Georgia still trusts its banks, says Gilbert Hie
By Salome Modebadze
Wednesday, November 19On November 17, 2008 Gilbert Hie, Chief Executive Officer of the JSC Bank Republic/Societe Generale Group, has delivered a public lecture about the current financial situation in Georgia and the world at the International School of Economics in Tbilisi.(ISET).
Gilbert Hie showed a film about the Societe Generale Group and spoke about its innovations and values. He also made a presentation on Bank Republic’s structural ideas and its role in the Georgian market. Afterwards he talked about general approaches to the crisis.
Mr Hie began by emphasizing that Georgia is no longer as isolated from the international financial system. Nowadays banks have unhindered access to international financial systems at reasonable prices. “International lenders always select to whom they will lend money; they never give financial support on air. They seem to have confidence in Georgia as they support it in the current financial crisis. Trust and confidence are the two main values of each bank,” Mr Hie stated.
Mr Hie said that the financial crisis in Georgia has resulted from a unique alignment of the worldwide oil crisis with the country’s social-political crisis after August war. This exceptional combination has posed questions in several areas. “Georgia needs some links to international market liquidity, which should be restored with international assistance,” Mr Hie said. “There have been problems in the Georgian financial system recently - banks were not able to lend or borrow money, crises blew up which almost caused bankruptcy, and people wondered what to do with their bank deposits; they should be confident in the banks, and the Government 100%”, Mr Hie noted. Georgia has been lucky to lose only 20% of its deposits, as it could have lost 50% or more, which would really be a tremendous figure for the country especially after the war. Fortunately Georgian people are still confident in the banking system. They realize that five years after entering the international market system the banks have appropriate rules, he said.
Another burning issue in Georgia which arose after the August war was price increases. The GEL was revalued against the USD, and this was reflected in prices at the local market. People have financial trouble, the rate of unemployment is high, and there are refugees in need of social support. Cooperation in social responsibilities plays an important role in the development of financial sustainability in every country. Social distribution, the fight against poverty, the provision of technical staff with solid salaries and charity are the main aspects of corporate social welfare in Georgia, Mr Hie said.
Mr Hie added that it’s important that international financial institutions see the GEL at a stable level. We may have had a devaluation, but our duty is to improve the current foreign exchange situation. “Government policy should be open for foreign investors. They somehow are not queuing up to invest here but still some are confident in Georgia and make projects with it,” Mr Hie remarked. He concluded by suggesting that Georgia has great potential to compensate for its lack of exports. “Banking is mainly based on trust and confidence. It’s important to restore the place of these things in society. International financial groups will cooperate with Georgia to provide foreign exchange.”