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Giorgi Kadagidze
Giorgi Kadagidze

National Bank: Commercial Banks don’t Own Non-core Assets

President of the National Bank of Georgia (NBG) George Kadagidze cannot agree with the opinion that commercial banks still hold non-core assets, after the law banning  such ownership was passed.

“These cases were not frequent  before  the adoption of the law but now a process of separation of non-core assets from the banks is going on. With regard to the shareholders of banks who  invest in other types of businesses, no one has the right to prohibit them from doing it. Possession of non-core assets is banned, and investments in such facilities are made bypassing banks,” he says.

At the same time, many businessmen say that despite the official ban, in reality the situation has not changed.

The issue became even more topical after it became known that the construction company M2 founded  by “Bank of Georgia” announced its intention to enter the hotel business – many experts have rated it as non-core activity.

Some experts believe that  it will hinder other players in the construction industry to develop because the companies associated with the banks have huge advantages.

The fact that M2 enters the hotel business  is a direct indicator that the banks still hold non-core assets and thereby cause problems to other construction companies – they are not  given loans because the banks are interested in the prosperity of their  non-core assets, and perceive  other players in the market as rivals. It’s a disaster when nobody  develops  in the country except for commercial banks,” they say.

Experts believe that the decision of the National Bank to  ban non-core assets  is not fulfilled, as the National Bank was limited to verbal recommendation without providing any concrete action to control the implementation of the decision.

However, not everybody is so skeptical.

For example, the head of the Hotels and Restaurants Association Shalva Alaverdashvili hails any activity in this direction.

“The more different brands and companies will operate on the market, the better for all. The fact that “Bank of Georgia” will be among the players is also good, since such a strong and stable player will add credibility to the project and to the market in general,” he notes.