EBRD support has helped to stabilise Georgia’s economy following the Russia-Georgia conflict and the global financial crisis.
Two crises in close succession made 2008 a challenging year for the Georgian banking sector. The August 2008 Russia-Georgia conflict, followed by the global financial crisis left investors nervous and the Georgian banking system under pressure as depositors withdrew money.
So vulnerable was the country after the August conflict that foreign governments and international donors pledged US$ 4.55 billion to aid Georgia’s recovery.
Investing in the banking sector
The EBRD is a long-term investor in Georgia and is standing by its partner banks in difficult times. Over the last four years, the EBRD has invested over US$ 150 million in the country’s banking sector through equity, long-term funding and trade facilitation guarantees.
In December 2008 the EBRD teamed up with the International Finance Corporation to provide a financial package of US$ 200 million to the Bank of Georgia. This is Georgia’s largest bank as well as the first Georgian company and the second bank in eastern Europe and the Caucasus to be listed on the London Stock Exchange.
The finance helps the Bank of Georgia maintain sufficient liquidity during the financial crisis and continues to assist retail clients and small and medium-sized businesses, two key client sectors that drive economic growth in Georgia.
After several years of successful integration into the world economy, Georgia was also affected by the global financial crisis. The impact was felt by local banks and businesses when access to international and local finance tightened.
The EBRD-IFC investment into the Bank of Georgia is helping to promote a stable and healthy banking sector. The financing is the EBRD’s largest transaction to date in the financial sector in the early transition countries, which are some of the poorest countries that the EBRD invests in.