“E-Commerce Will Grow by 100% Per Year” INTERVIEW with VERA PLATONOVA, SENIOR VICE PRESIDENT and GROUP COUNTRY MANAGER for VISA CISSEE

Denmark, Sweden, Switzerland Give $14 Does Marriage Million To UN Aid For Still Matter? Eastern Ukraine ANI LORTKIPANIDZE, GORBI See on p. 14 See on p. 8 11 February, 2019 News Making Money http://www.ﬁ nchannel.com

Tbilisi Preparing to Host Counting on 20 Grammy Award Winner “E-commerce will grow Commodity at 22nd Jazz Festival by 100% per year” Prices Is The FINANCIAL Tbilisi State Conservatoire or- Risky, Says chestrated by Revaz Kiknadze Country Manager for Visa development and operation- will participate in the Festival. Georgia is the CISSEE. Platonova, who al management. Platonova rom the 28th of Febru- nd New Report The 22 Jazz Festival will 2nd country worked for Visa from 2007- joins Visa from MasterCard, ary to the 2nd of March have its grand opening in the 2010 in Ukraine, now over- where she was the General this year Tbilisi will in the World State Conservatoire, with the sees all Visa operations in Manager for the company’s from BCG host the 22nd Jazz Fes- on the number new project Tbilisi Big-Band seventeen markets across representative offi ce in tival, this time head- of contactless The FINANCIAL & New Jazz Generation. This Eastern Europe, Central Asia Ukraine, Moldova, Georgia Flined by none other than 20 will be an event where the transactions and Southeast Europe, and and Central Asia for more Grammy award winner, the younger generation of jazz reports to Visa’s Regional than eight years. legendary American guitar mid growing musicians will meet their Eva BOLKVADZE President of CEMEA, An- The report analyzes the key player Pat Metheny. Tbilisi economic uncer- predecessors to create a tasty drew Torre. drivers of total shareholder Symphony Orchestra, con- The FINANCIAL tainties, mining musical jam. Platonova is a highly ex- return for 63 leading mining ducted by Vakhtang Kakh- companies need perienced executive in the companies. After the severe idze, Tbilisi Big-Band and the to develop value isa in September payment systems and retail downturn from 2011 through students of the jazz faculty of Continued on p. 4 Acreation strategies that are announced Vera banking sectors. Her sev- 2015. independent of commod- Platonova as its enteen-year career includes ity prices and enable them to Senior Vice Presi- strategy development and pursue value creation from Landmark Bakuriani – dent and Group implementation, business Continued on p. 6 V multiple angles. So says a new report from Boston Consult- Enjoy Skiing Year Round ing Group (BCG). The FINANCIAL ing, whose architects came January 2019: Post- Continued on p. 6 up with a creative concept and decided to turn the roof- ho doesn’t ab- top of the building into a ski Christmas Hangover? solutely love track. CURRENCIES skiing? Well, The track is covered with a ISET random people and ask them period, and there’s not much the great news special material so that it can tons of questions. During a re- money left for comfortable trips Feb 9 Jan 19 for all ski lovers work every season, no matter cent taxi ride, after I asked the after the traditional “Supras”, as Wis that in 2020 Landmark Ba- the temperature or weather eing a researcher is not driver how his business was go- well as the recently introduced 1 USD 2.6461 2.6573 kuriani will be open and ready conditions. only my job, it is my ing, he told me that the demand “Secret Santa” gift exchanges. 1 EUR 2.9996 3.0123 to host fans of the sport. way of life. Every time for taxis had fallen signifi cantly 100 RUB 4.0075 4.0221 Landmark Bakuriani is a I get the chance, I start in January. He also added that hotel-type apartment build- Continued on p. 4 Bconversations with January is typically a harsh Continued on p. 2 1 TRY 0.5039 0.5033 © 2019 The FINANCIAL. INTELLIGENCE BUSINESS PUBLICATION WRITTEN EXPRESSLY FOR OPINION LEADERS AND TOP BUSINESS DECISION-MAKERS 2 HEADLINE NEWS & ANALYSIS fi nancialnancial nnewsews 11 FEBRUARY, 2019 | FINCHANNEL.COM CURRENT PRICES ON GASOLINE AND DIESEL 11 FEBRUARY, 2019, GEORGIA

Prices in GEL Prices in GEL Prices in GEL Prices in GEL Prices in GEL G-Force Super 2.63 Eko Super 2.64 Super Ecto 100 2.69 Nano Super 2.58 Efi x Euro 98 2.64 GASOLINE PRICES PRESENTED BY G-Force Premium 2.49 Eko Premium 2.57 G-Force Euro Regular 2.41 Super Ecto 2.55 Nano Premium 2.48 Efi x Euro Premium 2.57 BUSINESSTRAVELCOM 11 February, 2019 Eko Diesel 2.63 Premium Avangard Ecto 2.44 Nano Euro Regular 2.38 Euro Regular 2.49 Euro Regular 2.35 Euro Diesel 2.59 HOTEL AND AIRTICKET BOOKING: G-Force Euro Diesel 2.59 Euro Regular 2.29 Nano Diesel 2.40 Efi x Euro Diesel 2.59 Euro Regular 2.49 Euro Deasel 2.49 Nano Euro Diesel 2.53 Euro Diesel 2.53 2 999 662 | SKY.GE Euro Diesel 2.49 Diesel Energy 2.53 ISSUE: 6 (640) CNG 1.49 GNG 1.45 © 2019 INTELLIGENCE GROUP LTD

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If you are seeking permission to use The FINANCIAL trademarks, logos, service marks, trade dress, slogans, screen shots, copyrighted designs, combination of January 2019: Post-Christmas Hangover? headline fonts, or other brand features, please contact publisher. “&” is the copyrighted symbol used eing a researcher is not Table 1: Monthly change in Consumer Confi dence (in index points), in groups by questions: January 2019 by The FINANCIAL only my job, it is my way FINANCIAL (The FINANCIAL) is registered of life. Every time I get the trade mark of Intelligence Group ltd in Georgia and Ukraine. Trade mark chance, I start conversa- registration by Sakpatenti - Registration tions with random people date: October 24, 2007; Registration Band ask them tons of questions. N: 85764; Trade mark registratrion by Ukrainian State Register body - During a recent taxi ride, after I Registration date: November 14, 2007. asked the driver how his business ADVERTISING was going, he told me that the demand for taxis had fallen signifi - All Advertisements are accepted subject to the publisher’s standard conditions of cantly in January. He also added insertion. Copies may be obtained from that January is typically a harsh advertisement and marketing department. Please contact marketing at: period, and there’s not much marketing@fi nchannel.com money left for comfortable trips see fi nancial media kit online Index after the traditional “Supras”, as Expectations www.fi nchannel.com well as the recently introduced Download RATE CARD “Secret Santa” gift exchanges. After the conversation, I won- dered whether this phenomenon Overall CCI might be refl ected in our CCI in-

dex. At fi rst glance, I found that Index his story seemed to be supported Present Situation by the numbers. Looking carefully at fi gure 1, almost every Janu- ary seems to be characterized by a drop in consumer confi dence. DISTRIBUTION Fortunately, this year the drop The FINANCIAL distribution network was not signifi cant, at just 1.1 in- covers 80 % of key companies operating dex points. While the reduction in Georgia. 90 % is distributed in Tbilisi, in the expectations index (by 5.3 Batumi and Poti. Newspaper delivered free of charge to more than 600 companies and points) – measuring the expecta- their managers. tions for the coming 12 months To be included in the list please contact – outweighed the growth of the distribution department at: temuri@fi nancial.ge present situation index (by 3.1 points). CONTACT US However, it is not clear wheth- EDITOR-IN-CHIEF er January’s overconsumption ZVIAD POCHKHUA should be blamed for this recur- E-MAIL: editor@fi nancial.ge rent phenomenon. When looking editor@fi nchannel.com Phone: (+995 32) 2 252 275 at the monthly change in index points (January compared to De- Expectations HEAD OF MARKETING DEPARTMENT cember) by survey questions and Index SOPHO PKHAKADZE E-MAIL: marketing@fi nancial.ge groups, it is clear that people are marketing@fi nchannel.com more concerned with the general Phone: (+995 32) 2 252 275 / EXT: 1 situation in the country rather SALES than their own condition. It is no- Present Situation NANUKA BERIDZE table that expectations related to Index n.beridze@fi nancial.ge Phone: (+995 595) 488 886 unemployment, infl ation and the OMAR KHOPERIA general economy are considerably Phone: (+995 592) 072 159 o.khoperia@fi nancial.ge more negative in January than in December. COMMERCIAL DIRECTOR Another topic we would like LALI JAVAKHIA E-MAIL: commercial@fi nancial.ge to emphasize is a very interest- commercial@fi nchannel.com ing phenomenon which has been Phone: (+995 558) 03 03 03 observed ever since ISET Policy HEAD OF DISTRIBUTION DEPARTMENT Institute started calculating the TEMUR TATISHVILI index. E-MAIL: temuri@fi nancial.ge Figure 2 and fi gure 3 reveal that Phone: (+995 599) 64 77 76 people from the regions are con- COMMUNICATION MANAGER: sistently more optimistic about EKA BERIDZE the future (relative to the present) Phone: (+995 577) 57 57 89 compared to their peers in Tbilisi. COPY EDITOR: However, their assessments of IONA MACLAREN the present and expectations for MAILING ADDRESS: the future tend to coincide with 17 mtskheta Str. those in Tbilisi. Although, when Tbilisi, Georgia it comes to the regions there is a OFFICE # 4 PHONE: (+995 32) 2 252 275 large gap between these two, with (+995 32) 2 477 549 expectations about the future be- FAX: (+95 32) 2 252 276 ing systematically higher than the Expectations E-mail: info@fi nchannel.com perception of the current situa- Index on the web: www.fi nancial.ge daily news: www.fi nchannel.com tion. Similar gaps can also be observed between the highly educated and the rest of the population, as well as between young and old individuals. It may sound somewhat surprising, but the old and less educated, despite signifi cant- Present Situation ly lower scores in the assessment Index of their current condition, report Intelligence Group ltd. 2019 future expectations in line with Member of the young and highly educated. When it comes to gender, no signifi cant diff erences emerge.

