General Information & Client Services
  • Americas: +1.212.553.1653
  • Asia: +852.3551.3077
  • China: +86.10.6319.6580
  • EMEA: +44.20.7772.5454
  • Japan: +81.3.5408.4100
Media Relations
  • New York: +1.212.553.0376
  • London: +44.20.7772.5456
  • Hong Kong: +852.3758.1350
  • Tokyo: +813.5408.4110
  • Sydney: +61.2.9270.8141
  • Mexico City: +001.888.779.5833
  • Buenos Aires: +0800.666.3506
  • São Paulo: +0800.891.2518
June 28, 2018

IMF published its staff report and selected issues report under the 2018 Article IV consultation with Georgia and completed second review of Extended Fund Facility of Georgia. Directors commended the central bank for strengthening the financial supervision and regulatory framework, including by implementing FSAP recommendations. They noted the need to bring the crisis management framework in line with best international practices and stressed the importance of improving crisis management procedures, including implementing the emergency liquidity assistance and banking resolution frameworks.

The staff report reveals that the banking sector remains well-capitalized, liquid, and profitable. The capital adequacy ratio remains close to 20%. The average liquidity ratio declined slightly from 41% in January 2017 to 37% in January 2018. Nonperforming loans (NPLs) declined to 2.9% of total loans (January 2018), from 3.8% a year ago. The central bank has strengthened regulations on capital and liquidity requirements, along with its financial stability framework, supervision, and financial safety nets. As the financial supervisor, the National Bank of Georgia (NBG) has stepped up efforts since the last Article IV Consultation to strengthen prudential regulation and supervision, broaden financial oversight, and undertake institutional changes to incorporate macro-prudential policy into the financial policy toolkit. Three banks have been identified as systemically important banks (SIBs), with additional capital requirements of 1.5–2.5 percentage points to be phased in by 2021. The countercyclical capital buffer, effective in December 2017, can limit procyclicality in credit growth that is triggered by, among other elements, deviations from the long-term trend in the credit-to-GDP ratio and indicators of the cyclical position of the financial sector.

The Basel III net stable funding ratio will be introduced in 2019, helping improve liquidity management over a one-year horizon.  In line with FSAP recommendations, NBG issued regulations to phase in by 2022 additional capital requirements for systematically important banks (structural benchmark, December 2017). To increase transparency of Pillar 2 capital requirements (under Basel III regulation), NBG published General Risk Assessment Program (GRAPE) guidelines, describing the general principles of risk-based supervision and the rationale behind capital add-ons. Additionally, NBG now has oversight over non-bank lenders. 

With the IMF support, NBG has started developing a macro-financial model, incorporating interlinkages between the real economy and the financial system to analyze financial and macroeconomic risks scenarios, conducting macro-stress tests and providing analytical support for macro-prudential policy. NBG has published macroeconomic risk scenarios to assist financial institutions’ transition to IFRS 9 accounting rules, which will drive more forward-looking provisioning. The model will also serve as a tool for a renewed financial stability report, which is planned for 2019. In the context of implementing IFRS reporting standards, NBG introduced impairment guidelines to help the financial sector establish proper credit loss calculation system following IFRS 9. Also, to ensure IFRS 9 implementation, Georgia started publishing macroeconomic forecasts and risk scenarios. Financial institutions can use these scenarios as an input for calculating the expected credit loss. A roadmap to transition to IFRS regulatory reporting will be prepared by June 2018. Ultimately, NBG aims to transfer banks’ regulatory reporting to IFRS framework through EU standards (FINREP/COREP forms).


Related Links

Keywords: Europe, Georgia, Banking, Basel III, IFRS 9, Macro-prudential Policy, Reporting, IMF

Related Insights

US Agencies Propose Rule on Appraisals for Real Estate Transactions

US Agencies (FDIC, FED, and OCC) proposed a rule to increase the threshold level at or below which appraisals would not be required for the residential real estate transactions from USD 250,000 to USD 400,000. Comments will be accepted for 60 days from publication in the Federal Register.

December 07, 2018 WebPage Regulatory News

EBA Single Rulebook Q&A: First Update for December 2018

This week one answer was published as part of the Single Rulebook Questions and Answers (Q&A).

December 07, 2018 WebPage Regulatory News

FED Updates Reporting Form and Instructions for FR Y-14Q

FED published the updated reporting form FR Y-14Q for Capital Assessment and Stress Testing, along with the associated instructions.

December 06, 2018 WebPage Regulatory News

PRA Finalizes Policy on Minor Amendments to Regulatory Reporting

PRA published the policy statement PS30/18, which contains the final policy following a consultation (CP16/18) on certain amendments to regulatory reporting.

December 05, 2018 WebPage Regulatory News

GM of BIS Examines Regulatory Implications of Big Tech in Finance

Agustín Carstens, the General Manager (GM) of BIS, during the keynote address at the FT Banking Summit in London, spoke about new challenges and policy implications of big tech in finance.

December 05, 2018 WebPage Regulatory News

ACPR Publishes Version 2.8.1 of the CRD IV Taxonomy

ACPR notified that version 2.8.1 of the Capital Requirements Directive (CRD) IV Data Point Model taxonomy and version 2.1.0 of the Anti-Money Laundering and Terrorist Financing (LCB-FT) taxonomy have been made available.

December 04, 2018 WebPage Regulatory News

European Council Endorses Package on CRD 5, CRR 2, BRRD 2, and SRMR 2

European Council endorsed the agreement achieved between the presidency and the Parliament on the key measures of a comprehensive legislative package aimed at reducing risks in the banking sector in EU.

December 04, 2018 WebPage Regulatory News

BCBS Report Examines Cyber Resilience Practices Across Jurisdictions

BCBS published a report that identifies, describes, and compares the range of observed bank, regulatory, and supervisory cyber-resilience practices across jurisdictions.

December 04, 2018 WebPage Regulatory News

EIOPA Publishes Q&A on Regulations and Guidelines

EIOPA published new sets of questions and answers (Q&A) on guidelines, implementing regulations, and delegated regulations applicable to insurers in Europe.

December 03, 2018 WebPage Regulatory News

ESMA Registers A.M. Best (EU) Rating Services as Credit Rating Agency

ESMA, the direct supervisor of credit rating agencies (CRAs) in EU, has registered A.M. Best (EU) Rating Services B.V. as a CRA under the CRA Regulation, with effect from December 03, 2018.

December 03, 2018 WebPage Regulatory News
RESULTS 1 - 10 OF 2316