TBC Bank - TP Cut on Rising Corporate Governance Risks

The news that, following an inspection, the NBG has requested that the two founders of TBC Bank (Mamuka Khazaradze and Badri Japaridze) step down from their positions as chairman and deputy chairman suggests that this case is not going away anytime soon. The bank is in the process of appealing the GEL1 mln fine levied by the NBG with regard to a conflict of interest in certain transactions that took place in 2007-08. The public prosecutor is also investigating the same matter. The NBG does not have the authority to remove the two founders from the BoD of the London-listed PLC (which owns 100% of the Georgian entity), nor to require them to sell their stakes in the bank (they own 20% between them); however, at this stage it is unclear how all of this will play out. While the investigation's focus appears to be on these individuals, rather than the bank itself, it remains to be seen whether the bank's operating performance will start being affected by what is major news locally.