HSBC enters Georgian banking sector
By Messenger Staff
Wednesday, July 9
The Messenger: What attracted HSBC to Georgia?
“It seems that a lot of our clients want us to be there. [So] the customers first of all, the market second, the supportive and favorable macroeconomic [conditions]—[this] means growth of GDP, [the] liberal reformist approach by democratic politicians…you have to have the right combination, the right mix, and I feel Georgia has that.”
TM: What kind of service do you offer local customers?
“Where we can be a bit different is in the following ways: one is that we bring an international dimension to the country that local banks by definition can’t do.
“I mentioned how our international clients first encouraged us to come here, well, we can serve the needs of international companies and increasingly international individuals who need banks—their bank—in different countries. And we are their bank in different countries, both at a personal level and at a company level…
“The second thing is the size and financial strength of the group. So leaving aside its international credentials we have a size and stability as a group that is greater than some of our—well, in fact all of our—competitors here.”
“Finally I would say that we have and will introduce more new products. For example, we are offering a variable rate mortgage and a floating rate mortgage, where customers will borrow at an interest rate that will adjust to market conditions …this is a very normal product in most markets but it doesn’t exist here, yet.
“For individuals we are offering a genuine, full credit card. Now you hear this word ‘credit card’ locally but the local credit card product and our credit card product are actually quite different. Ours is a genuine global product you can use it on the internet, you can use it in other countries and it is HSBC’s normal, fully-fledged credit card and that has features that are not available from the similar product in the local market.”
TM: Don’t you think that twenty banks plus is quite a lot for a small country like Georgia?
Yes I do, and you know probably we would expect to see some consolidation, merging, I think , although that’s not for me to say—this is something for the regulators and the market to decide. But yes it seems to be too many banks for a relatively small market.”
TM: Is the appearance of HSBC a threat to smaller local banks?
Well, I don’t know if we’re a threat. I’m not trying to be a threat. What we plan to do is increase the options available to the market, to the customers. There’s certainly room for several banks here. We haven’t entered Georgia to threaten anyone.
The plan is to grow organically, separately. There are no plans [to acquire other banks in Georgia] but we watch and wait and see.”
TM: Do you plan to have some more outlets around the country?
Yes that is in the plan but that plan is quite far away. First of all the plan is to open. We have already acquired freehold the title to a second branch on Gamsakhurdia avenue, which we will open this year, as soon as I can, and we will open more branches in Tbilisi next year. In due course, I would like that to include branches outside the city, I’m think in particular the ports—Batumi port for example—free trade zones in Poti of course are quite interesting—other regional towns. But I think we have to start close to home first. Lets get three, four, five branches in Tbilisi, get those working well and then look outside, which really means the end of next year, even the year after that.
TM: So are you are optimistic about the situation in Georgia?
Yes of course we are optimistic, or we wouldn’t open here…I’m even more optimistic now than I was six months or one year ago. The government has been elected with a renewed mandate, the regional development has continued to progress very well, there are some challenges, there always are. [Individual] borrowing seems quite high, there are some exchange challenges—people are earning their salaries in lari and companies are making their income in lari but companies are borrowing in dollars, and that is quite dangerous.
TM: You were setting things up at the end of last year, during the political turmoil…
The timing was a bit unlucky, but once our bank commits to do something, it does it. We are in 84 countries, Georgia is the 84th one…I’ve seen it before. It’s not the first time I’ve tasted tear gas…
TM: The risk was worth taking?
Well, look at some of the countries we’re in. We have a bank in the Green Zone in Baghdad, we have a bank in Palestine.
TM: Is there anything which you are not happy about in Georgia?
What can I say. People have much more in common that they have differences. Wherever I work, people are the same. Generally, I am enjoying it.
Questions and answers have been edited for length and clarity.