Financed ProjectsBank of Georgia

Identification Code:

OP/16/0018

Total Operation Cost:

60.000.000

Maturity:

60 months

Operation Status:

Description and Purpose of the Operation:

Bank of Georgia

Countries of Operation:

Georgia (100,00 %)

Financial Product:

SME's

Sector:

Financial Institutions

Domain:

Private

Borrower/Client:

Local Currency SME Facility to Bank of Georgia

Co-Financiers/Participants:

N/A

Guarantors/Sponsors:

N/A

Developmental and Regional Cooperation Impact:

This operation involves a GEL 60 million lending facility with the Bank of Georgia, for on-lending to eligible small and medium sized enterprises (SMEs). Economically, it is expected to have modest but favorable benefits for the Georgian economy, the most relevant being additional tax revenue gains from increased economic activity resulting from the financing provided, increases in employment, and multiplier effects for other parts of the economy. Since it is a local currency operation accompanied by issuance of a GEL denominated bond by BSTDB, the operation is innovative and will have a high demonstration impact. In addition, it will have benefits that result from local bond issuance such as no foreign exchange risk for the borrowers, and a modest but positive strengthening and deepening of the domestic financial market. The regional cooperation element is low, because it is not yet known who the end beneficiaries of the facility will be, but most of the SMEs are likely to be mainly oriented to the domestic market. Nevertheless, the presence of Bank of Georgia in other BSEC countries increases the potential for the realization of regional cooperation benefits.

Environmental Classification and Impact (summary):

BOG has developed and implemented a comprehensive environmental and social (E&S) management system. It consists of the E&S Policy and the E&S risk management procedures, which are compliant with BSTDB's requirements towards financial intermediaries. The system outlines the main policy statements of the Borrower and defines the procedures for the E&S risk assessment process, decision making, monitoring, as well as the assignment of responsibilities. Bank of Georgia has also developed procedures for ensuring compliance with IFIs E&S Exclusion Lists. Overall, the E&S management system is well-integrated in the credit cycle and is applied systematically to the entire portfolio. The analysis of 2015 portfolio shows that the Borrower is engaged primarily in sectors of limited to low E&S risks, which account for more than 70 % of the total transactions. Slightly more than 10 % were transactions of medium E&S risks, and approximately 15 % were of high risk. The latter involved projects in fertilizer production, cement manufacturing, metallurgy, mining and energy projects, such as hydropower generation and gas distribution. These operations were subject to E&S assessment, and included legal documentation review, risk identification and mitigation, monitoring and reporting. The findings of the assessment were reported to be duly translated in the legal agreements as E&S terms and conditions of financing. The Borrower is also involved in financing sectors, which are restricted by the BSTDB E&S Exclusion List, namely tobacco and alcohol production, and gambling activities. These, accounted for less than 2% of the total portfolio and were financed from the Bank of Georgia's own proceeds. In terms of the internal capacity for ensuring the proper implementation of the E&S management system, this has been assessed as appropriate. The overall responsibilities for E&S risk assessment is assigned to the Credit Risks Management Department, which employs an E&S expert. In addition to that the credit risk managers, credit officers and corporate bankers are also actively involved in the implementation of the Borrower's E&S management system.

Operation Leader:

Financial Institutions I

E-mail:

fi1@bstdb.org