Basel Compliance is the cornerstone of stability for the Georgian banking system. Developed by the Basel Committee on Banking Supervision (BCBS), these standards (Basel I, II, and III) aim to strengthen the financial resilience of banks and minimize systemic risks. In Georgia, where the banking sector is a dominant part of the economy, the National Bank of Georgia (NBG) actively implements Basel principles. This service involves comprehensive legal and regulatory support for commercial banks and financial institutions to ensure they fully meet strict international requirements regarding capital, liquidity, and risk management. Compliance with Basel standards is not just a mandatory norm — it is a guarantee of a bank's reputation, investor confidence, and long-term stability.
What Does the Basel Compliance Service Cover?
Specialists on our platform offer full consulting services on the implementation and monitoring of Basel framework regulations:
- Implementation of the Three Pillars: Legal assurance for meeting Minimum Capital Requirements (Pillar 1), the Supervisory Review Process (Pillar 2), and Market Discipline/Transparency requirements (Pillar 3).
- Management of ICAAP and ILAAP Processes: Preparation and legal audit of documentation for the Internal Capital Adequacy Assessment Process (ICAAP) and Internal Liquidity Adequacy Assessment Process (ILAAP).
- Risk Management Framework: Developing policies for credit, market, and operational risk management in accordance with Basel standards.
- Legal Support for Stress Testing: Participating in the development of stress test scenarios and communicating results with the regulator.
- Reporting System Setup: Preparing "Pillar 3" reports for submission to the National Bank, covering public disclosure standards.
Common Scenarios and Needs
Issues related to Basel compliance are particularly relevant in the following situations:
- Adoption of New Regulations: When the National Bank issues a new decree (e.g., introducing buffers under Basel III) and the bank needs to rapidly adapt internal processes.
- Supervisory Review and Evaluation Process (SREP): Preparing for and responding to the results of the supervisory review conducted by the National Bank.
- Capital Raising: When a bank needs to raise additional Tier 1 or Tier 2 capital (e.g., subordinated loans) and the transaction needs to be structured according to Basel criteria.
- Risk Weighting: Refining the Risk-Weighted Assets (RWA) methodology to optimize capital consumption.
Georgian Legal Framework
The implementation of Basel standards in Georgia is carried out through the Organic Law of Georgia on the National Bank of Georgia and the Law on Activities of Commercial Banks. Direct technical regulation is done via orders of the President of the National Bank, such as the "Regulation on Capital Adequacy Requirements for Commercial Banks" and the "Regulation on Liquidity Coverage Ratio (LCR)". These normative acts directly rely on BCBS recommendations and EU directives (CRD/CRR), making Georgian banking legislation compatible with European standards. Failure to meet regulatory requirements leads to sanctions, imposition of additional capital buffers, or license suspension.
Service Process: What to Expect
The process begins with a diagnostic of the current state (Gap Analysis) — how well the bank's internal procedures and capitalization match Basel requirements. Lawyers and risk managers jointly develop an action plan to eliminate deficiencies. This may involve changing the corporate governance structure, approving new policies, or optimizing the capital structure. The final stage is submitting reports to the National Bank and managing feedback.
Why Choose Legal.ge?
Basel compliance requires specific, niche knowledge that combines jurisprudence, finance, and risk management. On Legal.ge, you will find experts with years of experience working with banking regulations who deeply understand the National Bank's methodology. With our help, your financial institution will not only avoid regulatory sanctions but also improve financial resilience and operational efficiency.
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