Continued on p. 14 HEADLINE NEWS & ANALYSIS 3 FINCHANNEL.COM | 11 FEBRUARY, 2019 ppublicityublicity

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@mpamagmedia | @runltb | #mpatellsandsells 4 HEADLINE NEWS & ANALYSIS ﬁ nancialnancial nnewsews 11 FEBRUARY, 2019 | FINCHANNEL.COM Landmark Tbilisi Preparing to Host Bakuriani 20 Grammy Award Winner – Enjoy Skiing at 22nd Jazz Festival Year Round

ho doesn’t absolutely love skiing? Well, the great news for all ski lovers is that in 2020 Landmark Bakuriani Wwill be open and ready to host fans of the sport. Landmark Bakuriani is a hotel-type apartment building, whose architects came up with a creative concept and decided to turn the rooftop of the building into a ski track. The track is covered with a special material so that it can work every season, no matter the temperature or weather conditions. What makes this project so special is the collaboration of Dux Development and German-based company Hueck, which has already constructed a very similar building in Copenhagen with the help of a Danish architect. In order to fully describe the uniqueness of the project, we must mention the amazing inner training facility for skiers, which is basically a 5 meter- long non-stop ski-track (much like the concept of a treadmill). The tracks are created by Austrian company Skiworld pro. Hotel-type apartments will be placed at the complex. An international company will take responsibility for their management to avoid any discomfort for future hotel management. The project is located 600 meters from the Didveli piste, which is very convenient for experienced skiers or snowboarders. A 10-hectare recreation zone sur- rounds the project, including diff erent types of relaxation zones and an extreme adventure park. Apartments are spread over 6 fl oors; 2 fl oors are dedicated to children’s entertainment space and common gath- ering areas. The apartments are delivered fully- renovated, fi tted with furniture and electrical appliances. The highest stan- dards of all hotel requirements are to be met during the planning process. There are both enclosed and open parking spaces. The enclosed parking lot is for 30 vehicles serving visitors to the apart-hotel, while an open parking space will be created around the complex to cater for up to 100 vehicles Apartment owners will be able to turn the apartments into a source of ?????????? income should they wish. Features will include: 102-meter roof-top piste; Ski gym. 2 indoor ski slopes with continuously variable surface speeds The FINANCIAL ence, Culture and Sport of Geor- experiment, yet in such a way as ey Redman, Mike Brecker and from 1-25 km/h; gia. to remain appealing to audiences. Charlie Haden resulted in an al- Fully-renovated apartments, includ- On the 1st of March, the Festival Since the age of 13, when he bum called 80/81. ing furniture; rom the 28th of February to will host the legendary headliner fi rst started playing guitar, he has 1990 - Tour with Herbie Han- 5-star hotel service; the 2nd of March this year himself alongside virtuoso drum- always been developing as a mu- cock and his quartet. 24/7 security service and concierge; nd Ski-depot; Tbilisi will host the 22 mer Jonathan Barber and bass sician. He graduated from uni- Trio album with Dave Holland, Jazz Festival, this time Restaurant; player Darek Oleszkiewics. versities Miami and Berklee. Roy Haynes. Lobby bar; headlined by none other On the 2nd of March Tbilisi In 1974 he released his fi rst re- Collaboration with Joshua Entertainment zone for children; Fthan 20 Grammy award winner, Event Hall will hold the closing cording with Paul Bley and Jaco Redman. 10-hectare recreation area; the legendary American guitar event, presenting Pet Metheny Pastorius. Recordings with Sonny Rollins. The purchase of an apartment in player Pat Metheny. Tbilisi Sym- playing the album “Beyond the 1974-1977 marks a very special Each and every recording of landmark Bakuriani. phony Orchestra, conducted by Missouri Sky and more” along- period in his career, because of Pat Metheny’s is a refl ection of The project has attracted many in- Vakhtang Kakhidze, Tbilisi Big- side Tbilisi Symphony Orchestra. his collaboration with Gary Bur- his uniqueness. ternational brands since the beginning Band and the students of the nd of its construction, and will be com- The 22 Jazz Festival is sup- ton and his band. As an example, the 1994 album pleted in December 2020. jazz faculty of Tbilisi State Con- ported by the Ministry of Educa- In 1978 Metheny established “Zero Tolerance for Silence” es- servatoire orchestrated by Revaz “Landmark Bakuriani has a very re- tion and Science, the Ministry of his own band with Lyle Mays (pi- tablished Pat Metheny as one of alistic opportunity to become the key Kiknadze will participate in the Sport and Culture, and the Mayor ano), Mark Egan (bass), and Dan the most creative performers of building to represent Georgia as a ski- Festival. of Tbilisi. Gottlieb (drums). This was the all time. resort country,” proudly stated Irakli The 22nd Jazz Festival will have The proud winner of 20 Gram- tipping point in Metheny’s career And his compositions from Lomidze, the Executive Director of Dux its grand opening in the State my awards and arguably the most as he became a recognized jazz “ECM RECORDS” once again Development. Conservatoire, with the new proj- creative guitar player of our era, musician whose concerts were outlined the reason why he is a Ori group, the company that origi- ect Tbilisi Big-Band & New Jazz Pat Metheny is the one and only always a target for music lovers, world class musician. nated in Azerbaijan, has been operating in Georgia for more than 5 years Generation. This will be an event artist in the music history to win eager to fi ll every single avenue “Beyond the Missouri Sky where the younger generation with its sub-companies Dux develop- awards in 10 diff erent categories. where he performed. (Short Stories)” an album re- ment and Hueck Georgia. of jazz musicians will meet their His style of playing does not re- The desire to unleash creative corded in 1997 alongside Char- Dux development has been actively predecessors to create a tasty ally belong to any specifi c genre, potential in his music always led lie Haden still remains his most functioning as a construction com- musical jam. however without any question him to new experiments, there- famous work. This is the album pany, and Hueck Georgia, with the Tbilisi Jazz Festival is orga- the unique mastery of music that fore he avoided producing pre- that got him a Grammy award, partnership of a German aluminium- nized by Eastern Promotions and Pat Metheny has, simply goes be- dictable music. and the album the legendary manufacturing company, has already TBC Status and supported by the yond the jazz world as we know it. It is important to outline sev- musician will play in front of his constructed buildings such as: the Ministry of Tbilisi City Hall and Metheny is one of those very spe- eral of his works such as: audience at the 22nd Tbilisi jazz Mercedes-Benz centre; Panorama the Ministry of Education, Sci- Tbilisi; Housart Plaza, as well as many cial people who dares to make an 1980 - Collaboration with Dew- festival. more in the South Caucasus region. HEADLINE NEWS & ANALYSIS 5 FINCHANNEL.COM | 11 FEBRUARY, 2019 ppublicityublicity

Advertiser: Terma. Contact FINANCIAL Ad Dep at marketing@ﬁ nchannel.com 6 HEADLINE NEWS & ANALYSIS ﬁ nancialnancial nnewsews 11 FEBRUARY, 2019 | FINCHANNEL.COM “E-commerce will grow by 100% per year” INTERVIEW WITH VERA PLATONOVA, SENIOR VICE PRESIDENT AND GROUP COUNTRY MANAGER FOR VISA CISSEE

Georgia and Central Asia for A. As you know, Visa is Georgia more than eight years. worldwide leader of pay- As part of Visa CEMEA’s ment technologies and it’s is the 2nd regional management team, defi nitely very challenging to Platonova will also represent retain this position of leader- country in CISSEE within the regional ship. Now the whole world is and global Visa network, en- moving to mobiles, to wallets, the World on suring that best practice from to all kind of gadgets, which other markets can be off ered are becoming new payment the number to the regional payment eco- ways. We see that the future system. of payment lies not in the of contactless The FINANCIAL talked plastic world, but more in the with Platonova about Visa’s world of payment experience. transactions future visions and develop- I think our region is one of ment strategy in Georgia. the most developed globally, Eva BOLKVADZE especially Georgia. Currently Q. What is the develop- Georgia is the second country The FINANCIAL ment strategy of Visa in in the world by the number of Georgia and its plans for face-to-face contactless pay- isa in September 2019 specifi cally? ments at POSes), right after announced Vera A. We will defi nitely pay Australia. Platonova as its Se- much more attention to the Q. What is Visa’s ap- nior Vice President popularization of cashless proach to blockchain in and Group Coun- payments with Visa in the Georgia? Vtry Manager for Visa CIS- country. We will be focusing A. Blockchain is a very big SEE. Platonova, who worked on the work with key stake- and diff erent topic from our for Visa from 2007-2010 in holders, key banks, but not core business. In some mar- Ukraine, now oversees all only that. We will bring many kets it’s a kind of startup trend Visa operations in seventeen more resources into the coun- which is sometimes adopted markets across Eastern Eu- try. Georgia has been identi- and sometimes not. There- rope, Central Asia and South- fi ed as one of the key coun- fore, we really don’t build our east Europe, and reports to tries we need to focus on. So if strategy with a full focus on Visa’s Regional President of we are talking about the mass blockchain solutions because CEMEA, Andrew Torre. segment, we are thinking our core business, the world Platonova is a highly ex- about what additional value of payment itself, is growing perienced executive in the we can provide to cardhold- too fast. We need to look at payment systems and retail ers to support banks in their blockchain in 2-3 years and banking sectors. Her sev- eff orts to drive cashless and understand how it works and enteen-year career includes POS usage. We will also bring how it can be combined with strategy development and im- a number of premium prod- the everyday experience of plementation, business devel- ucts and benefi ts to the mar- people in payments. opment and operational man- ket. We hope to make Visa top Q. What are your agement. Platonova joins Visa of the wallet and drive usage greatest challenges when from MasterCard, where she of this segment because there it comes to innovation? was the General Manager for still is a lot of cash here. A. I think for all these 60 the company’s representative Q. What is Visa’s role offi ce in Ukraine, Moldova, in developing payment technologies? Continued on p. 12 Counting on Commodity Prices Is Risky, Says New Report from BCG

The FINANCIAL – Amid growing economic uncertainties, mining The report companies need to develop value creation strategies that are indepen- emphasizes dent of commodity prices and enable them to pursue value creation from three main multiple angles. So says a new report from Boston Consulting Group avenues for (BCG). Banking on rising commodity value prices—which powered performance in the most recent cycle and has creation. largely driven gains in the current recovery—is no strategy in itself, Take productivity to the next according to the report. “Instead, level. To ensure that cash flows companies need to return to true remain sustainable—and to keep strategy in the fullest sense,” says up with rising costs—companies Gustavo Nieponice, a senior partner must continually and ambitiously at BCG and coauthor of the report. adjust their productivity targets. “They need to secure future growth, A number of new and emerging be resolute about improving pro- technologies promise powerful ductivity, and manage current and new ways to unlock value—but future capital projects in a balanced, as the authors note, developing a disciplined way.” cohesive technology strategy that all exploration spending. delivers hard benefits can be dif- report’s other Despite speculation to the con- Growth ficult. “You want to be sure that Bright Spots in trary, M&A activity has remained the business drives technologi- key findings: subdued. Recent industry and macroeco- cal change, and not the other way the Recovery Although industry circumstances nomic developments underscore the around,” says Vogt. “A portfolio approach to digital and technol- n 2017 and 2018, revenues and have improved markedly since 2016, need for value creation strategies The report analyzes the key driv- I ogy solutions makes sense. Adopt margins grew simultaneously for the companies cannot aff ord to be com- that help companies build business ers of total shareholder return for 63 a venture capital mindset: take a fi rst time in seven years. placent. Since mid-2018, uncertain- resilience while pursuing profi table leading mining companies. After the range of higher- and lower-risk Higher cash fl ows and valuations ties in demand and prices, along growth. BCG research has consis- severe downturn from 2011 through bets, and actively manage the shored up balance sheets, enabling with rising operating costs, have tently shown wide variation in TSR 2015, when mining turned in the portfolio of opportunities.” companies to pay down debt. stirred up headwinds that are chal- performance within every industry. lowest TSR of any major industry, Seek value at every project stage. Although cash reserves improved, lenging the recovery. “Some companies systematically out- it experienced a welcome rebound. BCG has found that companies that project spending remained near de- perform their peers in value creation,” However, a sharp decline during the apply lean principles to projects can cade lows. says Thomas Vogt, an associate direc- second half of 2018 has raised ques- reduce capital intensity (the capital Meanwhile, companies have been Build tor at BCG and coauthor of the report. tions about how sustainable the re- required per unit of productive ca- returning a growing chunk of excess “What are they doing diff erently? In covery is—and what executive teams pacity) by from 8% to 17%. Improv- cash to shareholders. Resilience, a nutshell, they understand the key can do to respond. ing construction planning and pro- Exploration is on the rebound, drivers of TSR beyond commodity ductivity and aligning incentives can particularly among juniors, which Pursue prices, and the tradeoff s required at generate another 9% to 23% reduc- now account for almost one-third of diff erent points in the cycle.” Among the Profitable tion in capital intensity. HEADLINE NEWS & ANALYSIS 7 FINCHANNEL.COM | 11 FEBRUARY, 2019 ppublicityublicity

