When a commercial bank falls into serious difficulty and ordinary supervisory measures no longer suffice, a special resolution mechanism comes into play for the National Bank — a purpose-driven recovery procedure instead of bankruptcy or chaotic liquidation. The Organic Law on the National Bank defines the objectives of resolution, the Bank's resolution powers, the rules on temporary state financing and the resolution fund, and the institutional framework for crisis preparedness. On this page we explain every key element of this mechanism.
What resolution is and what its objectives are
The National Bank, directly or through a special manager, carries out the resolution of a licensed commercial bank in Georgia and of a branch of a foreign bank. In the resolution process the Bank is guided by five objectives of equal weight: ensuring the continuity of the commercial bank's critical functions; avoiding a significant negative impact on the stability of the financial system; protecting budgetary and state funds; protecting insured deposits in accordance with the law on the deposit insurance system; and protecting consumers' funds and assets. The list or criteria of critical functions are determined by a legal act of the National Bank. The Bank takes all measures to achieve these objectives in light of the specific circumstances of each case and, as far as possible, ensures that resolution costs and creditors' losses are minimized.