BAKU, Azerbaijan, April 10
By Tamilla Mammadova - Trend:
National Bank of Georgia (NBG) plans to strengthen the existing partnership with the European Bank for Reconstruction and Development (EBRD), Trend reports with reference to NBG.
According to the bank, in order to support the Georgian financial sector, NBG will sign a $200 million swap agreement with EBRD.
At the expense of attracted funds, the National Bank plans to provide additional liquid assets using commercial banks and microfinance organizations, as well as a swap channel.
“Talks will be held with the European Bank for Reconstruction and Development, as a result of which it is planned to sign an agreement on conducting a foreign exchange transaction in the amount of $200 million. The terms and conditions of currency swap operations are determined by agreement of the parties,” said the National Bank of Georgia.
NBG is ready to make swap transactions in the amount of $200 million for both commercial banks and microfinance organizations.
“In order to support liquidity, the National Bank will provide the maximum limit to commercial banks and microfinance organizations. The total amount of the swap will be distributed among the participants in the scheme in proportion to the market share of the financial institution. However, in order to avoid excessive concentration, one organization will be limited to 25 percent of the total, which will increase the availability of resources for small financial institutions. The swap transaction period is set at 1 month with the right to monthly renew for the next year,” NBG said.
Swap transaction is a contract to exchange two financial liabilities. For example, swapping fixed interest-rate debts for variable-rate debts. They are commonly used to enable a borrower to change the basis of interest payments and will often incur a fee.
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