Irakli Burdiladze, managing partner of White Square and BK Holding declares, that increased concentration limits are the reason for the suspension of financing of development projects by the banking sector. Burdiladze claims that the financial sector does not see risks in the market.
"As you know, I am a former banker. I spent seven years on the management team of the Bank of Georgia, and I know very well how banks work from the inside.
Banks have not stopped financing the real estate sector because of negative expectations, banks have set concentration limits on sectors and at the end of last year, they reached these limits in the construction sector. They were so actively funding this sector and the demand from banks was so great that they reached this earlier than other sectors, and therefore they could not issue loans. What concentration limits mean, let me explain, this is the risk diversification policy of banks. You cannot lend your entire portfolio to real estate, it should be distributed across different sectors to diversify risks. Lending is not a static process either, credit is issued dynamically and repaid at the same time.
They do not see any risks. Our company works with both systemic and non-systemic banks in terms of financing," Burdiladze said.
