TBC Bank - Senior Loan

complete

The EBRD, in parallel with the IFC and FMO, is considering the following project: Senior debt to improve the asset and liability tenor match of corporate and retail loans for eligible transactions. The EBRD, IFC and FMO have structured a financing package which will meet the key objectives of assisting TBC to restructure its operations following the recent conflict and economic downturn. This is expected to increase confidence, maintain stability and enable the bank’s continued sound development. It is envisaged that EBRD, IFC and FMO will provide together USD 171 million in long term facilities. The EBRD will provide a USD 75 million funding package (break down loans vs equity). The transition impact of the transaction mainly comes from supporting TBC in the process of restructuring its operations towards a more sustainable funding model under post-conflict market conditions and amid the global financial crisis. There are also transition benefits from restarting the currently limited provision of commercial funding to the real economy, including small and medium sized enterprises. The restructuring process will focus on a new business plan for TBC, revision of risk management, increase of the level of deposits to loans ratio and the increased focus on work-out procedures for non-performing loans. A successful restructuring is expected to have a positive demonstration effect on the market and commercial lenders may resume lending to large banks in Georgia. The proposed facilities will include covenants that will encourage TBC to restructure its operations towards a more sustainable funding model by focusing on increase in the level of deposits to loans ratio. The transaction will also allow TBC to gradually restart normal lending operations and provide finance to creditworthy individuals and enterprises. More stringent lending standards will put pressure on enterprises to adjust their business plans and adopt more robust risk management solutions. The increase in economic activity will have a positive influence on increasing the levels of deposits and encourage TBC to rely more on deposit expansion than foreign borrowings. TBC Bank, a universal bank, is the second largest Bank operating in Georgia. As of 30 September 2008, TBC had USD 1,390 million in assets, USD 222 million in equity and USD 2.2 million in net profit. Up to USD 25 million senior loan USD 75 million Screened FI. TBC is an existing client and regularly participates in EBRD-organised environmental trainings. The latest was EBRD Environmental and Social Risk Management training where TBC staff demonstrated familiarity with the EBRD Environmental Risk Management Manual (including the latest version). Until recently, TBC only applied environmental and social risk management procedures to IFI funded transactions. However, now TBC started to apply these risk management procedures to all transactions of more than USD 1.0 million. None Mariam Megvinetuhutsesi, Head of Capital Markets TBC Bank 6, Marjanishvili Street 0102 Tbilisi Georgia Telephone: +995 32 272727 Email: mariamm@tbcbank.com.ge