Advertiser: m2. Contact FINANCIAL Ad Dep at marketing@ﬁ nchannel.com 8 HEADLINE NEWS & ANALYSIS ssurveysurveys & aanalysisnalysis 11 FEBRUARY, 2019 | FINCHANNEL.COM

Does Marriage Still Matter? ANI LORTKIPANIDZE, GORBI

“Marriage is outdated” be- Chart 1. Rejectors of Marriage by none religious vs general public (%) Chart 2. Rejectors of Marriage by age group (%) came a recently popular idea in many publications based on opinion polls. Truth be told, most of these articles are describing a social perception of marriage in developed de- mocracies. Social scientists have used several arguments to support this statement, two key arguments among many being the decriminalization of same sex marriage and a decline in religiosity. The latter is playing a vital role in marriage and, similar to the state, religion also defi nes, endorses and regulates marriage. Nev- ertheless, unlike the state, religion rarely restricts on a racial basis, but it does so re- Source: European Value Study, 2017-2018 Source: European Value Study, 2017-2018 garding those of other faiths. In this column I am not go- Fineman advocated the use and Russia. that marriage is an outdated religious people tend to be- for countries that were part of ing to discuss factors that dis- of relationship contracts to The European Values Study institution. For Georgians lieve in marriage much more EVS survey the older people tinguish marriage from other replace marriage. The idea (EVS) is a large-scale, cross- and 3 other Orthodox coun- than non-religious ones. This get the more religious they relationships and whether un- is that such contracts enable national, repeated cross- tries, marriage still matters a is true for all of the countries become, and we can also see married partnerships can be each couple to come to an sectional survey research lot. Even though in Southern presented, but we see a more a positive correlation between more permanent compared to agreement that matches their program on basic human Europe people have less fi rm extreme gap between the religiosity and belief in family married ones, and even what own unique circumstances values that started in 1981. beliefs in family institutions, opinions of religious people institutions. will be the fate of marriage and preferences. Such con- GORBI has been part of the with 36% of Spaniards say- vs the non-religious in Geor- To summarize, even though when life expectancy reaches tacts are becoming normal, project since 2008 and is the ing that marriage is outdated, gia. religion, social institutions its possible maximum, fur- but at a slow pace. Therefore, data provider for Georgia and even these number are not the It is interesting to note that and society in general play a ther expanding the time that the question that we can ask is Azerbaijan for 2017-2018 EVS majority, and we can say that for all of the noted countries, key role in the stability of fam- a couple stays together. if Orthodox Europe is ready to Survey. overall Europe still believes belief in the institution of ily institution, new democra- Personally, I believe the in- consider marriage as anach- As we can see from Chart 1, that the traditional family is a marriage is changing by age. cies can also contribute, for stitution will be around even ronistic and move to an alter- compared to other countries valid institution. Older people tend to believe example by implementing after Mars is colonized, but native form, such as even civil surveyed, Bulgaria is the big- As research by Bosoni and more strongly in the fam- diff erent regulations for mar- it will evolve together with partnership? gest believer in the idea that Mazzucchelli (2016) based ily institution than younger ried and single taxpayers. And humankind. And this is not For the sake of comparabil- marriage is outdated. Nev- on the 2008-2009 EVS data ones. This gap is even more this is even more important because I don’t like the idea ity, using the data from the ertheless, even in Bulgaria, demonstrates, religiosity ap- visible if we look at Bulgaria for Georgia where unemploy- that a government should European Value Study (EVS) a majority of the population pears to be the most impor- and Belarus in Chart 2. If 43% ment and poverty is almost as validate my love, nor because 2017-2018, and choosing 4 does not agree with the idea tant independent variable for of young Bulgarians (aged 15- widespread as khachapuri. feminists have been objecting Orthodox countries which are that marriage is an outdated the belief in the institution 24) believe that marriage is an to marriage for at least cou- similar to each other in many institution. Moreover, among of marriage for Italians. By outdated institution, only 12% GORBI is an exclusive ple of hundred years. From parameters, I wanted to show these 4 countries, Georgia looking at Chart 1, we can also of older Bulgarians (65 years member of the Gallup the 1980s onwards, various our readers how people see is the most fi rm believer in easily note that there is diff er- and older) think the same International research feminist theorists such as the institution of marriage the family institution, with ence in how people perceive way. A lurking variable such network and has more than Marjorie Maguire Shultz, Le- today. These countries are: around 91% of the popula- the family institution accord- as religiosity can also be re- two decades of experience in nore Weitzman and Martha Georgia, Belarus, Bulgaria, tion disagreeing with the idea ing to their religiosity, where sponsible for this trend, since survey research (gorbi.com) Number of healthy years of life: countries compared Dollar Continues to Exhibit Strength

hhee USUS dollardollar hashas ggainedained inin strengthstrength thisthis wweekeek onon safesafe havenhaven aappeal,ppeal, amidamid risingrising wworriesorries aboutabout globalglobal Tggrowthrowth andand uncertaintyuncertainty aaboutbout a US-ChinaUS-China tradetrade ddealeal aheadahead ofof thethe MarchMarch 1 ddeadline.eadline. TThehe DollarDollar Index,Index, ccurrentlyurrently uupp 0.13%,0.13%, aatt 996.41,6.41, hhasas ggainedained moremore thanthan 1.1%1.1% inin thethe wweek,eek, itsits biggestbiggest weeklyweekly gaingain iinn nnearlyearly sixsix months.months. AAmongmong thethe majormajor ccurrencies,urrencies, thethe CanadianCanadian ddollarollar strengthenedstrengthened aagainstgainst thethe greenbackgreenback aafterfter datadata showedshowed a biggerbigger tthanhan expectedexpected increaseincrease inin The FINANCIAL Latvia had the lowest number of healthy CCanadiananadian jjobsobs inin January.January. AAgainstgainst thethe BritishBritish PoundPound ppersistentersistent uncertaintiesuncertainties suchsuch life years for women (54.9 years) and men (52.3 years). Extreme values can partly HHowever,owever, CanadianCanadian ttoooo thethe greenbackgreenback isis gaining,gaining, aass protectionism.protectionism. n 2016, the number of years a person be explained by the way in which activ- uunemploymentnemployment increasedincreased toto rrisingising aboutabout 0.12%.0.12%. UUSS PresidentPresident DonaldDonald is expected to continue to live in a ity limitation is measured in the country, 55.8%.8% inin January,January, ffromrom 44.8%.8% DDisappointingisappointing economiceconomic TTrumprump hhasas reportedlyreportedly saidsaid healthy condition at birth in the Euro- impacting, to some extent, on the results. a monthmonth earlier.earlier. ddataata outout ofof GermanyGermany andand thethe tthathat hehe won’twon’t bebe meetingmeeting pean Union (EU) was estimated to be The number of healthy life years at birth was higher for women than for men TThehe LoonieLoonie isis gaininggaining aboutabout ddownwardownward revisionrevision inin EuroEuro CChinesehinese PresidentPresident XiXi JinpingJinping 64.2 years for women and 63.5 years 00.3%,.3%, hhavingaving sstrengthenedtrengthened aarearea growthgrowth forecastsforecasts byby thethe bbeforeefore a MarchMarch 1 deadline.deadline. Ifor men. This represented approximately in 20 of the EU Member States, with the 77 % and 81 % of the total life expectancy diﬀ erence between the sexes generally ttoo USD1.3268,USD1.3268, ffromrom ppreviousrevious EEuropeanuropean CommissionCommission andand UUSS TreasuryTreasury SecretarySecretary for women and men respectively. relatively small. Within those countries ccloselose ofof USD1.3308.USD1.3308. tthehe BankBank ofof EnglandEngland havehave SSteventeven MnuchinMnuchin andand otherother Life expectancy for women in the EU there were 4 Member States where the TThehe JapaneseJapanese YenYen isis ddentedented investorinvestor sentimentsentiment UUSS officialsofficials areare scheduledscheduled toto was, on average, 5.4 years longer than that gap was more than 3 years: Bulgaria (+3.5 for men in 2016. However, most of these years), Estonia (+4.6 years), Lithuania ttradingrading atat 109.78109.78 a dollar,dollar, wwhichhich hashas resultedresulted inin globalglobal ttravelravel toto BeijingBeijing nextnext weekweek toto additional years tend to be lived with ac- (+3.2 years) and Poland (+3.3 years). uupp marginallymarginally fromfrom previousprevious sstocktock marketsmarkets takingtaking a ccontinueontinue tradetrade negotiations.negotiations. tivity limitation, whereas on average, men However, there were also seven coun- ccloselose ofof 109.81,109.81, aafterfter havinghaving bbeating.eating. PPresidentsresidents ofof thethe twotwo nationsnations tend to spend a greater proportion of their tries where the number of healthy life wweakenedeakened toto 109.90109.90 earlier.earlier. TThehe EuropeanEuropean CentralCentral hhadad agreedagreed toto a 90-day90-day tarifftariff shorter lives free from activity limitation. years for women was lower than for men. The EU country with the highest num- The largest diﬀ erences were in the Neth- TThehe greenbackgreenback isis gaininggaining BBankank PPresidentresident MarioMario DraghiDraghi ttruceruce inin earlyearly DecemberDecember ber of healthy life years in 2016 for both erlands (- 5.0 years), Luxembourg and aaboutbout 0.14%0.14% againstagainst thethe ssaidaid lastlast monthmonth thatthat risksrisks toto 22018.018. women and men was Sweden (73.3 years Portugal (both - 2.5 years) and Finland EEuro,uro, hhavingaving eedgeddged upup fromfrom tthehe euroeuro areaarea growthgrowth tiltedtilted for women, 73.0 for men). In contrast, (- 2.1 years). ppreviousrevious closeclose ofof USD1.1341.USD1.1341. ttoo thethe downsidedownside thanksthanks toto AAlliancelliance NNewsews HEADLINE NEWS & ANALYSIS 9 FINCHANNEL.COM | 11 FEBRUARY, 2019 ppublicityublicity

Advertiser: ProCredit Bank. Contact FINANCIAL Ad Dep at marketing@ﬁ nchannel.com 10 HEADLINE NEWS & ANALYSIS FFactCheckactCheck 11 FEBRUARY, 2019 | FINCHANNEL.COM Safer Internet Day: how Zurab do you log in online? Tchiaberashvili:

“The larisation programme, which supposedly was to solve the loan problem, has effectively failed.”

