Financial package to enhance Bank of Georgia’s capital base

By Rezo Bitsadze

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  • EBRD to provide its first Additional Tier 1 (AT1) capital loan
  • Bank to invest US$ 35 million, with the remaining US$ 15 million provided by Swedfund
  • Amount equivalent to the capital loan to be allocated to GET-eligible investments

To support Georgia’s economic growth and enhance the resilience of the financial sector, the European Bank for Reconstruction and Development (EBRD) is lending US$ 35 million to Bank of Georgia. Sweden’s Development Finance Institution (Swedfund) will provide an additional US$ 15 million, taking the total loan amount to US$ 50 million.

The financing package consists of sophisticated Basel III-compliant Additional Tier 1 (AT1) parallel capital loans, which are expected to be included in Bank of Georgia’s Tier 1 capital on disbursement and the requisite approval from the National Bank of Georgia. It is the first time the EBRD is providing such an instrument to a partner institution in the economies where it operates.

The loan will optimise Bank of Georgia’s capital base and enhance its resilience to support a continuous flow of credit to the real economy.

Bank of Georgia undertakes to deploy an amount equivalent to the AT1 capital loan (US $ 50 million) to green investments that meet EBRD’s eligibility criteria for Green Economy Transition. As a regional leader in climate finance, the EBRD will also provide a grant for a technical cooperation programme to support Bank of Georgia in its green economy financing initiatives.

Bank of Georgia is one of the largest, most systemically important universal banks in Georgia, with a record of strong and stable returns. The EBRD’s successful relationship with its partner financial institution spans more than two decades. Back in 2006, Bank of Georgia was the first Georgian bank to list on the London Stock Exchange.

The EBRD has invested almost €4.8 billion in Georgia to date through 269 projects, with 80 per cent of those in the private sector. The Bank’s key areas of investment include the financial sector, sustainable infrastructure and small and medium-sized enterprises (SMEs).

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