IFC helps TBC Bank strengthen Georgian financial system by reducing interest-rate risk

IFC, a member of the World Bank Group, is helping TBC Bank, the largest bank in Georgia by retail deposits, hedge interest rate risks and thus improve its operations and competitiveness.

IFC and TBC Bank today agreed to undertake additional interest rate swaps under their International Swaps and Derivatives Association Master Agreement, the international legal documentation for the execution of risk-management transactions.

IFC first started providing TBC Bank with interest rate swaps in 2004. The current transaction will enable the bank to hedge U.S. dollar interest-rate risk on the its outstanding long-term borrowings at favorable rates. The transaction is part of IFC’s broader strategy to improve risk-management capacity within its client banks and introduce innovative products to its clients in Central and Eastern Europe.

“In 2004 TBC Bank was delighted to be the first Georgian bank to use swaps as a risk-management tool,” said Vakhtang Butskhrikidze, TBC Bank’s General Director. “Entering the swaps will help us better match our asset and liability positions and increase our ability to manage the bank’s finances for the benefit of our customers, depositors, and shareholders.”

“IFC’s strategy in the financial sector is to help banks improve their sustainability and mitigate risks, including interest rate risks,” said Snezana Stoilikovic, IFC Director for Central and Eastern Europe. “I am pleased we have another opportunity to extend our support to TBC Bank, our oldest banking client in Georgia, and contribute to strengthening Georgia’s financial sector by encouraging prudent risk management.”

IFC is the only international financial institution focused exclusively on the private sector, the engine of sustainable development in emerging markets. Along with IBRD, it is currently seeking a capital increase to strengthen its ability to create opportunity for the poor in developing countries—including by helping strengthen financial system by reducing interest-rate risks.