Vakhtang DEMURIA according to factual data. In particu- denominated loans to GEL with a GEL lar, only 24.2% (GEL 15.7 million) of exchange rate of GEL 0.2 lower than FactChek the total funds (GEL 65 million) al- the offi cial fi gure with the diff erence located for subsidising the loan con- being reimbursed as a subsidy from version process was spent. The ac- the state budget. The programme cov- VERDICT: tual number of benefi ciaries is 5,164 ered only those citizens who had taken whilst the programme could have loans before 1 January 2015 with im- FACTCHECK CONCLUDES THAT covered 33,000 borrowers (as stated mobile property as loan collateral. ZURAB TCHIABERASHVILI’S STATE- by the then Minister of Finance). In When the changes came into force MENT IS TRUE. accordance with the National Bank of (January 2017), the total volume of Georgia, the programme could have loans issued by commercial banks RESUME: covered 27,000 borrowers. There- amounted to GEL 18.9 billion. Of this fore, only 17-20% of the total number amount, GEL 6.5 billion (35%) was In order to partially eradicate the of borrowers deemed loan larisation GEL denominated whilst GEL 12.3 negative consequences of GEL depre- to be an acceptable solution. billion (65%) was foreign currency de- ciation, the Government of Georgia nominated. approved the so-called one-off larisa- ANALYSIS In the course of the larisation pro- tion programme which was active in gramme which started on 17 January the period of 17 January to 24 March European Georgia Movement for and ended on 24 March, there was 2017. This programme allowed citi- Freedom MP, Zurab Tchiaberashvili, a trend of growth in the percentage zens to convert their USD denominat- on air on the TV broadcast Archevani, fi gure of GEL denominated loans. ed loans to GEL with a GEL exchange stated: “You remember the larisation According to the data of 1 April 2017; rate of GEL 0.2 lower than the offi cial programme which was to supposedly that is, when the programme ended, fi gure with the diff erence being re- solve the loan problem. They said that the total amount of issued loans was imbursed as a subsidy from the state GEL 65 million was to be spent. In GEL 18.3 billion. Of this amount, GEL budget. The programme covered only fact, upon the programme’s comple- 7.1 billion (39.1%) was GEL denomi- those citizens who had taken loans tion, only GEL 15 million was spent.” nated whilst GEL 11.2 billion (60.9%) before 1 January 2015 with immobile In his statement, the MP under- n 2018, over 80% of in- PIN code list (30%) were also In the EU, most internet was foreign currency denominated. Of property as loan collateral. scored the unsuccessful nature of the ternet users aged 16-74 in popular. users in Czechia (75% of all note is that the GEL exchange rate has The Government of Georgia had programme. In particular, Mr Tchia- to be taken into account whilst ana- the European Union (EU) internet users), the Neth- high hopes for the programme and berashvili highlighted that the Gov- lysing the loan dollarisation indica- logged in to online services erlands (72%), the United prognosticated signifi cant benefi ts. ernment of Georgia had high hopes tor because the total volume of loans using their username and Use of text Kingdom (61%) and Den- However, the number of programme for the aforementioned initiative and is given in GEL and the appreciation Ipassword. mark (60%) logged in to benefi ciaries was lower than initially thought that the population would re- message of the national currency reduces the planned in the end. It is possible to ceive a number of benefi ts by alleviat- Other popular identifi ca- online services using a pro- USD denominated loan value in GEL. say that the programme was not at- ing the pressure on GEL. However, the tion procedures were by re- identification cedure involving their mo- At the same time, amount of foreign tractive enough for the majority of number of programme benefi ciaries ceiving a code by text message bile phone where a code is currency denominated loans is af- borrowers or the Government of was ultimately much lower than ini- on their mobile phone, which highest in received through a text mes- fected by restrictions that have been Georgia could not properly commu- tially planned which indeed speaks to imposed upon individuals for taking was used by 44% of the EU’s sage. In contrast, the lowest nicate its message to the public. the ineff ectiveness of the programme. Czechia, loans(under 100 000 GEL) in a for- internet users. Using social shares for this type of login When the changes came into force In the second half 2014, GEL eign currency since January 2017. media logins to access other lowest in procedure were recorded in (January 2017), the total volume of started to devalue vis-à-vis USD and The decreased dollarisation can- online services (33%) and Croatia (4%), Bulgaria and loans issued by commercial banks a number of other foreign currencies. not be fully explained by the processes Croatia amounted to GEL 18.9 billion. Of this In parallel with GEL depreciation, logging in with a single-use Romania (both 5%). caused by the aforementioned pro- amount, GEL 6.5 billion (35%) was the problem of foreign currency de- gramme. It is natural, however, that GEL denominated whilst GEL 12.3 nominated debt service became more artifi cial interference has had a certain billion (65%) was foreign currency pressing for the population. GEL de- impact upon the changes in the indica- denominated. According to the data preciation made debt service more ex- tors for a specifi cally given period. of 1 April 2017; that is, by the end of pensive for those individuals who had Finally, the programme can be the programme, the total amount of income in GEL and debt obligations in Annual retail sales via mail characterised as unsuccessful given issued loans was GEL 18.3 billion. Of a foreign currency. High-level curren- the factual data. In particular, only this amount, GEL 7.1 billion (39.1%) cy risks are dangerous not for an indi- 24.2% (GEL 15.7 million) of the total was GEL denominated whilst GEL vidual borrower taken separately, but funds (GEL 65 million) allocated for 11.2 billion (60.9%) was foreign cur- given their scale, this could threaten order/Internet are up subsidising the loan conversion pro- rency denominated. Therefore, the the entire fi nancial sector. Therefore, cess was spent. The actual number of dollarisation rate dropped slightly as it is in a state’s interest that individu- benefi ciaries is 5,164 whereas the pro- a result of the programme. als (because they are less capable to gramme could have covered 33,000 The decreased dollarisation can insure against currency volatility) take borrowers (as stated by the then not be fully explained by the pro- loans in the same currency as their Minister of Finance). In accordance cesses caused by the aforementioned income. with the National Bank of Georgia’s programme. It is natural, however, In order to partially eradicate the position, the programme could have that artifi cial interference has had a negative consequences of GEL depre- covered 27,000 borrowers. Therefore, certain impact upon the changes in ciation, the Government of Georgia only 17-20% of the total number of the indicators for a specifi cally given approved the so-called one-off larisa- borrowers deemed loan larisation to period. Generally, the programme tion programme. This programme be an acceptable solution. can be characterised as unsuccessful allowed citizens to convert their USD

Graph 1: Trend of Changes in Loan Dollarisation Indicator

Source: National Bank of Georgia The FINANCIAL -- The latest tail sales the pace of growth (both +26 %). In contrast, Graph 2: GEL Exchange Rate Dynamics in 2017 annual fi gures on the volume has been slower, with annual there were year-on-year falls of retail sales via either mail growth rates of between 2% in Portugal (-9 %) and Fin- order houses or the Internet and 3% since 2014. land (-1 %). show a year-on-year increase Among the EU Member The index of the volume of 12 % in the European States for which data are of retail trade measures the Union (EU) in 2017. available, Estonia shows the evolution of the turnover in Retail sales by mail order largest annual growth in re- retail trade, adjusted for price or the Internet have been in- tail sales via either mail or- changes (defl ated), i.e. the creasing through much of the der houses or the Internet evolution of the total amount last decade and since 2014 between 2016 and 2017 (+36 of goods sold, based on data annual growth rates have %), followed by Hungary (+32 adjusted for calendar and sea- Source: National Bank of Georgia exceeded 9 %. For total re- %), Romania and Lithuania sonal eff ects. HEADLINE NEWS & ANALYSIS 11 FINCHANNEL.COM | 11 FEBRUARY, 2019 FFactCheckactCheck Ivanishvili’s suit to have case heard Maia in Singapore Tskitishvili: court dismissed “Funding for self-government will increase by more than GEL 100 million in 2019 which is 13% more as compared to the previous year.”

