Baku, Azerbaijan, September 16
By Tamilla Mammadova – Trend:
In the past eight years, the number of banks in Georgia has decreased from 21 to 15, Trend reports referring to the report of European Investment Bank (EIB).
The financial sector of Georgia is composed of 15 commercial banks, two non-bank depository institutions, 65 microfinance organizations, 1,000 exchange bureau, one stock exchange, 17 insurance companies and three pension schemes
The banks increased their assets substantially reaching 91.4 percent of GDP in 2018, with total banking sector assets of over 39 million lari (over 12 million euro). The banks accounted for 93 percent of the financial sector, the report said.
All banks are essentially private sector-owned. Microfinance organizations are the second largest segment within the financial sector with a 4.1 percent share, followed by insurance companies (1.6 percent) and pawnshops (1.3 percent).
The banking sector is a two-tier market. The country’s two largest banks - Bank of Georgia (BoG) and TBC Bank - jointly hold 73 percent of total banking sector assets. Both banks have benefited substantially from foreign support over the past decade. They are listed on the London Stock Exchange.
These banks and Liberty Bank (5 percent of total banking sector assets) are classified as systemically important banks in Georgia. Consequently, they are expected to progressively increase their capital buffer requirements from 1.5 percent to 2.5 percent by 2021. All in all, taking into account the small size of the Georgian economy, the number of banks still allows for stiff competition in the banking sector.
According to EIB, this is reflected across multiple dimensions including decreasing lending rates and margins, high marketing costs, high qualified staff costs, legal cases driven by headhunting, number of branches, ATMs and POS terminals within the same locations, and the virtual nonexistence of syndicated loans. Financial intermediation has been steadily growing in Georgia over the past decade.