TBC BANK to Receive $100 million Credit Line from EBRD & EU
The European Bank for Reconstruction and Development (EBRD) has extended a loan of $100 million (equivalent in Georgian Lari) to TBC Bank for the support of local SMEs, TBC announced on Tuesday at a press conference held at TBC Bank’s head office in Tbilisi.
The signing was attended by TBC Bank’s CEO, Vakhtang Butskhrikidze; Badri Japaridze, Vice-Chairman of the Supervisory Board of TBC Bank; Bruno Balvanera, EBRD Director for the Caucasus, Moldova and Belarus; and Janos Herman, Ambassador of the European Union to Georgia.
EBRD and the European Union are expanding their joint program with TBC Bank with the aim of supporting Georgian small and medium sized enterprises (SMEs) to adopt EU standards, which will make them more competitive on international markets and allow them to take advantage of greater benefits from the Deep and Comprehensive Free Trade Area Agreement (DCFTA) between Georgia and the EU.
The offered package will be divided. In the equivalent of local currency, up to $60 million will be allocated to assist businesses to comply with existing EU standards and take advantage of the DCFTA. An additional equivalent of up to $20 million will be used for SME financing to help the development of the private sector. A further equivalent of up to $20 million will be allocated for the support of businesses owned or managed by female entrepreneurs. TBC says that these funds will be lent to private sector clients by the Bank. At the same time, a contribution of EUR 19 million (50 million GEL) from the EU is to serve for the provision of technical assistance, investment grants and training to partner financial institutions, enhancing the ability of local banks to accept the risks related to SME lending.
“It’s an extremely important day for TBC Bank,” said Vakhtang Butskhrikidze. “For the last 25 years, support of small and medium size businesses has been our strategic direction. It’s also crucial because the assigned financial resources will be in Lari- as SMEs revenues are mainly in Lari, loans provided in Lari have fewer risks. Alongside financial assistance, TBC Bank has also done considerable work in supporting SMEs through more than 5000 seminars organized in Tbilisi, Kutaisi and Batumi during recent years on marketing, finances, new technologies and more. We hope that 2017 will be a very successful year for both TBC Bank and SMEs, as we have more novelties to offer to our clients in the second quarter of the year”.
“Georgia is the first country to take advantage of this program,” said Janos Herman, noting that SME development is a vital factor for employment opportunities and economic growth. “We are very happy to see that the EBRD is opening a credit line with TBC Bank. We’re confident that it will be a very efficient tool in the hands of Georgian companies to raise competitiveness. The EU has already made available EUR 19 million in grants. This will be used for technical assistance- investment incentives that we share”.
The EU4Business credit line is part of the European Union EU4Business initiative aimed at supporting SMEs in countries like Georgia, helping them take full advantage of the open market opportunities the DCFTA offers.
“We all know how important SMEs are for the economy of the country and, in particular, in the case of Georgia; how important it is to support the modernization and competitiveness of SMEs,” said Bruno Balvanera. “Within the Association Agreement and the DCFTA Georgia signed with EU are a number of obligations for SMEs to improve quality in order not only to access the European market, but also for production for the local market. In order to be able to reach the European market, Georgian companies need to have good quality products at a competitive price. SMEs in Georgia will have significant pressure to modernize their own companies and this is why the EU has offered a grant to partially finance the modernization of said companies.”
He added that of $100 million, $60 million will go towards the modernization of the companies. Via TBC Bank, EBRD will be able to offer over five years of financing in Lari at a competitive rate, plus a grant of 10 to 15% of the investment cost, depending on the type of investment.
“We’re signing an agreement with which we’re receiving GEL 240 million financial resources- the largest we’ve ever received. We’ve been closely cooperating with EBRD all through these years, and we’ll ensure that our clients will fully benefit from this collaboration,” said Badri Japaridze, prior to signing the agreement.
Nino Gugunishvili