Egnate SHAMUGIA incomes. The amount of the dropped substantially as a transfer was determined in result of allocating a part of FactChek accordance with the Budget income tax revenues to mu- Code of Georgia and as pre- nicipalities. In 2016-2018, the scribed by the subordinate state budget equalising trans- VERDICT: normative act within the mar- fer to state budget incomes FACTCHECK CONCLUDES THAT gins of the diff erence between ratio was 6.8% on average. MAIA TSKITISHVILI’S STATEMENT revenues and payments. In regard to 2018, munici- IS TRUE. In the current budget year, palities received GEL 705 mil- the self-governing units will lion from the state budget as RESUME: have 19% of the value added an equalising transfer which Since 2019, self-governing tax (VAT) generated income constituted 6.8% of state entities will no longer receive distributed among them- budget incomes. fi nancial assistance in the selves in lieu of the equalising As mentioned previously, form of an equalizing transfer transfer. The distribution will municipalities will receive because the transfer has been be carried out in conformity 19% of VAT generated income abolished. However, 19% of with the criteria as prescribed beginning in 2019. In 2019, VAT generated income will by law. These criteria include GEL 946.7 million of VAT now be distributed among the number of registered generated income is planned municipalities in place of the people in a municipality, the for distribution which con- former equalising transfer. number of registered children stitutes 9% of state budget In 2018, municipalities re- in a municipality under the incomes. Therefore, munici- ceived a total of GEL 705 mil- age of six years, the number palities will have GEL 241.7 lion as equalising transfers of registered children in a mu- million (34.3%) more income from the state budget and will nicipality between the ages of in 2019 as a result of the six and 18 years, the area of changes. Of additional note The bank was defended receive GEL 946.7 million in investment fi rms, Meadow- municipality and the num- is that the distribution of VAT Bidzina by Senior Counsel Harpreet 2019, as a result of VAT in- sweet Assets and Soothsayer. ber of individuals with the income means that the in- Singh Nehal, Mr Jordan Tan come distribution, which is In March 2005, US$550 status of permanently living comes of self-governing units Ivanishvili and two others, while Senior GEL 241.7 million (34.3%) million was transferred to in mountainous settlements. will increase in parallel with Counsel Stanley Lai, Mr Ken- more. In addition, the self- the Soothsayer account at the Of note is that even if a mu- economic growth. (left) with the neth Lim and three others governing unit income to Singapore branch of Credit nicipality’s income increases In 2018, the total income of acted for the trustee. consolidated budget incomes Suisse, while the remaining from local taxes, levies or oth- self-governing units was GEL President of according to The Straits ratio will increase from 11.3% US$550 million was held in er revenues, its VAT income 1,309.8 million which consti- Times, in judgment grounds to 16.6% in 2019 whilst the Azerbaijan, the Meadowsweet accounts will not decrease whereas tuted 3.2% of Georgia’s GDP. issued last month, Justice self-governing unit income to at the Geneva branch of the there was a decrease in fi nan- This fi gure will increase up to Valerie Thean wrote that is- GDP ratio will increase from Ilham Aliev, bank. cial assistance from the state GEL 2,090.3 million in 2019 sues such as the governing 3.2% to 4.7%. The trust assets were man- budget in the case of the for- and constitute 4.7% of the laws of the country, the loca- Therefore, both the nomi- credits: aged and invested by the mer equalising transfer. The estimated GDP of the same bank, which provided invest- tion of the witnesses, docu- nal and relative budget fi gures Minister’s statement is about year.1 Therefore, the budgets ment reports detailing the ments and evidence, the need for self-governing unit in- President VAT income distribution in of self-governing entities will performance of the accounts to fi nd a trial venue that bet- come will increase even more exchange for the equalising receive a larger share of gov- Administration to the trustee. The Geneva ter secures a just trial, and the from the beginning of 2019 transfer and its consequences. ernment collected fi nancial branch was the centre of man- overall nature of the litigation as compared to the numbers Prior to 2019, self-gov- resources in 2019 as com- of Azerbaijan agement for the portfolio. are important factors in this provided in Minister Maia erning units received fi nan- pared to previous years. Between September and case. Tskitishvili’s statement. cial assistance in the form of In addition, the share of The FINANCIAL – Former October 2015, the bank is- Justice Thean said: “The ANALYSIS equalising, targeted, special self-governing entities in the Georgian prime minister Bid- sued margin calls totalling claim is essentially one and capital transfers from 2019 consolidated budget in- zina Ivanishvili failed to have US$41.01 million on accounts framed against the bank for The Minister of Regional the state budget. Of these, comes increases up to 16.6% a lawsuit against a Swiss bank within the Mandalay Trust. conduct wider than the Man- Development and Infrastruc- only the equalising transfer whereas this fi gure was 11.3% involving a US$1.1 billion The calls were sparked by dalay Trust.” ture of Georgia, Maia Tskit- was categorised as a munici- in 2018. In 2010-2018, the (S$1.5 billion) trust heard in the drop in the value of the She added that the “site” of ishvili, stated at the Local pality’s own income whereas self-governing entities in- a court in Singapore instead trust fund from US$697.68 the events “surrounding the Self-Governance Forum that other transfers were not a come to consolidated budget of Geneva, according to The million in December 2014 to claims against the bank is Ge- local self-government fund- municipality’s own income income ratio was 8.7% on Straits Times. US$437.8 million in Septem- neva, and ought to be tested ing will increase by more (article 92.4). average. Therefore, the share Mr Ivanishvili, 62, his wife ber 2015. in Geneva”. than GEL 100 million in The nominal fi gures for the of municipal fi nances in 2019 and three children had sued Mr Ivanishvili claims that The judge found that the 2019 which constitutes a 13% equalising transfer from the public fi nances (income) is Switzerland-based invest- in the process of following plaintiff s’ trust case against growth as compared to 2018. state budget increased annu- projected to grow whilst the ment bank Credit Suisse and up on these margin calls, he the trustee is rooted in Sin- The former equalising ally between 2010 and 2015. share of the state budget de- trustee Credit Suisse Trust in discovered misconduct on the gapore, while the case against transfer has been abolished In 2015, the state budget al- creases. the High Court, over losses to the bank is rooted in Geneva, from the beginning of 2019. part of his portfolio manager located GEL 834.2 million as the Mandalay Trust, of which which is the central “theatre This transfer was a form of Patrice Lescaudron, accord- an equalising transfer to self- they are the benefi ciaries. of action”. fi nancial assistance allocated ing to The Straits Times. governing entities which con- Both the bank and trustee Justice Thean ruled that to municipalities from the 1 This fi gure includes incomes Lescaudron was convicted stituted 10.2% of state budget applied last November to stop Geneva was the most suit- state budget. It was given to from the budgets of the Abkhazia of embezzlement, forgery and incomes. After 2015, the vol- the court proceedings here able forum for the case to be those municipalities whose and Ajara Autonomous Repub- other charges in a Geneva ume of equalising transfers and have the case heard in a court last year and jailed for heard. expenses exceeded their own lics. Swiss court instead - which, fi ve years, newspaper wrote. Dismissing the appeal, she they argued, was more appro- In a lawsuit last August, said: “Having regard to all Graph 1: State Budget Allocated Funding; Own Income (GEL Million, %) priate. the plaintiff s sought to fi nd the circumstances, it is fair Mr Ivanishvili - who was the bank liable to account for to conclude that the trust re- elected prime minister of losses to the Mandalay Trust, lationship was the ancillary the former Soviet republic of among other things. relationship, and the banking Georgia in October 2012 and But the defendants success- relationship in Geneva was stepped down a year later - is fully applied for the case to be the primary one.” said to be Georgia’s richest heard in a Swiss court. A version of this article ap- man and worth US$4.6 bil- Mr Ivanishvili, represented peared in the print edition of lion, according to Forbes. by a legal team led by Senior The Straits Times on Febru- He settled about US$1.1 Counsel N. Sreenivasan and ary 04, 2019, with the head- billion in the Mandalay Trust Mr S. Palaniappan, appealed line ‘Ex-Georgian PM’s suit in Singapore in March 2005, to the High Court last Octo- to have case heard in S’pore with the assets held by two ber. court dismissed’. Source: Ministry of Finance of Georgia 12 HEADLINE NEWS & ANALYSIS fi nancialnancial nnewsews 11 FEBRUARY, 2019 | FINCHANNEL.COM Traditional cost-cutting measures aren’t enough to solve current profitability crisis in Financial Services industry

The FINANCIAL – With banks model that can compete with both to improve the level of talent and struggling to improve their return incumbent institutions and digital- change innovation delivered from the em- mainstream on capital, many institutions are only competitors.” ployee base. being forced to restructure and Based on a detailed survey of the functions To keep up with digital-only com- cut costs, says PwC latest research. global financial services industry, petitors and rapidly deliver a seam- Even in the asset management in- PwC has identified six areas where Forty per cent of fi nancial institu- 4: Improving less and instant customer experi- dustry, where ROE is higher than financial institutions can focus tions are spending 20% of their en- ence, 77% of fi nancial institutions the financial services industry as a their productivity efforts to boost tire budget on so-called ‘change-the- are turning to agile somewhere in whole, there is downward pressure long term sustainable profitability: institution’ eff orts. However only workforce their organizations. on margins and profitability. Cost 15% said they were satisfi ed with cutting will only deliver so much, their ability to execute change. digital IQ PwC says. If financial institutions 1: Better 6: Mastering are to improve profitability in the As people live and work longer, long term they need to fundamen- understanding 3: Embracing and unemployment rates remain digital labour tally improve the productivity of low, digital training and retraining the enterprise. the workforce the platform of existing workforces is particularly Over 50% of CEOs believe artifi - “The cost cutting agenda ad- crucial. Despite its importance, re- cial intelligence (AI) will have a big- opted by many institutions since Our experience indicates that by economy search shows that current eff orts are ger impact than the internet. Getting the financial crisis has, in essence, simply tracking hours by task, or- not achieving the desired results. Of the balance right between tasks per- de-globalised the industry to make ganisations can improve productiv- Only 21% of fi nancial institutions the fi nancial-services leaders polled formed by AI and tasks performed it more local or national, shrunk ity by 15% to 20%, and the imple- employ crowdsourcing tools today. in PwC’s 2018 CEO Survey, 75% re- by people will be key to future suc- global footprints, divested busi- mentation of service catalogues Platforms can run challenges that ported they were concerned about cess for fi nancial institutions. nesses, and shed clients”, John and multi-tier sourcing can bring tap the collective brainpower and shortages of digital skills within the “It is clear what fi nancial insti- Garvey, Global Financial Ser- another 20% improvement.Of the resources of a crowd, driven by a industry. tutions need to do to build future vices Leader for PwC stated that. organisations that didn’t track work sense of competition to develop the profi tability and to remain competi- “However, this process has run by hours and tasks, 62% believed best response. We predict that gig tive. However doing it and making its course. If profitability is to get such tracking would yield produc- employees will perform 15% to 20% 5: Bringing an the necessary changes will be a huge anywhere near the highs of fifteen tivity benefi ts. of the work of a typical institution challenge. Very soon we will start to years ago, what’s needed now is a within fi ve years. This translates agile mind- see which CEOs have taken the pro- fundamental focus on building a into signifi cant cost savings across ductivity agenda seriously”, added sustainable productive business 2: Rethinking the board, along with the potential set to the John Garvey. “E-commerce will grow by 100% per year”

