Noncore assets of commercial banks bring serious problems to the country. Specialists and business sector representatives stress that this environment kills valuable competition and aggravates the situation for various businesses.
Entrepreneurs frequently note that they have taken loans from major commercial banks. As a result, this or that bank has full information on financial indicators of competitor companies. As a result, when a commercial bank enters a special business field, all other competitor companies are oppressed and they fail to offer valuable competition. Moreover, commercial bank possess huge financial resources and they finance their noncore businesses themselves.
Bank of Georgia is a special commercial bank in terms of noncore assets. Despite the bank does not possess these businesses any more, as they were united into the joint holding of Georgian Capital (the former BGEO Group), informed circles know very well, how Bank of Georgia used to enter various business segments for many years and expand noncore activities thanks to its own financial resources.
Moreover, Bank of Georgia and Georgian Capital have the same stakeholders and assertions as if the bank holds no noncore business are just attempts of misleading and cheating the society. Despite Bank of Georgia encurtains its noncore assets behind Georgian Capital or BGEO Group, everybody knows very well that Bank of Georgia finances the mentioned businesses itself, supplies cheap money, spends high financial resources, and even it directs its own money from one pocket to another even when lending money to them.
Therefore, the bank cannot so easily swindle the society, business sector and specialists. The fact is that today the country has become a business for Bank of Georgia and the bank’s tentacles penetrate almost all business fields. In a certain segment, the bank owns even two competitor businesses. It is regretful that if this processes continues, commercial banks will take over all major businesses in the near future. As a result, the current grave situation in business sector will be further aggravated.
Here we introduce information on key businesses that Bank of Georgia owns eventually in the holding of Georgian Capital.
Insurance business – Aldagi and Imedi L
In the insurance business the bank owns two major companies – Aldagi and Imedi L. According to the January to September 2017 indicators, Aldagi insurance company ranks second due to attracted insurance premium of 64 million GEL, while Imedi L ranks third with 41 million GEL insurance premium.
Pharmaceutical business – GPC and Pharmadepot
Pharmaceutical business is one of the most profitable sectors in the country and, naturally, Bank of Georgia stakeholders would not miss the chance and this business sector was taken over simply, where the bank owns two major companies – GPC and Pharmadepot. It should be noted that Pharmadepot was bought in in the current year and these two companies jointly hold the major ratio on the market.
Evex Medical Corporation
Evex medical corporation is the largest hospital sector in the country with 76 clinics in 6 regions.
The field specialists often stress that pharmaceutical companies should be stripped of the right for management of clinics and insurance companies, because similar situation frustrates market competition and hinders a reduction in prices. However, has Bank of Georgia ever respect any rule?
Development Business – M2
M2, one of the largest development companies, is actually owned by Bank of Georgia and representatives of competitor construction companies frequently protest against this fact.
Water supply companies and HPPs – GWP, Mtskheta Water, Rustavi Water. GWP, Georgia’s major water supply company with more than 400 000 subscribers, is owned by Georgian Capital, as well as Mtskheta Water and Rustavi Water. These water supply companies own several hydro power plants, including Saguramo HPP, Zhinvali HPP and Bodorna HPP.
Distribution Company – Teliani Trading Georgia
Teliani Trading Georgia distribution company was founded in 2006 for distribution of domestic and imported beverages. It holds a 47% stake in bottle wine category. The company carries out distribution of soft and strong drinks.
Winemaking Company – Teliani Valley
One of the biggest winemaking companies in Georgia, which sells its own products on both Georgian and foreign markets.
Beer Business – Heineken, Aisi, Black Lion
Over the past period Georgian Capital expressed interest in beer business too and obtained the right from Heineken for building a brewery, then it launched bottling Aisi and several days ago it also bought Black Lion at 3.2 million USD. As a result, the company will hold a significant ratio on the beer market.
Soft Drinks – Kampa
It would be really surprising if the bank had not penetrated the business of soft drinks. Kampa company was founded in 2008 and offers assortment of juices and nectars.
Payment Terminals – Express Pay
Our society remembers when Bank of Georgia offered a standard model of dumping, when, initially, contrary to competitors, it did not increase fee for making payments to cell operators, but after competitors withdrew from the market, it raised service tariffs.
Bank of Georgia University
The bank has established its own university with BA and MA courses in business administration.
The mentioned businesses are only a small part of interests that Bank of Georgia Group has in Georgian business.
It is worth noting that both government and parliament members permanently talk that noncore activities should be regulated on the level of holdings, but no efficient steps have been taken so far.
There is no explanation to such indifference and there are doubts that the influential banking sector’s lobby makes pressure on parliament members. If so, this is political corruption, otherwise this is just political impotence, when they initiate projects, but cannot bring them to an end.