Bank of Georgia traces its roots to 1903 and is the successor to the state-owned Bank for housing and construction, “Binsotsbanki”, which was privatized in 1994. The Bank’s main business areas are retail banking, corporate banking and wealth management. In addition, the Bank, through its subsidiaries, provides insurance, investment banking, asset management and card processing services. As of August 31, 2008, Bank of Georgia was the largest bank in Georgia based on total equity (with a market share of 38%), total assets (with a 32.6% market share), total gross loans (with a 32.7% market share), and deposits (with a 27.5% market share). The Bank has an extensive branch network in Georgia, with 142 branches, including full-service flagship branches, service centers and smaller scale sales outlets, and the largest ATM network in Georgia, comprising 386 ATMs. Bank of Georgia is traded on the Tbilisi Stock Exchange and since 2006, through Global Depository Receipts (“GDRs”) on the London Stock Exchange. It has a widely diversified shareholding base including investment funds, retail investors and the management of the Bank.

The total project cost is estimated at up to $200 million and would consist of a debt and quasi-equity package, of which $100 million would be for IFC’s own account and the remainder to be provided by other potential lenders.

106.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	106.0
Equity	0.0

* These investment figures are indicative

Bank of Georgia is headquartered in Tbilisi and has 142 branches across Georgia.

The project has a high expected developmental impact. The underdeveloped banking sector impedes Georgia’s economic growth and limits local business access to longer term financing. The development impact of the project is expected to be significant in terms of its support for local businesses in the real economy. By providing financing to Bank of Georgia, IFC will enable the bank to expand its lending operations and provide longer tenor commercial financing to businesses in a various economic sectors, therefore fostering economic growth and employment generation. In addition, this project will broaden access of the population to retail finance, including mortgage finance, thus improving the living standards of population.

IFC’s proposed investment will enhance the capabilities and franchise of Georgia’s leading banking institution. It will help stabilize Georgian financial markets by providing funding at a critical juncture at longer maturities than market sources, and would support Bank of Georgia’s continued financing of SMEs and individual borrowers.

This project has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure.

BOG is an existing IFC client required to develop a Social & Environmental Management System (SEMS) to screen investments against applicable National Social and Environmental Laws and regulations and the IFC FI exclusion list and appoint responsible staff to oversee the implementation of the SEMS. A recent review had identified supplemental actions BOG will be required to take to improve its SEMS as a condition of disbursement for this investment.

Based on the review, BOG will be required to:

- Update its existing SEMS prior to disbursement to the satisfaction of IFC
- Continue to ensure responsible, qualified persons are appointed to manage and implement the SEMS
- Commit to implement the SEMS, to ensure that its investments/activities are in compliance with the Applicable Performance Requirements
- Continue to submit a periodic report to IFC as per a format to be provided by IFC

The mortgage finance component will not attract the above S&E requirements.