Davit Utiashvili, Head of the Financial Stability Department at the National Bank of Georgia (NBG), stated that the concentration of the banking sector, where two banks hold an 80% market share, occurred naturally. He discussed the issue of market concentration in an interview with the TV program "Analytics.
Utiashvili emphasized that the sector does not face a competition problem despite the concentration.
“First, we should ask whether this is truly a major problem. It is clear that two banks hold a high share, and while it might be optimal to have four banks with 20% each, the current situation developed naturally. These two banks grew efficiently, launched strong products, and managed their operations well. Both banks are listed on the London Stock Exchange, which is rare in our region. Therefore, we do not view this as a critical issue. Competition exists, especially in retail banking, and customers have choices. Naturally, if more strong players enter the market, overall competition would increase,” Utiashvili said.
Regarding the impact on interest rates and whether the high concentration might discourage new players or international banks, he said that while concentration may have some effect, it is not significant enough to materially impact the market.
“In terms of competition, customers have ample choice in the retail sector. The only relatively challenging segment is large corporate clients, as only these two banks can adequately serve them. Interest rates are high, but this is driven by other factors, not by sector concentration. Georgia’s banking sector is transparent, and metrics like bank expenses relative to revenues and assets compare favorably to other countries. Our banks are among the best performers even by London Stock Exchange standards. Investors recognize this strong performance. So overall, the banking sector does not pose a challenge, and access to credit remains high. For example, over 60% of adults have loans, which is globally one of the highest ratios,” Utiashvili added.
