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Gachechiladze: NBG’s Approach Is Indeed Conservative

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BM.GE
03.11.20 17:15
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In his last interview with The CheckPoints, Bank of Georgia's CEO, Archil Gachechiladze, mentioned a decision about banks preemptively creating reserves. This is something that Fitch Ratings called a unique approach from Georgia's central bank. This uniqueness stems from the features assessment that other regulators restrained from.
 
"I think the decision was unique. We have not seen other regulators do the same. On one side, we saw a Georgian regulator asking us to provide for all of the losses we expected for the covid-19 pandemic. In comparison, the other regulators have allowed the banks to take time to realize the pandemic's impact and charge accordingly. Not all regulators can afford to be conservative. The Georgian regulator was able to do so because the banks have plenty of capital, allowing for this kind of conservative approach," - he said.

According to Gachechiladze, the decision created questions on the investors' side because they suddenly saw a deteriorating capital position, which was based on the upfront charge. "We had to explain this decision to our investors. But after this explanation, I think everybody was on board. I think our clients, as well as the regulator, were happy with the fact that there was enough capital to see the full upfront charge, but at the same time, plenty of capital regardless," - he said.
 
Gachechiladze added that the investors see the capital ratios in Georgian standards, which is much more conservative than International Accounting Standards. He hopes that they will go to the international accounting standards soon, and the investors will see there's more capital in the system than the reported numbers, which are based on conservative ratios and the message that the National Bank employs.