Georgia and those in easy for the cardholders. The the best indicators of market will gradually move to mo- overall fi nancial education of Continued from p. 6 other Eastern European second point is that it com- growth in the region. Georgia bile phones, to gadgets, fi n- people who sometimes might countries? pletely secured. We have done year over year shows excel- ger print payments, and face disclose their personal data. years of Visa’s history the A. I think that users in a number of researches on lent results. People are really recognition payments. But it Q. Georgian banks re- challenges have almost un- Georgia are really an example what stops people from pay- changing their behaviour. doesn’t mean that cards will fuse to cover damages in changed. One is the main to follow compared to in many ing over the internet. There Q. What about your disappear entirely. Payment the event of card fraud challenge is changing the be- of the surrounding countries, are a number of points but the competitors, what’s your through Visa technology will and unauthorized use of haviour of cardholders - mov- including Europe. Georgia fi rst one is security, they are further strategy and spe- not disappear. It’s not about cards. What is Visa’s pol- ing to cashless payments from was the fi rst country in the re- concerned that if something cial off er for consumers? the card. It’s about the fact icy towards this in other cash. It’s a big fi ght which we gion of the CEMEA (90 coun- happens they will lose money. A. The competition is great. that you pay. And the fact that countries? have been fi ghting for the last tries) where Visa launched its So, fi rst it’s important to Without successful and smart there is a network all around A. We have a so-called few decades. If we take as an Visa payWay card. Since that educate people on the secu- competitors we would not be the globe uniting all banks “zero liability” policy in all example Georgia, one of the time Georgia has been the rity of payments in e-com. We that strong. We identify our which Visa supports to make countries in the region under most developed markets, only most developed contactless are working right now with strategy in two ways. The transactions. That’s why we which a cardholder is not re- around 30% of its total vol- acceptance market with out- the key banks and some edu- fi rst direction is working with don’t have a fear that plas- sponsible for fraud, if he/she ume goes through cashless standing results (9 out of 10 cational staff on how to de- banks, merchants, business- tic will disappear. Moreover has not disclosed their per- payments, terminals at mer- transactions are contactless liver this message to people. es; and here we work to help we are actually pushing this sonal information. At Visa chants. The rest is cash from here). And people are very In 90% of cases the leaking of our partners to bring really trend for mobile phones to be we work in any market of our ATMs or cashier desks. This open to any innovations. We credentials happens because high value proposition with the main way of making pay- presence in accordance with transition from cash to cash- have 3 issuers wallets, off ered the cardholder discloses their Visa cards to their cardhold- ments ASAP. our own rules and the laws less is growing year on year, by TBC Bank, Bank of Georgia personal data by phone or in ers. There are a lot of ways to Q. What are the global of the country. I really don’t but we are still not fully there, and VTB Bank. They are very some other way. So educa- achieve this: joint activities; fraud trends? What is the think that banks don’t want to it is a long way ahead. We popular and this is a sign that tion and promo activities will bringing added value ben- situation in this regard take on the responsibility of rely a lot on the experience the people are much more bring people into e-com. efi ts; driving technologies; in Georgia? fraud cases. It’s probably the of mobile payments because ready for payment innova- Q. How would you undertaking joint trainings A. Fraud is a permanent condition of the contract and the whole world shows that tions, sometimes even more evaluate the statistics with bankers. And another and unrelenting war between the way the fraud happened. the behaviour of cardholders so than the big corporations. of Visa card payments big direction which we are payment systems, banks and It’s a question of investigation changes dramatically once Q. What prospects do during 2018 in Georgia? developing right now is B2C, fraudsters, which sometimes in each individual case. they acquire the possibility to you see for the develop- How have they changed meaning talking directly to become very smart, how- Q. How have the meth- pay by phone. ment of e-commerce in in the last 5 years? the cardholders. ever at the same time we are ods of criminals been We are very much involved Georgia? A. What we see from over- Here we will intensify our building and strengthening changing in light of con- in all kinds of social projects, A. E-commerce share is all statistics on the market, eff orts to drive this B2C sec- networks to make them much temporary technological in educational projects all only 9% in the payment vol- is that there is still high po- tor and you will see in the more sophisticated and pro- development? around the world to bring ume, and 5% in transactions tential for growth. Domestic next few years that Visa will tect cardholders and their A. Fraudsters sometimes cashless experience to the currently, which is quite transactions grew around be closer to cardholders in data. Our part of the world is get very smart. They’re de- parts of population for which small. As I mentioned earlier, 35% on year on year basis. If delivering messages on how probably one of the most se- veloping new ways, new this way of payments is not in cross-border around 50% we compare this indicator to to pay, and what exactly the cured in terms of payments. technologies and solutions to so obvious. Last year we had of the volume is in e-com. I 2016-17 it was around 29%. cardholder can get when they First of all, because we are crack data and get personal a big initiative with National know that there are a number So the market is growing even make transactions with Visa. much faster when it comes to info. But at Visa we have Bank of Georgia, based on of good cases of e-com already faster than in previous years. I think we need to popularize adopting new technologies. strong security controls and our big platform Financial in the country. From the ex- Cross-border transactions this topic much more to deliv- The level of fraud with con- are constantly upgrading all Football. We are trying to ap- perience of Ukraine, Belarus, grew 53% in 2018, vs. 28% in er the information to people tactless cards is much lower of the technologies to protect proach people from all angles, and other countries, which the previous period. Currently about how they can actually than with chip cards, and data. We have a number of from social perspectives, from have already started quite big the ratio of payment volumes get the benefi ts. So we will be with biometric recognition, platforms which banks also user experience perspectives, expansion in e-com, I can say to total volumes is 27%, in focusing on bringing added it is almost zero. So the more use and which allow identifi - and from technological per- that this market can grow by 2017 it was on 22%. So people value and also delivering the we make the move to modern cation using big data analytics spectives. 100% per year, dramatically are paying more and we see it message explaining how they technologies, the less fraud to identify and prevent fraud We also pay a lot of atten- and very quickly. A lot of re- in the volumes. can easily access the benefi ts we have. and block suspicious trans- tion currently to e-com. In sponsibility for the quality of Another sign of the maturi- which Visa provides. Also, Georgian banks are actions at the very moment Georgia, around 50% of pay- this experience lies on banks. ty of the market is the average Q. Do you think that extremely sophisticated. Even they’re happening. ments in cross boarder are We are considering making ticket. It’s currently around digital wallets may re- with all the support of inter- Q. What is your main done in e-com. Overall the this experience very easy, like GEL 50, though this is slowly place card payments in national payment schemes, security advice for your share of e-com is only 9% if a single click. lowering. So we see that peo- the near future? If so, the banks themselves are very cardholders? we look at domestic, though Q. What are the main ple are making many more how could cards be trans- smart in protecting cardhold- A. Don’t disclose your per- it’s growing. That’s why we advantages Verifi ed by transactions for small ticket formed in the future? ers. They have online monitor- sonal data to anybody. 99% are doing a lot of things to de- Visa and how this helps operations, so meaning they A. I think that plastic is ing systems, Visa platforms for of fraud cases happen when a crease people’s fear of paying to drive e-com? pay more in their usual life. only one of dozens of pay- how to make payments secure person gives his or her card to digitally. A. First of all, the key banks We see the market is growing ment form factors which ex- in also online mode. The topic somebody or even tells them Q. What are the main are already certifi ed for the 43% on payment volumes year ists. Defi nitely plastic year of fraud is not that hot in our their pin code. The security diff erences between the technology ‘Verifi ed by Visa’. on year without any decline. I on year will be decreasing part of the world and the main of people lies in their own habits of Visa users in They know how to make it would say that this is one of in quantity and everything problem still remains the hands. HEADLINE NEWS & ANALYSIS 13 FINCHANNEL.COM | 11 FEBRUARY, 2019 marketsmarkets Weekly Market Watch WEEKLY MARKET WATCH EXCLUSIVELY PROVIDED TO THE FINANCIAL BY GALT & TAGGART

y/y, +0.66ppts) and healthcare ECONOMY (+3.4% y/y, +0.28ppts) categories, while prices were Ease of Doing Business InÀ ation was down in clothing and footwear # 6 (Top 10) (-8.8% y/y, -0.32ppts). On a 2.2% y/y and monthly basis, there was 1.3% Economic Freedom Index 1.3% m/m in inÀ ation in January 2019, # 16 (mostly free) aɣ ected by price increase January 2019 in food and non-alcoholic Global Competitiveness Index beverages category (+3.2% # 66 (improving trend) Annual CPI inÀ ation was m/m, +0.98ppts) and alcoholic 2.2% in January 2019 up beverages and tobacco (+5.8% Source: O௻ cial data, IMF Source: GeoStat Source: Rating agencies Source: World Bank, Heritage from 1.5% in previous month, y/y, +0.39ppts). 1) As of 9M18 Note: Rapid estimate for 4Q17 Foundaition and World Economic according to Geostat. Core 2) Preliminary estimate Forum inÀ ation was 1.7% in January 2019 up from 0.9% recorded in Tourist previous month. Annual price arrivals up Georgia decreased by 0.6% day arrivals, while tourists (+16.8% y/y), Ukraine (3.6% changes were driven by price y/y to 0.44mn in January arrivals increased by 5.9% y/y) and Israel (+132.1% y/y), International increases in food and non- 5.9% y/y in 2019, according to the y/y (0.31mn trips, 70.0% of while visitors were down reserves stood alcoholic beverages (+3.2% January 2019 Ministry of Internal Aɣ airs. total). Out of top countries, in from Azerbaijan (-3.4% y/y), y/y, +1.00ppts), alcoholic Decline in overall visits was January 2019, international Armenia (-5.0% y/y) and at US$ 3.4bn in beverages and tobacco (+10.1% Total international visits to aɣ ected by fall in same- visitors increased from Russia Turkey (-20.2% y/y). January 2019 Gross international reserves were up 10.9% y/y to US$ 3.4bn in January 2019 according to NBG. Change in reserves was attributed to FX auctions (total purchase of US$ 85.0mn in January), government FX operations and/ or asset revaluation. NBG purchased US$ 15.0mn On 6 February 2019, the NBG intervened on the FX market Source: NBG and purchased US$ 15.0mn. The Note: Index growth means appreciation of exchange rate, decline means NBG purchased US$ 100mn Source: GeoStat depreciation of exchange rate. YTD on its 7 FX auctions.

FIXED EQUITIES INCOME Corporate Eurobonds: Bank of Georgia Group Eurobonds (GEBGG) closed at 6.3% yield, trading at 98.9 (+0.1% w/w). Bank of Georgia GEL- denominated Eurobonds (GEBGG) were trading at 99.5 (-1.0 w/w), yielding 10.6%. Georgia Capital Eurobonds (GEOCAP) were trading at 91.4 (+0.3% w/w), yielding 8.2%. GOGC Eurobonds (GEOROG) were trading at 101.8 (-0.4% w/w), Source: Bloomberg Source: Bloomberg yielding 5.9%. Georgian Railway Euro- bonds (GRAIL) traded at a premium at BGEO shares traded was at 0.46% of its changed hands in the range of GBP 13.82 105.6 (-0.1% w/w), yielding 5.9%. Source: Bloomberg Source: Bloomberg capitalization. – 14.96/share. Average daily traded vol- Georgian Sovereign Eurobonds ume was 18k in the last 4 weeks. The vol- (GEORG) closed at 106.1 (+0.1% w/w) Georgia Capital (CGEO LN) shares ume of TBCG shares traded was at 0.10% at 3.9% yield to maturity. closed at GBP 11.14/share (+1.29% w/w Bank of Georgia Group (BGEO and +9.67% m/m). More than 128k of its capitalization. LN) shares closed at GBP 15.85/share shares traded in the range of GBP 10.80 Georgia Healthcare Group (GHG (-0.54% w/w and +9.55% m/m). More – 11.14/share. Average daily traded vol- LN) shares closed at GBP 2.35/share than 227k shares traded in the range ume was 23k in the last 4 weeks. The (+3.07% w/w and +21.13% m/m). More of GBP 15.49 – 16.05/share. Aver- volume of CGEO shares traded was at than 95k shares were traded in the age daily traded volume was 59k in the 0.34% of its capitalization. range of GBP 2.21 – 2.35/share. Aver- last 4 weeks. FTSE 250 Index, of which TBC Bank Group (TBCG LN) closed age daily traded volume was 81k in the BGEO is a constituent, lost 0.77 % w/w the week at GBP 14.08 (-3.03% w/w and last 4 weeks. The volume of GHG shares and gained 2.70% m/m. The volume of -5.38% m/m). More than 52k shares traded was at 0.07% of its capitalization.

the auction held at NBG on February 5, 2019. The weight- MONEY MARKET ed average yield was ¿ xed at 6.890%. The nearest trea- sury securities auction is scheduled for February 12, 2019, Ministry of Finance T-Bills: 1-year GEL 40.0mn where GEL 40.0mn nominal value 2-year Benchmark (US$ 15.1mn) T-Bills of Ministry of Finance were sold at Bonds and GEL 20.0mm 6-months T-Bills will be sold.

* Source: Bloomberg *GWP 12/21 bonds and GEBGG 06/20 bonds are in Georgian lari **Coupon rate 3.5% over the NBG’s re¿ nancing rate

Source: NBG Source: NBG Source: Bloomberg *Note: As of latest auction.

WEEKLY MARKET WATCH EXCLUSIVELY PROVIDED TO THE FINANCIAL BY GALT & TAGGART Investments (or any short-term transactions) in emerging markets involve signi¿ - GALT & TAGGART cant risk and volatility and may not be suitable for everyone. The readers of this document must make their own investment decisions as they believe appropri- Address: 79 D. Agmashenebeli Avenue, Tbilisi 0102, Georgia ate based on their speci¿ c objectives and ¿ nancial situation. When doing so, such Tel: + (995) 32 2401 111 recipients should be sure to make their own assessment of the risks inherent in Email: [email protected] emerging market investments, including potential political and economic instabil- ity, other political risks including without limitation changes to laws and tariɣ s, and nationalization of assets, and currency exchange risk. 14 HEADLINE NEWS & ANALYSIS ﬁ nancialnancial nnewsews 11 FEBRUARY, 2019 | FINCHANNEL.COM

January 2019: Post-Christmas Hangover?

of such “gaps” might be easy ther debt. If this is the case, Continued from p. 2 to discern. For example, those the introduction of new regu- people whose expectations lations on responsible lending While the reasons behind for the future are much more in the ﬁ nancial system - in such phenomena require fur- optimistic than their percep- force since January 2019 – ther research, some behavior- tions of the present might be should be regarded as a step al – and policy – implications more inclined to take on fur- in the right direction.

