An interview with Mamuka Khazaradze, Chief Executive of “TBC Group”
Recently, accusations of Georgian commercial banks in fostering the devaluation of the national currency have become frequent. Many claims are voiced about the transactions of banks that the government does not control. How would you evaluate these accusations?
Commercial banks are operating in the interests of customers, and perform transactions ordered by clients – whether they are private individuals or business companies. Statements that banks are interested in the devaluation of the national currency are not serious. Due to the depreciation of the lari, our bank’s investors lost $ 250 million. These are also those shareholders who have joined “TBC Bank” on the London Stock Exchange.
On the other hand, devaluation contributes directly to the deterioration of the loan portfolio of the banking system, and affects the condition of banks in the long-term and short-term profitability. We have to go for restructuring of loans; many of our customers cannot cover the debts taken in dollars. Therefore, any such statement is groundless, since it means that the banks are the enemies to themselves, including all shareholders and all employees of banks.
I think that such statements are of a political character and their aim is to please someone, they eventually cause serious damage to the economy of Georgia.
If the reputation of the banking sector is stained, it will hurt almost all sectors of the economy.
Many bring an example of US banks which have been fined for currency speculation. How is this possible in Georgia?
I have been working in the banking sector for 24 years, but such statements about the banks I hear in these days, I’ve never heard. It doesn’t matter what happened in America, it does not mean that the same will happen in Georgia. These are serious charges against the banking sector. Any charges need arguments. In particular, the accusations against the National Bank and commercial banks that they supposedly contribute to the devaluation of the lari. Populist statements that affect the mood of the people, to put it mildly, are incorrect. I think that everything what is happening is aimed to blame someone for the events that are taking place in the economy.
There are talks about the need to create a temporary commission to investigate the causes of the devaluation of the national currency and the government’s control over transactions of private banks. What is your opinion on this?
If the current Georgian legislation that envisages secret private transactions is amended, the banking system will collapse. The mystery of the transaction is one of the foundations of the banking system, in the event, of course, if we are not talking about the crimes for which law enforcement agencies carry out investigation. With regard to the activities of the National Bank of Georgia, I was in Azerbaijan and I know what happened there. To keep the exchange rate of manat, $ 3 billion have been spent – that is more than all foreign exchange reserves of Georgia. However, this measure did not help. In fact, 3 bln were thrown into the air.
Therefore, when experts say that the National Bank had to spend reserves to hold the lari’s rate they show lack of knowledge. The national currency is always determined by a combination of factors. It is not formed only by the purchase and sale, it is affected by a number of factors such as the level of exports, volume of remittances, tourism revenue, and more. Accordingly, when analyzing the situation, populism should be forgotten, since it is a very delicate topic.