6th Apr 2020 12:06
(Alliance News) - Bank of Georgia Group PLC said Monday it has agreed with its regulator to set up a GEL400 million general provision, about USD126.4 million, to combat the uncertainty caused by Covid-19.
The lender said the provision represents about 3.3% of its loan book, and will be taken in the first quarter of 2020.
"Our understanding is that the specific quantum of the provision reflects the National Bank of Georgia's current expectation of estimated credit losses on the bank's lending book for the whole economic cycle, given current economic expectations," Bank of Georgia explained.
Peer TBC Bank Group PLC, on Friday, created an additional loan loss provision buffer - representing about 3.0% to 3.3% of its loan book.
Bank of Georgia said the country's banking regulator, the National Bank of Georgia, still considers the lender's capital ratios to be "sufficiently in excess" of the expected minimum capital requirements at March 31.
The NBG said Bank of Georgia can absorb the provision and maintain a "sufficiently comfortable" buffer over the required minimum capital ratios.
At the end of March, Bank of Georgia's expects the CET1, Tier 1 and Total Capital adequacy ratio requirements at 6.9%, 8.7% and 13.3%, respectively. As of February 29, its own CET1, Tier 1 and total capital adequacy ratios were 12.2%, 14.2% and 18.6%, respectively.
"The NBG has also stated its willingness, if necessary, to fully or partially release the remaining requirements of Pillar 2 capital buffers, and, again if necessary, to introduce initiatives to reduce liquidity requirements," the lender added.
Back at peer TBC Bank, the lender's executive directors and top management of its primary operating subsidiary, JSC TBC Bank, have volunteered to waive all their rights to potential bonuses and long-term incentive plan grants for 2020.
TBC Bank noted this typically represents the majority of total compensation.
Shares in Bank of Georgia were 5.5% higher in London on Monday at 882.00 pence each. TBC Bank was trading 4.2% higher at 677.00p each.
By Paul McGowan; [email protected]
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