The valuation involves three types of valuation of assets and liabilities of the commercial bank and the branch of the foreign bank in accordance with the rule approved by the order №128/04 of the President of the National Bank of Georgia dated June 29, 2020 “On the Approval of the Rule For the Valuation of the Assets and Liabilities of a Commercial Bank for the Purposes of Resolution”. Specifically, there are three types of valuation:

    • Valuation 1 – Assessing the solvency of a commercial bank to determine the grounds for the resolution regime and/or revoking a banking license (“Failing of Likely to Fail” assessment)
    • Valuation 2 – Selection of appropriate resolution powers and resolution tools to be applied to the commercial bank under resolution and determination of the usage conditions – the so-called “Assessment for Introduction of Resolution Regime and Selection of Resolution Tools”.
    • Valuation 3 – Calculating the amount, which creditors and shareholders would have received in the event of the commercial bank’s hypothetical liquidation. This amount is then compared with the amount which these parties have received in resolution and will be compensated if they suffered more in resolution than they would in normal insolvency proceedings – the so-called “Post-Valuation of the Use of Resolution Powers”.

    The goal of the valuation is to facilitate the implementation of the regulations defined by the legislation of Georgia, which is related to the decision to introduce the commercial bank resolution regime defined by the current legislation of Georgia.

    The valuator can be an independent individual, or legal entity (including the professional services company/audit firm), and a competent employee of the National Bank of Georgia, who performs only an interim valuation.

    In this regard, memorandums of understanding (MoUs) were signed in 2023 between the National Bank of Georgia and five leading external valuation firms.