Issue 4, 2018. August-September

   

BANK OF GEORGIA SPLITS, CREATES TWO FTSE COMPANIES

The Bank of Georgia has demerged into two separate entities, creating the Bank of Georgia Group and Georgia Capital. Investor.ge spoke to Bank of Georgia CEO Kaha Kiknavelidze about the demerger and its impact for the bank and the Georgian banking sector.

The demerger of Bank of Georgia into two separate businesses - Bank of Georgia Group and Georgia Capital - will strengthen both entities, according to Bank of Georgia CEO Kaha Kiknavelidze.

Under the new structure, Bank of Georgia Group PLC (Bank of Georgia) will be a "pure-play banking story, and Georgia Capital PLC (Georgia Capital), the only diversified investment vehicle in Georgia," he said.

"As demerged entities, the companies are better positioned to invest in various sectors and thus create greater value in the Georgian economy. Importantly, the entities will no longer be constrained by conflicts of interest in their respective sectors," Kiknavelidze told Investor.ge.

"Bank of Georgia will expand its lending activity in the corporate sector, including to Georgia Capital's companies, which was restricted due to related party regulations. Georgia Capital will not be subject to the banking regulatory regime thereby improving its ability and flexibility to allocate capital, take advantage of various investment opportunities and better execute its growth strategy."

While the change will require the group to separate support functions, the banking and non-banking businesses had been operating independently for years, Kiknavelidze said.

"Today the two companies have fully independent operations, management teams and two separate boards of directors," he added.

Georgia Capital will retain a 19.9 percent stake in Bank of Georgia as part of the deal.

For the sake of independence, however, Georgia Capital has waived its active voting rights, Kiknavelidze said.