Georgia: Financial Sector Assessment Program-Detailed Assessment of Observance of the Basel Core Principles for Effective Banking Supervision-Technical Note
IMF Staff Country Reports, January 8, 2015
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Bibliographic details
- Published: January 8, 2015
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781498384353.002
Executive summary findings
- There have been significant improvements in both the quality of regulation and the supervisory approach since the 2007 FSAP.
- Many amendments to existing laws, new laws, and regulations have been introduced, aimed at addressing shortfalls identified in the 2007 FSAP.
- Operational risks were identified within the NBG’s Banking Supervisory Department:
- Very high level of staff turnover in recent years due to a lack of salary competitiveness vis-à-vis the commercial banks.
- Apparent over-reliance on key personnel.
- The level and type of staff training need to be expanded.
- Supervisory focus and risk understanding:
- The NBG puts significant effort into understanding the risk profile of each individual bank and the banking system as a whole.
- More attention is needed to improve the quality of risk management of the banks.
- Legal and powers framework:
- In a number of areas, notably bank licensing, the NBG relies on its broad supervisory powers to carry out its functions in the absence of detailed explicit powers.
- While this regime generally seems to work well in practice, it could leave the NBG open to challenge where these broad powers are not supported by more granular powers.
- Recently, several amendments to the legislation have been introduced in order to address these shortcomings.
Detailed supervisory and operational observations
- Human resources and capacity:
- High staff turnover and non-competitive salaries relative to commercial banks undermine supervisory continuity.
- Over-reliance on key personnel increases operational vulnerability.
- Expanded and diversified staff training programs are needed.
- Risk management across banks:
- NBG supervisory activities focus on bank-level and system-wide risk profiling.
- Banks require strengthened internal risk management practices to match supervisory assessments.
- Legal authority and enforcement:
- Dependence on broad supervisory powers in place of granular statutory powers is a structural weakness, especially in bank licensing.
- Recent legislative amendments have been enacted to mitigate these legal and procedural gaps.
Subject areas and keywords
- Subject: Banking, Commercial banks, Credit risk, Financial institutions, Financial regulation and supervision, Loans, Market risk, Operational risk
- Keywords: central bank, Commercial banks, CR, credit risk, Credit risk, Global, interest rate, ISCR, Loans, Market risk, national bank, NBG law, Operational risk, risk management, risk profile, senior management
Publication metadata and key statistics
- Publication date: January 8, 2015
- Pages: 215
- Volume: 2015
- Issue: 010
- Series: Country Report No. 2015/010
- DOI: https://doi.org/10.5089/9781498384353.002
- Stock No: 1GEOEA2015004
- ISBN: 9781498384353
- ISSN: 1934-7685
International Monetary Fund. Monetary and Capital Markets Department "Georgia: Financial Sector Assessment Program-Detailed Assessment of Observance of the Basel Core Principles for Effective Banking Supervision-Technical Note", IMF Staff Country Reports 2015, 010 (2015).