Over- Rest of Higher The Tbilisi Male Female Young Old all Georgia education Rest Your fi nancial situation, 4% 3% 5% 2% 9% 3% 5% 8% 2% past 12 months How will your fi nancial situation change, next 12 -2% -3% -1% 0% -5% -9% 3% -1% -2% months? How did the general economic situation change in 6% 1% 11% 3% 12% 6% 5% 9% 5% Georgia, past 12 months? General economic situa- -12% -11% -12% -7% -19% -19% -6% -4% -16% tion, next 12 months Extent of consumer price -3% 0% -8% -2% -5% 0% -6% -3% -4% rise, past 12 months Do you expect prices to increase more rapidly, next -19% -10% -28% -13% -32% -22% -17% -21% -18% nchannel.com 12 months? fi Expected level of unemployment in Georgia, next -9% -9% -8% -5% -15% -9% -8% -2% -12% 12 months Is now the right time for people to make major 3% 0% 4% 4% 5% 7% 0% 9% 0% purchases in Georgia? Do you expect to increase spending on major pur- 6% -1% 12% 2% 14% 5% 5% 11% 3% chases compared to the past, next 12 months? Is now the right time for 5% -2% 12% -4% 23% 5% 4% 11% 3% people to save in Georgia? Your ability to save, next 4% 0% 7% 2% 9% 2% 6% 8% 2% 12 months? Your current ability to 3% 1% 5% 5% 2% 1% 6% 12% -1% save? Advertiser: Radui Commersant. Contact FINANCIAL Ad Dep at marketing@ Denmark, Sweden, Switzerland German Exports, Give $14 Million To UN Aid For Imports Rebound Eastern Ukraine in December BERLIN (Alliance News) - Germa- fell sharply to EUR 13.9 billion ny’s exports rebounded at a faster- from EUR 20.4 billion in Novem- than-expected pace in Decem- ber. Economists were looking for a ber, exceeding expectations, and surplus of EUR 17.3 billion. imports followed suit, extending The statistical offi ce also re- some positive data for the biggest ported that the current account euro area economy after the recent surplus fell to EUR 21 billion in run of weak fi gures that suggested December from EUR 21.6 billion a slowdown. in November. Exports rose a calendar and For full year 2018, exports rose seasonally-adjusted 1.5% from 3% and imports grew 5.7%, and November, when they declined their values exceeded their record 0.3%, fi gures from the Federal highs. The trade surplus fell to Statistical Offi ce showed on Fri- EUR 227.8 billion from EUR 247.9 day. Economists had expected billion in 2017. 0.5% growth. EU countries attracted 3.8% The pace of growth was the fast- more German exports than a year est since May’s 1.6% gain. ago, and imports from the group Imports climbed 1.2% month- rose 6.3%. Exports to the euro area on-month, recovering from a 1.3% increased 4.5% and imports from The FINANCIAL – The govern- measures, law enforcement and ju- after Russia seized Ukraine’s Crime- slump in November. Economists the bloc climbed 6.9%. ments of Denmark, Sweden, and dicial reform, and the promotion of an Peninsula. had forecast 0.4% growth. Shipments to the non-EU coun- Switzerland have announced they human rights.” According to the UN, the RPP is “Today’s trade data is a wel- tries rose 1.9% and imports from will pledge some $14 million over “The trust of citizens in confl ict- aimed at strengthening community come sign of life, confi rming our these countries grew 5%. the next three years to a UN proj- aff ected areas in governmental in- security and social cohesion, sup- view that the assessment of the In 2018, the current account ect to promote social cohesion and stitutions will improve and they will porting the economic recovery of German economy currently needs surplus dropped to EUR 249.1 bil- strengthen regional governance in feel safer if administrative, law en- confl ict-aff ected communities. It less black-and-white thinking and lion from EUR 261.2 billion a year eastern Ukraine. forcement, and security capacity are also works to further decentralize is more nuanced,” ING economist ago. More than 10,300 people have strengthened, and it becomes easier and reform the health-care system Carsten Brzeski said. Germany likely avoided a tech- died since fi ghting erupted in April for them to access justice and envi- in government-controlled areas of “While the temporary prob- nical recession in the fourth quar- 2014 in eastern Ukraine between ronmental protection. This project the Donetsk and Luhansk regions. lems in the automotive sector will ter, the economy ministry has said. Russia-backed separatists and will help to support these changes,” The RPP is being implemented by Ukrainian forces. Thousands have said Victor Munteanu, the manager four United Nations agencies and is gradually be resolved...and should Average annual growth slowed to a been wounded and more than 1.5 of the UN’s Recovery and Peace- supported by the European Union, boost exports, the risks and uncer- fi ve-year low of 1.5% in 2018. million people have been internally building Program (RPP). the European Investment Bank and tainties from outside the eurozone On Thursday, the European displaced. According to the press release, the governments of Denmark, the are clearly the make-it-or-break-it Commission slashed the German In a press release on February 8 Denmark has pledged to contribute Netherlands, Norway, Poland, Swe- factor for the export sector,” the growth forecast for this year to to announce the new initiative, the more than $9 million; Sweden $3 den, Switzerland, and Japan. Its to- economist added. 1.1% from 1.8% and the projection three states said the “breakdown in million; Switzerland $2 million. tal budget for 2019-2022 is over $50 On a year-on-year basis, exports for next year was left unchanged at trust” in the confl ict-hit region “can RPP has addressed priority needs million. decreased 4.5% and imports were 1.7%. only be overcome by job creation, in eastern Ukraine since the armed unchanged in December. poverty alleviation, anti-corruption confl ict erupted in the spring of 2014 RFE/RL The non-adjusted trade surplus Copyright RTT News/dpa-AFX HEADLINE NEWS & ANALYSIS 15 FINCHANNEL.COM | 11 FEBRUARY, 2019 ttravelbizravelbiz Airlines: Healthy Passenger Demand Continued in 2018

British Airways Announces 19

The FINANCIAL -- Global passen- adjusted basis, traffi c growth has 2017. Capacity rose 7.7% and load Reasons to Fly ger traffi c shows that demand (rev- Markets softened a bit in recent months, like- factor dipped 0.6 percentage point With BA in 2019 enue passenger kilometers or RPKs) ly owing, in part, to uncertainty over to 81.8%. Traffi c was aff ected by the rose by a healthy 6.5%, according International passenger traffi c the economic backdrop and Brexit. mid-year general strikes in Brazil as ritish Airways’ new year’s reso- to the International Air Transport in 2018 climbed 6.3% compared Middle East carriers’ traffi c in- well as by political and economic de- lution is to provide its custom- Association (IATA). Although this to 2017, down from 8.6% annual creased 4.2% last year, down from velopments in some of the region’s ers with even more quality and represented a slowdown compared growth the year before. Capacity 6.9% growth in 2017. It was the other key economies. choice in every cabin on every to the 2017 annual growth of 8.0%, second year in a row of moderating African airlines saw 2018 traffi c route - with a £6.5bn invest- rose 5.7% and load factor climbed Bment and 19 great reasons to look for- it was another year of above-trend by 0.4 percentage point to 81.2%. All demand growth. Capacity climbed rise 6.5% compared to 2017, which ward to fl ying with the airline in 2019. growth. regions recorded year-over-year in- 5.2% and load factor slipped 0.7 per- was an increase compared to 6.0% Here are some of the reasons to fl y with December RPKs rose 5.3% against creases in traffi c, led by Asia-Pacifi c. centage point to 74.7%. The decel- annual growth in 2017. The strong British Airways this year: the same month in 2017, the slowest However, North America and Africa eration in growth refl ects the impact performance took place in spite of The January sale – on now. year-over-year pace since January were the only two regions to post of policy measures and geopolitical the mixed economic backdrop of the Bag a bargain to dozens of top global 2018 and a continuation of the trend stronger demand growth in 2018 tensions, including travel restric- continent’s largest economies, Nige- destinations. Do it now, before everyone that saw demand growth decelerate compared to the prior year’s perfor- tions and the temporary ban on large ria and South Africa. Capacity rose else does. to an annualized rate of 5% over the portable electronic devices. Traffi c 4.4%, and load factor jumped 1.4 New routes. Customers can try out mance the airline’s new routes to Charleston course of the 2018 second half com- Asia-Pacifi c airlines’ 2018 traffi c actually declined 0.1% year-on-year percentage points to 71.0%. y’all, with Pittsburgh, Osaka, Kos and pared to a 9% pace in the fi rst half. rose 7.3%, compared to 2017, driven in December, but this may refl ect Domestic air travel climbed 7.0% Corsica, Ljubljana, Montpellier, among “2018 was another year of strong by robust regional economic expan- volatility in data. last year, which was unchanged from others. It’s the airline’s most extensive passenger demand, as aviation con- sion and an increase in route options North American airlines had their the rate in 2017. All markets showed route network in more than a decade. tinued to support the global econo- for travelers. Although this was a fastest demand growth since 2011, annual growth, led by India and Chi- New aircraft. Customers can fl y on my. We expect similar, if somewhat slowdown from the 10.5% year-over- with full-year traffi c rising 5.0% na, which both posted double-digit one of the carrier’s 15 plush new aircraft moderating performance in 2019. year growth recorded in 2017 versus compared to 2017, an increase from annual increases. Capacity rose 6.8% being delivered this year – including Nevertheless, slowing growth in 4.7% annual growth in 2017. Here and load factor was 83.0%, up 0.2% four fabulous A350 aircraft. 2016, it was strong enough to lead all A brand-new Club World seat, featur- the second half of 2018, coupled the regions for a second consecutive too, however, demand growth slack- percentage point compared to 2017. ing on the new A350 aircraft, and two with concerns over issues including year. Capacity rose 6.4%, and load ened noticeably in the last two quar- India’s domestic market posted the 777 aircraft by the end of the year. Brexit and US-China trade tensions, factor ticked up 0.7 percentage point ters. This may be owing to increasing fastest full-year domestic growth rate WiFi. The best, live streaming WiFi are creating some uncertainty to this to 80.6%. concerns over the US economic out- for the fourth consecutive year, with on all short-haul fl ights and the vast positive outlook,” said Alexandre de European carriers’ international look and trade tensions with China. an 18.6% annual demand increase. majority of long-haul fl ights so custom- Juniac, IATA’s Director General and traffi c climbed 6.6% in 2018 com- Capacity climbed 3.7%, and load fac- Domestic demand is underpinned by ers can sit back and enjoy fi lms and TV CEO. pared to the previous year, which tor edged up 1.0 percentage point to robust economic expansion and in- shows from their favourite streaming 82.6%, second highest among the creasing numbers of city pairs. service. was down from 9.4% growth the A new look for First. New fi rst-class year before. Capacity rose 5.9% and regions. Australia represented the opposite dining, bedding and amenity kits from International load factor increased 0.6 percentage Latin American airlines’ traffi c picture, as annual traffi c rose just one of the UK’s best-loved designers. point to 85.0%, which was the high- climbed 6.9% in 2018, a slowdown 1.4%, although this was a slight in- An industry-leading makeover for Passenger est for any region. On a seasonally- compared to 8.8% annual growth in crease over the rate of 2017. World Traveller Plus. Look out for new bedding and new dining in this intimate and exclusive cabin. New lounges for customers to relax and enjoy ahead of their fl ight, in San Francisco, Johannesburg, Geneva and 3 million unemployed JFK. Bank Of Georgia An extended partnership with premium dining supremo Do&Co, the air- found work in Q3 2018 line’s new in-fl ight caterer from Heath- Launches Real Estate row and already providing meals in Club Europe. A new ba.com homepage, making Digital Platform Area.ge booking with British Airways even easier and more intuitive. New partners for the British Airways Executive Club, off ering even more ways to collect and spend Avios. Digital bag tags. A UK airline fi rst. Sync your personal baggage tag with the BA app, drop your luggage at the airport, and fl y. Self-service baggage drops at Heath- row T3 off ering customers the same service as T5. Facial recognition technology. More biometric technology at Heathrow, Lon- don City and Gatwick, New York JFK, Orlando, Los Angeles, Miami and many more. The system makes boarding faster and more convenient, helping British Airways depart fl ights on, or ahead of time. New emissions-free, remote-controlled pushback vehicles for long-haul aircraft to continue to improve punctu- ality. Short-haul versions reduced pushback delays by more than 70 per cent. New winter equipment – helping British Airways safely de-ice its fl eet of almost 300 aircraft quicker than ever during the frosty winter months. The FINANCIAL – Between the From those initially counted as LONDON (Alliance News) - Bank “Bank of Georgia continues to be Hotel reservations. Investment in second and third quarters of 2018, economically inactive in the second of Georgia Group PLC on Wednes- at the top of digital off erings in the new technology will see rooms automat- 3.0 million people (19.3 % of all un- quarter of 2018, 4.3 million (3.7 %) day said it has launched a real estate local market, and Area.ge is our lat- ically booked for customers who miss employed in the second quarter of moved into employment in the third digital platform Area.ge. est investment in this endeavour,” their fl ights due to disruption. The company said the new product said Bank of Georgia Chief Executive Enhanced customer service. Almost 2018) found a job. During this pe- quarter, and 3.7 million (3.3 %) tran- 30,000 staff will receive the airline’s all- riod, 8.8 million (57.3 %) remained sitioned into unemployment. off ers a single place for convenient Archil Gachechiladze. new customer service training. At T5 – unemployed and a further 3.6 mil- The graphic and table below give exchange of information among all “Area.ge is equipped with custom- more airport hosts than ever before are lion (23.4 %) became economically an overview of all possible transi- parties involved in buying, selling, er propensity detecting systems that being re-trained to manage any custom- inactive. These fi gures do not in- tions and show the changes in la- renting and developing real estate in enable us to show our clients tailor- er issue, from re-booking to upgrades, clude data for Germany. bour market status. In the graphic, Georgia. made off ers within their fi nancial ca- lounge access, baggage and transfer Of all those initially in employ- the fi gures for employment, unem- The FTSE 250-listed bank said pacity and deliver superior customer queries and fl ight information. ment in the second quarter of 2018, ployment and inactivity refer to the Area is the fi rst platform which is experience,” added Levan Kobakh- And last but not least – look out for fully integrated with Bank of Georgia idze, Area.ge’s general manager. British Airways’ Centenary celebrations. 2.3 million (1.2 %) became unem- number of people remaining in each It’s going to be 100 years’ old this year, ployed in the third quarter, and 4.1 status between the two quarters. The to provide its users a “one-click” live Bank of Georgia shares were trad- and will be celebrating in style, sharing million (2.2 %) transitioned into grey arrows indicate the direction of credit limit appraisal and mortgage ing 0.6% higher on Wednesday at its heritage and looking at what to ex- economic inactivity. net fl ows. application experience. 1,584.60 pence each. pect from fl ying in the future. 16 HEADLINE NEWS & ANALYSIS ppublicityublicity 11 FEBRUARY, 2019 | FINCHANNEL.COM

