MICROCAPITAL BRIEF: European Fund for Southeast Europe (EFSE) Loans $25m to Bank of Georgia for On-lending to Micro, Small Enterprises (MSEs)

Bank of Georgia, a Tbilisi-based commercial bank that offers corporate and retail banking, wealth management, brokerage and insurance services in Georgia, Ukraine and Belarus, recently borrowed EUR 18.5 million (USD 25.2 million) under a senior loan agreement from the European Fund for Southeast Europe (EFSE), a Luxembourg-based, government-backed microfinance investment vehicle. The loan will be used for on-lending to approximately 3,000 micro and small enterprises in Georgia.

According to a statement attributed to Ms Monica Beck, the Chairperson of the Board of EFSE, “with more than 20 percent of its business loan portfolio dedicated to micro-, small and medium enterprises, and one of the largest branch networks in the country for reaching small entrepreneurs, Bank of Georgia is a significant player in the country’s microfinance segment, and thus an excellent partner for the EFSE”[1]. Irakli Gilauri, the chief executive officer of Bank of Georgia added that he is “delighted to join forces with EFSE to facilitate access to credit for micro- and small enterprises, one the most important contributors to economic growth and job creation in Georgia”[1].

As of 2011, Bank of Georgia reported total assets of GEL 4.7 billion (USD 2.8 billion), client deposits of GEL 2.6 billion (USD 1.5 billion), a gross loan portfolio of GEL 2.6 billion (USD 1.5 billion), return on average total assets of 3.6 percent and return on average total equity of 20.4 percent. Bank of Georgia belongs to a holding company called Bank of Georgia Holdings Public Limited Company, which also owns Joint-stock Company (JSC) Aldagi, a healthcare and insurance firm that recently purchased an 80-percent equity stake in Avante Hospital Management Group, also of Georgia. As of 2012, EFSE reported total assets of EUR 835 million (USD 1.1 billion), a sub-loan portfolio of EUR 638 million (USD 875 million) and a profit of EUR 1.7 million (USD 2.3 million). Bank of Georgia has been a “partner lending institution”[1] of EFSE since 2010. More recent financials for Bank of Georgia and EFSE are not available.

By Alíz Crowley, Research Associate

About Bank of Georgia

The Bank of Georgia is a commercial bank that was founded in 1994. It offers corporate and retail banking, wealth management, brokerage and insurance services to clients in Georgia, Ukraine and Belarus. As of March 31, 2014, the bank has 203 branches and approximately 1.3 million client accounts. As of 2011, Bank of Georgia reported total assets of GEL 4.7 billion (USD 2.8 billion), client deposits of GEL 2.6 billion (USD 1.5 billion), a gross loan portfolio of GEL 2.6 billion (USD 1.5 billion), return on average total assets of 3.6 percent and return on average total equity of 20.4 percent. Bank of Georgia belongs to a holding company called Bank of Georgia Holdings Public Limited Company, which also owns Joint-stock Company (JSC) Aldagi, a healthcare and insurance firm that recently purchased an 80-percent equity stake in Avante Hospital Management Group, also of Georgia.

About European Fund for Southeast Europe (EFSE)

The Luxembourg-based European Fund for Southeast Europe (EFSE) focuses on the development of local financial sectors in Southeast Europe and parts of Central Asia. EFSE provides “long-term” funding for small and microenterprises as well as private households via its partner institutions. EFSE also supports investment activities though the EFSE Development Facility, which provides technical assistance, consulting and training services supporting capacity building within its partner institutions. EFSE was established in 2005 by Germany’s Kreditanstalt für Wiederaufbau (KfW), which means Reconstruction Credit Institute, with the financial support of the German Federal Ministry for Economic Cooperation and Development (which is also known by its German acronym BMZ) and the EU’s European Commission. The fund is privately managed, with Oppenheim Asset Management Services of Luxembourg acting as fund manager and Finance in Motion GmbH of Germany acting as fund advisor. EFSE operates in 16 countries: Albania, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, the former Yugoslav Republic of Macedonia, Kosovo, Georgia, Moldova, Montenegro, Romania, Serbia, Ukraine and Turkey. As of 2012, EFSE reported total assets of EUR 835 million (USD 1.1 billion), a sub-loan portfolio of EUR 638 million (USD 875 million) and a profit of EUR 1.7 million (USD 2.3 million). As of December 2013, EFSE holds a microfinance label from Luxembourg Fund Labeling Agency (LuxFLAG), an NGO that certifies that social investment vehicles actually invest as advertised.

Sources and Additional Resources

[1] European Fund for Southeast Europe Press Release, EFSE signs EUR 18.5 million senior loan with Bank of Georgia to boost MSE finance

MicroCapital, June 22, 2014, European Fund for Southeast Europe (EFSE) Loans $12m to Araratbank of Armenia to Support Micro-, Small Enterprises (MSEs)

MicroCapital, May 30, 2014, European Fund for Southeast Europe (EFSE) Loans $4m to Mikrofin Banja Luka of Bosnia and Herzegovina for On-lending to 2,000 Micro-, Small Enterprises

MicroCapital, February 18, 2014, International Finance Corporation (IFC) Capitalization Fund Loans $65m to Bank of Georgia

MicroCapital Universe Profile: Bank of Georgia

MicroCapital Universe Profile: European Fund for Southeast Europe (EFSE)

Do you know that MicroCapital publishes the MicroCapital Monitor newspaper each month? Find out more at https://www.microcapital.org/products-page/

Similar Posts: