General Information & Client Service
  • 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 Articles

HKMA Decides to Maintain Countercyclical Capital Buffer at 2.5%

HKMA announced that, in accordance with the Banking (Capital) Rules, the countercyclical capital buffer (CCyB) ratio for Hong Kong remains at 2.5%.

April 16, 2019 WebPage Regulatory News

EP Approves Agreement on Package of CRD 5, CRR 2, BRRD 2, and SRMR 2

The European Parliament (EP) approved the final agreement on a package of reforms proposed by EC to strengthen the resilience and resolvability of European banks.

April 16, 2019 WebPage Regulatory News

FDIC Consults on Approach to Resolution Planning for IDIs

FDIC approved an Advance Notice of Proposed Rulemaking (ANPR) and is seeking comment on ways to tailor and improve its rule requiring certain insured depository institutions (IDIs) to submit resolution plans.

April 16, 2019 WebPage Regulatory News

EP Resolution on Proposal for Sovereign Bond Backed Securities

The European Parliament (EP) published adopted text on the proposal for a regulation of the European Parliament and of the Council on sovereign bond-backed securities (SBBS).

April 16, 2019 WebPage Regulatory News

PRA Seeks Input and Issues Specifications for Insurance Stress Tests

PRA announced that it will conduct an insurance stress test for the largest regulated life and general insurers from July to September 2019.

April 15, 2019 WebPage Regulatory News

PRA Finalizes Policy on Approach to Managing Climate Change Risks

PRA published the policy statement PS11/19, which contains final supervisory statement (SS3/19) on enhancing banks’ and insurers’ approaches to managing the financial risks from climate change (Appendix).

April 15, 2019 WebPage Regulatory News

EBA Single Rulebook Q&A: First Update for April 2019

EBA published answers to nine questions under the Single Rulebook question and answer (Q&A) updates for this week.

April 12, 2019 WebPage Regulatory News

EIOPA Statement on Application of Proportionality in SCR Supervision

EIOPA published a supervisory statement on the application of proportionality principle in the supervision of the Solvency Capital Requirement (SCR) calculated in accordance with the standard formula.

April 11, 2019 WebPage Regulatory News

FED Updates Form and Supplemental Instructions for FR Y-9C Reporting

FED updated the form and supplemental instructions for FR Y-9C reporting. FR Y-9C is used to collect data from domestic bank holding companies, savings and loan holding companies, U.S intermediate holding companies, and securities holding companies with total consolidated assets of USD 3 billion or more.

April 11, 2019 WebPage Regulatory News

OSFI Finalizes Guidelines on Liquidity Adequacy and NSFR Disclosures

OSFI published the final Liquidity Adequacy Requirements (LAR) guideline and the net stable funding ratio (NSFR) disclosure requirements guideline.

April 11, 2019 WebPage Regulatory News
RESULTS 1 - 10 OF 2920