This is key for the preservation of a sound banking system and the return to sustainable growth in the future.”

Jyrki I. Koskelo, IFC Vice President, added: “Over the past several years, Georgia’s banking sector has made remarkable progress in deepening financial intermediation and facilitating economic growth. This investment into Bank of Georgia will help promote a stable and healthy banking sector which is critical for other sectors of the economy to develop. We are happy to support Bank of Georgia together with the EBRD and are jointly considering other opportunities in the Georgian banking sector jointly.”

Bank of Georgia is the largest Georgian bank, with a market share of 34 percent of total assets, 33 percent of total loans and 30 percent of total deposits. Since November 2006, the bank has been listed on the London Stock Exchange in the form of global depositary receipts.

The EBRD Board of Directors has approved plans for a substantial increase in the Bank’s investments in 2009 in response to the global financial crisis. The Bank aims to invest up to EUR7 billion next year, a record increase of over EUR 1 billion or nearly 20 per cent above 2008. The extra investments will be targeted across the EBRD’s countries of operations. As EBRD investments have typically attracted additional funding from commercial partners at a ratio of at least 2:1, that means EBRD-led financing could top EUR 20 billion in 2009.