Tbilisi (GBC) - Systemic banks face a new obligation. The National Bank of Georgia (NBG) imposes MREL requirement (Minimum Requirement for Eligible Liabilities and Capital Instruments) on 3 banks, which will come into effect from the end of the year, the guidelines for which will be published by the supervisor soon.
MREL is part of the defense mechanism of the sector in a stressed situation. It gives the NBG the discretion to take the bank's raised funds into the capital.
Funds to be used for this purpose, i.e., convertible resources, are "allowed liabilities", which include funds borrowed from financial institutions (eg: EBRD, IFC...), etc. bonds.
The ratio of liabilities and capital instruments of this category to regulatory capital and total liabilities (MREL rate) is set at 10% from 01.01.2024.
Other banks can maintain the mentioned ratio, although it is not mandatory.
The delay in the current issues in the NBG is related to the recent changes. The board of vice-presidents who have left the bank's board are transferable.
Despite the fact that the 3 retired vice-presidents will continue their activities until the end of November, none of them is going to actively participate in the processes. With additional clarifications, they specify only that the motive of their move was not political and was due to purely professional activities.
After leaving the board, the vice-president’s salary is maintained for 6 months, and the board membership allowance is removed.
The remuneration of vice-presidents, according to the property declaration, varies between 18,000-19,000 GEL, where the salary of a board member is in the range of >GEL6,000.