The National Bank of Georgia (NBG) has developed an instruction on a group of connected borrowers, that was to serve the commitment assumed under the Regulation on Concentration of Risk Exposures and Large Exposures in Commercial Banks. The NBG is pleased to present the draft instruction to the interested public as part of its public consultation practice. The document incorporates the best international practices, including the methodologies of the European Banking Association (EBA) in relation to a similar issue.

 

The purpose of the instruction is to establish uniform principles across the banking system, to guide commercial banks through identifying potential connections between different borrowers. This is important as above-mentioned connections could cause a spillover of financial problems from one borrower to the other, resulting in a material negative impact. Such interdependence among borrowers creates a single risk for the banks. Therefore, it is important for them to have a precise vision of potential risks, so that they can record connected borrowers as one group and hence, better manage concentration risks.

 

The NBG expects comments and notes from interested parties through September 22, 2022 by e-mail, to the following mail address: group_of_connected_clients@nbg.gov.ge . The instruction and related documentation are available at the following link.