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EBRD enhances support for Mongolia’s banking sector
Equity stake in Zoos Bank, loan and trade finance facility in support of small and medium-sized enterprises
The EBRD is increasing its support for the development of the Mongolian financial sector by acquiring an equity stake, extending a loan for small businesses and providing a trade finance facility to Zoos Bank, the country’s sixth largest bank.
The equity investment Zoos Bank, which will reach 25 percent plus one share within one year, will help the bank strengthen its corporate governance and international operating standards, support its growth and expansion plans and prepare Zoos Bank for a successful listing on an international stock exchange or a sale to a strategic investor in the future.
The EBRD’s equity investment is accompanied by a USD 4 million loan for onlending to micro, small and medium-sized enterprises, thus supporting a vital segment of the country’s economy. An additional €1.2 million of technical cooperation funds are planned for training and institution building. It is anticipated that the funding will be provided by EBRD Early Transition Countries Multi-Donor Fund.
The EBRD is also providing USD 1 million trade finance facility to Zoos Bank to bolster financing imports and exports by its clients. The EBRD’s Trade Facilitation Programme (TFP) includes more than 100 issuing banks in the Bank’s countries of operations, which participate together with some 600 confirming banks globally to facilitate imports and exports to and from the region. More than 5,000 transactions have been financed with a turnover of more than €2.7 billion to-date under TFP.
Founded in 1999, the privately-owned Zoos Bank has been expanding its activities in the SME sector in Mongolia since then and was the first bank to be listed on the Mongolian Stock Exchange in 2006. Zoos Bank is well positioned to grow its activities in the SME and corporate markets in Mongolia and expand further into the retail segment.
The EBRD finance is complemented by a comprehensive institution-building plan developed in cooperation with Zoos Bank’s management. This programme, to be supported with donor funds, aims to raise corporate governance to international levels, improve the organisational structure of the bank, strengthen credit and risk management procedures, upgrade customer service standards and develop the bank’s product offering. The EBRD will also nominate a member to the Supervisory Board of the bank.
With this latest financing, the EBRD is further increasing its support for the country’s banking sector, which is still small and highly concentrated in Ulaanbaatar and larger towns. Financing of micro, small and medium enterprises, particularly in rural areas, and foreign trade remain a major challenge, which the EBRD will continue to address by providing long-term financing for SMEs, thus supporting further competition in this vital sector of the economy.
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