TBC Bank and Asian Development Bank (ADB) signed a $50 million senior loan agreement on February 26. The five-year facility will be dedicated to extend credit to small and medium enterprises outside the capital Tbilisi. TBC, together with its subsidiary Bank Constanta, will also provide loans to micro segment customers in the regions.
TBC Bank signs agreement with ADB
By Salome Modebadze
Wednesday, February 27
“This will help the bank to further strengthen its position in the MSME segment by expanding its portfolio in the rural areas of Georgia where credit availability is relatively limited at present,” CEO of TBS Bank Vakhtang Butskhrikidze said. Butskhrikidze also explained that ADB’s loan agreement will make it possible for the bank to provide 5-year loans between 11-13% so that the companies will not only finance their working capital, but also invest to improve their facilities.
ADB has been operating in Georgia since 2007 and TBC Bank has been the participant in the ADB Trade Finance Program since April 2011. However, this is ADB’s first agreement with TBC aimed at supporting Georgia’s rural sector.
Principal Investment Specialist at ADB, Rainer Hartel, said after signing the agreement that the main criteria for financing businesses will be their potential to grow. He said agriculture, tourism and construction activities and services will have great potential in Georgia, and so they will be the main focus.
“Basically what we understand is that in the more remote locations, the TBC Group is very well positioned through its Constanta network, so they have a pretty good rural footprint,” he said.
ADB has $1.1 billion in loan approvals to the Georgian government over the past five years, including $163 million for the private sector. Kathie Julian, the resident representative of mission of ADB in Georgia, told The Messenger that they have a large portfolio that has been increasing rather rapidly in the last five years. Julian said that although ADB’s private sector portfolio is not as large, it is growing.
“We are very happy to [provide] $50 million from our private sector window to TBC and we are especially pleased that it to be used for small and medium enterprises, as well as micro loans outside Tbilisi and in the regions,” Julian told, us stressing that ADB cares a lot about improving “connectivity between urban and rural areas.”