Advertiser: Qatar Airways. Contact FINANCIAL Ad Dep at marketing@fi nchannel.com HEADLINE NEWS & ANALYSIS 17 FINCHANNEL.COM | 11 FEBRUARY, 2019 fi nancialnancial nnewsews 227,000 SMEs in Germany Sant to ‘Hundreds’ Transfer Ownership by the End of 2020 Of Chinese, Russia Number Agents of secured management ‘Operating’ successions is In Brussels growing uundredsndreds ofof RussianRussian andand CChinesehinese intelligenceintelligence agentsagents The FINANCIAL aarere operatingoperating inin Brussels,Brussels, tthehe EU’sEU’s foreignforeign serviceservice hhasas warned.warned. he coming generational tran- HTThehe EuropeanEuropean ExternalExternal ActionAction sition continues to be a recur- SServiceervice (EEAS)(EEAS) estimatesestimates therethere areare ring theme on the executive ““aboutabout 250250 ChineseChinese andand 200200 Rus-Rus- fl oors of Germany’s small and ssianian spiesspies inin thethe EuropeanEuropean capital,”capital,” medium-sized enterprises. GGermany’sermany’s WWeltelt amam SonntagSonntag news-news- TBy the year 2020 alone, 227,000 ppaperaper reported,reported, citingciting EUEU diplomats.diplomats. owner-managers want to pass their AAccordingccording toto thethe report,report, EUEU diplo-diplo- company into new hands, according mmatsats havehave beenbeen advisedadvised toto staystay awayaway to KfW Research. ffromrom certaincertain partsparts ofof Brussels’Brussels’ Eu-Eu- The number of bosses who want to rropeanopean quarter,quarter, iincludingncluding a popularpopular transfer their business to a successor ssteakhouseteakhouse andand a cafecafe nearnear thethe Euro-Euro- within two years thus remains on a ppeanean Commission’sCommission’s mainmain building.building. high level, according to the current TThehe RussianRussian andand ChineseChinese intel-intel- analysis conducted by KfW Research lligenceigence agentsagents chiechiefl y workwork atat thethe on the basis of the representative eembassiesmbassies oror tradetrade missionsmissions ofof theirtheir KfW SME Panel (previous year’s hhomeome countries,countries, accordingaccording toto thethe re-re- survey: 236,000). Encouragingly, pport.ort. owner-managers are also becom- 9.3 billion, which is roughly 2.4% of at exactly the same level (45%) as tinuing to make entrepreneurship ing increasingly aware of the need all business investment in Germany, selling the business to an external more attractive are therefore core BBasedased oonn rreportingeporting byby dpadpa andand to face the challenges of the coming and they account for around 6% of buyer such as a start-up, fi nancial in- tasks of an education and economic WWeltelt aamm SonntagSonntag generational transition in a timely total turnover in the SME sector, or vestor or another enterprise. Factors policy that is oriented to the future.” manner. EUR 283 billion.” that may play a role are children’s Besides the wish for orderly busi- Never before have more of them Even if the share of SMEs that are diff erent career choices, or the fact ness succession, planned closure is been weighing the options available due for succession within the next that more existing entrepreneurs the second large block in an enter- for withdrawal due to age (59% vs. two years but have made few or no have no children compared with pre- prise’s view of the future. After all, Head of Southern 55%). The number of secured man- preparations has dropped consider- vious entrepreneur generations. not every manager who seriously agement successions is also growing. ably (-10 percentage points to 16%), “A key bottleneck in the search ponders retirement actually has a Command Nearly two thirds of SME owner- time is running out for a substan- for external successors is the short plan for their business to continue. on Russia in managers looking to transfer their tial number of fi rms. So far, 36,000 supply of emerging entrepreneurs. Today, 16% of all owner-managers business by 2020 have either fi nal- owner-managers have either not Because of the good labour market see closure as the only conceivable Venezuela: ised their succession or are in the even started the process or have situation, the number of business solution. Owner-managers of mi- process of negotiating with a specifi c ‘Anything’s Possible’ successor. That means some 141,000 small and medium-sized enterprises WASHINGTON — The United States have an idea of who will take over should not rule out Russian military after the current owner-manager re- involvement in Venezuela, accord- tires (previous year: 137,000). INTERGENERATIONAL TRANSITION HAMPERED ing to the new head of U.S. Southern “I am pleased that the current Command. Speaking exclusively in generation of owner-managers has MAINLY BY GROWING SHORTAGE OF EMERGING his fi rst in-depth interview since tak- made succession management a ing command, Navy Admiral Craig signifi cantly higher priority on their Faller told VOA that Russia was act- agenda”, said Dr Jörg Zeuner, Chief ENTREPRENEURS ing like a “wounded, declining bear Economist of KfW Group. “Today, that’s just lashing out” against dem- around four in ten bosses of small ocratic interests in the region. and medium-sized enterprises are “I think with Russia, anything’s over the age of 55. They will soon possible,” he said. “We’ve seen what have to think about retirement and, merely collected information. An founders has been declining for cro-businesses with fewer than fi ve they’ve done (in Syria), and I think hence, the continuity of their busi- orderly succession usually takes sev- years. In 2017, only 557,000 people employees, in particular, often con- we have to be prepared for what ness. When we consider the weight eral years of planning – even more started their own business. Found- sider this option (41%), while shut- might happen in the future.” these enterprises have for the econ- so when the successor is not a family ers willing to take over an existing ting down is almost not an option for QUESTION: “Admiral, let’s start omy as a whole, it becomes clear member. It is very likely that these business are becoming particularly large SMEs (2%). Thoughts of shut- with Venezuela. What options have that a lot depends on successful managers will not be able to follow rare, and recently they numbered ting down play much less of a role you been asked to provide for the generational change. The 227,000 through with their previous retire- only 57,500 a year”, said KfW Chief in manufacturing as well, but nearly situation in Venezuela.” SMEs that are ready for succession ment and succession plans. Economist Zeuner. “That is nowhere half the owner-managers of small NAVY ADMIRAL CRAIG FALL- by 2020 alone employ nearly 2 mil- While the previous years’ surveys near enough to meet the high need and medium-sized enterprises in the ER, COMMANDER OF THE U.S. lion workers and 76,000 trainees always showed a preference for suc- for successors in the coming years. construction sector plan to give up SOUTHERN COMMAND: “We’re and apprentices. They invest EUR cession within the family, this is now Teaching business skills and con- their business in the future. focused on supporting a political and diplomatic solution and as you’d expect from a combatant commander we’re working to ensure that U.S. citizens and property, our diplomats that are there are safe, and so that’s Birth rate of where we’ve been, our eff orts have been centered.” enterprises QUESTION: “Are you concerned that Russia might do something in in the EU: Venezuela like it did in Syria? Like we saw how they propped up the (Syrian 9.8 % in President Bashar al-)Assad regime there. Could that happen again?” 2016 FALLER: “I think, with Russia, anything’s possible. The national defense strategy calls out competition with The FINANCIAL Russia and China specifi cally as areas of focus. We’ve really aligned and he number of newly-born done a lot of thinking, planning and enterprises in the European resourcing to those. Diff erent cases Union (EU) as a proportion though. China is an economic power- of the total number of active house on the rise, and they have a le- EU enterprises stood at 9.8 gitimate economic and business inter- T% in 2016, slightly higher than the est around the world. They don’t play corresponding fi gure in 2015 (9.6 by the rulebook though. Russia, on %). the other hand, is almost, you know, The birth rates were above 16 % in a wounded, declining bear that’s just Lithuania (18.8 %), Malta (16.4 %) lashing out, and I couldn’t predict and Latvia (16.2 %) and were close what Russia will do, and I wouldn’t to the EU average in Spain, France want to. We’ve seen what they’ve done, and the Netherlands. At the other and I think we have to be prepared for end of the scale, the lowest enter- what might happen in the future.” prise birth rates were in Greece (4.5 %) and Belgium (6.2 %). Voice of America 18 HEADLINE NEWS & ANALYSIS ppublicityublicity 11 FEBRUARY, 2019 | FINCHANNEL.COM

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