Brief History

In 2008, Bank Constanta started making significant changes in its strategies. While remaining committed to its original mission – supporting micro and small businesses, the organization came up with new directions focused on retail banking.

For this purpose, the organization developed new credit products, formed a modern structure of branches having a common brand intended to renovate the current branches and open new offices in all the regions of the country.

Constanta today

On 30 July 2010, Oikocredit Ecumenical Development Co-operative Society U.A,. came in as a foreign shareholder in the share capital of the Bank. The investment made by the institution accounted for approximately 13% of the Bank’s share capital. The investment will be used to finance the development of the microfinance sector that is Bank Constanta’s target segment.

Constanta’s first steps

The first Georgian microfinance NGO “Constanta Foundation” was established in 1997. With the significant support from Save the Children USA Constanta started to offer financial resources to Tbilisi-based IDPs, who, were among the most vulnerable groups in the country. Many of the displaced started making a living as street vendors or running micro-businesses. They had no access to capital to upgrade their businesses and thus were considered unbankable by the financial institutions. Constanta’s operations were designed to provide better solutions for financing micro-businesses and thus improve economic opportunities for this most disadvantaged segment of Georgian population.

The first loan product by Constanta was technically simple and uniform for all clients – a group loan. To a large extent, the overall success of Constanta’s first project can be attributed to the enthusiasm and dedication of a small team of micro-finance pioneers in Georgia.

Expansion

In 1998 Constanta received new grants from USAID Mission in Caucasus to expand its client base and thus allow other segments of disadvantaged urban population to access micro-credit for business development.

Two years later, in 2001 Constanta was one of five institutions providing financially sustainable micro-finance services in Georgia. By that time Constanta was already working in three urban centers (Tbilisi, Gori and Batumi). Since the market was not only growing but also evolving, this year was marked by the launching of a large scale individual credit scheme for the clients who graduated from group to individual loans.

The real breakthrough, in terms of coverage area and product diversity, happened after Constanta received a grant from Baku-Tbilisi-Ceyhan / South Caucasus Pipeline (BTC/CP) Companies to support economic development in the communities along the BTC/SC pipelines through provision of credit to small farmers and rural entrepreneurs. Constanta had not only launched operations in the new geographical area, but also prepared and launched new loan products, proved to be successful in all parameters.

One year later, Constanta started purchasing money from international financial institutions such as International Bank for Reconstruction and Development (IBRD) and Deutsche Bank. This shift towards capital markets was triggered by the quick evolution of demand towards a larger credit in the country. Meeting such demand was well beyond the scope of donor support and Constanta, like most other Georgian MFIs previously exclusively reliant on donor funds to grow, established links with commercial sources of funds.

By the end of 2005, Constanta’s loan portfolio raised to GEL 13.5 million and the number of clients grew up to 16, 578. Such development of the MFI can be attributed to the combination of internal and external factors including appropriate lending practices, diversification of loan products, donor support at the earlier stages of development, growth of client base and attraction of capital market investments.

In November 2006, Planet Rating, an international microfinance rating agency, awarded Constanta a B+ rating with a positive outlook – this grade indicated that Constanta’s “procedures are well developed, effective, and incorporate a long-term perspective”.

Transformation into commercial bank

In 2006 according to the new law adopted MFIs should have been only commercial entities (existing NGO-MFIs were given certain time for transformation) and were allowed to provide wider range of financial services, except savings and deposits.

In such circumstances, Constanta, which intended to maintain steady growth whilst remaining focused on micro-financial services, decided to undertake the process of transformation into commercial bank. The road-map for the process was developed in consultations with the National Bank of Georgia. The entire Constanta team worked on the implementation of changes in the systems of governance, risk management, regulatory oversight, internal controls, and capital structure to comply with national regulations for banking institutions. Significant resources were invested in upgrading the infrastructure and building Constanta’s staff capacity to operate in the new environment. The transformation work was completed in less than two years – in July 2008 Constanta received the government license to operate as a bank.

Constanta’s transformation into the Bank Institution was coincided with August 2008 conflict and the global economic meltdown. All banks, including Constanta, had to scale back their credit activities in order to cope with new market realities. However, the level of downscaling in Constanta’s operations was less dramatic than in many other banks. Due to the relatively shorter repayment terms for smaller loans Constanta had also faced lesser problems with liquidity.

In 2008, Bank Constanta started making significant changes in its strategies. While remaining committed to its original mission – supporting micro and small businesses, the organization came up with new directions focused on retail banking.

For this purpose, the organization developed new credit products, formed a modern structure of branches having a common brand intended to renovate the current branches and open new offices in all the regions of the country.

Constanta today

On 30 July 2010, Oikocredit Ecumenical Development Co-operative Society U.A,. came in as a foreign shareholder in the share capital of the Bank. The investment made by the institution accounted for approximately 13% of the Bank’s share capital. The investment will be used to finance the development of the microfinance sector that is Bank Constanta’s target segment.

On 13 May 2011, another important investment was made into Bank Constanta’s share capital, with TBC Bank becoming a majority shareholder of the Bank. As a result, Bank Constanta acquired a strong partner who will help the Bank reinforce its positions on the microfinance market and implement new and increasingly ambitious plans in the sector.

Currently Bank Constanta provides banking services to tens of thousands of customers through 42 branches all over the Georgia; 12 branches out of which are located in the capital city of Tbilisi.

Donors:

For years Constanta has partnered with a number of internationally acclaimed organizations, including:

Save The Children;
United Nations Office of the High Commissioner for Refugees (UNHCR);
United State Agency for International Development (USAID);
Consultative Group to Assist the Poorest (CGAP);
SHOREBANK ADVISORY SERVICES;
British petroleum (BP);
CARE;
MERCY CORPS;
Chemonics Georgia;
European Bank for Reconstruction and Development (EBRD);
GCMC;
Triodos;
Oikocredit;
MicroVest;
Credit Suisse, etc.

Timeline of important moments in the history of Constanta:

1997 – Constanta, the first Georgian microfinance NGO was established by the significant support of Save the Children; the group loan scheme was launched;

1999 – Three institutions (Constanta, FINCA and ProCredit Bank) run microfinance programs in Georgia;

2001 – Phase out of Save the Children’s technical support program; Constanta becomes fully self-sustainable and independent; Constanta launches its first individual credit scheme and opens first branches outside capital;

2004 – Introduction of Constanta’s seasonal and agricultural loan schemes;

2005 – Constanta starts purchasing money from international financial institutions;

2006 – Adoption of a new law on NBFIs – NGOs are still not allowed to collect savings and provide other financial services except credit;

2007 – in December Constanta started its operations as Joint Stock Company (JSC); f

2008 – Constanta received the license from the National Bank of Georgia (NBG) to conduct commercial banking operations under the brand new name JSC Constanta Bank.

2008 – Armed conflict between Georgia and Russia; Beginning of the global economic crisis; Many Georgian banks scale back their credit operations;

2009 – Constanta’s performance indicators are back to normal;

2010 – Oikocredit came in as the first foreign shareholder in the share capital of the Bank;

2011 – The Memorandum of acquisition of a controlling stake in Bank Constanta by TBC Bank was signed.

Currently, Constanta Bank operates 51 outlets throughout Georgia and offers full range of banking products to its customers. 11 outlets out of 51 are located in the capital city of Tbilisi.