Khan Bank MSME and VCF facility

Overview
Project Summary Document
Environmental and Social Documentation
Procurement
Complaints

Project ID 39653

Status Complete

Location

Mongolia

Business Sector

Financial Institutions

Notice Type

Private

Project timeline

Exploratory
Passed Concept Review
Passed Structure Review
Passed Final Review
Board Approved
Signed
Implementing
Completed

Project ID 39653

Status Complete

Location

Mongolia

Business Sector

Financial Institutions

Notice Type

Private

Environmental Category

Approval Date

23 Jul 2013

Disclosure date

18 Jun 2013

As per section 1.4.2 (iii) of the Directive on Access to Information: "For Projects approved by Bank management where the Board of Directors has delegated the approval authority, the PSD shall be disclosed at the start of the relevant no-objection notification period to a member country of the Bank in accordance with Article 13 (iii) of the Agreement Establishing the EBRD."

Translated version of this PSD: Mongolian

Project Description

The project consists of a USD 25 million senior loan to be provided to Khan Bank for on-lending to small businesses.

It has two mutually-linked components:

(i) MSME component for on-lending to local entrepreneurs and
(ii) a Value Chain Finance (VCF) component to design, improve and implement successful VCF products. This will benefit MSMEs’ access to finance and the effectiveness of large corporations’ supply/distribution chain.

The project will support the bank in further expanding its core business and in demonstrating a value chain finance product line in accordance with the needs of the market and the Mongolian economy.

Transition Impact

The project’s transition impact will be most prominent in the following areas:

(1) Market Expansion: The project will provide the necessary long term finance to assist Khan Bank to prudently expand the size of its MSME loan portfolio in Mongolia.

(2) Demonstration of new products: The project will raise awareness in the banking sector of new financing products and demonstrate their viability. This will be achieved by developing and enhancing VCF products which have the potential to improve access to finance for MSMEs with a positive impact on the Mongolian economy.

(3) Transfer of skills: The project will incentivise the development of a new financing product in Khan Bank by reducing internal bottlenecks that have hindered the development of VCF products.

Through an Action Plan it will align the interests of key parties at KB and through an internal training program it will transfer the skills necessary to expand VCF products.

The Client

Khan Bank is the largest commercial bank in Mongolia with total assets and loan portfolio representing a market share of 23% and 25% respectively. The bank has the largest network in the country with 512 branches and sub-branches covering an extensive part of the rural areas. It provides banking services to an estimated 80 per cent of Mongolian households.

EBRD Finance

USD 25 million senior loan.

Project Cost

USD 25 million (EURO 18.9 million equivalent).

Environmental Impact

Categorised FI. Khan Bank is an existing client of the Bank and has adopted an Environmental Policy and Environmental and Social Procedures, which largely satisfy requirements of PR 2 and 9. Required actions to achieve full compliance with the PRS have been communicated to the client.

Technical Cooperation

Between 2008 and 2012 Khan Bank benefited from technical assistance for MSME lending under the Mongolia Multi-Bank Framework (USD 2 million for all partner institutions). The funding was provided by EBRD Early Transition Country Fund and EBRD Shareholder Special Fund.

The bank also received technical assistance under the Medium-sized Co-Financing Facility (MCFF) which was established as part of a set of instruments to provide funding to medium-sized enterprises in selected countries of operation. The donor source was the Early Transition Country Fund.

EBRD commissioned a Feasibility Study funded by TC (Shareholder Special Fund) to ascertain the viability of VCF in Mongolia.

As a result of the Study, potential VCF structures across various value chains were identified and potential market demand in Mongolia was assessed. The client decided to develop the product in line with an action plan developed with the Bank and using its own resources.

There is a possibility that recourse to technical co-operation funds may be required at a later stage for product enhancements.

Company Contact

Khan Bank LLC
Seoul Street-25, PO.BOX-192,Ulaanbaatar-44 Mongolia
E-mail: info@khanbank.com
Website:www.khanbank.com
Tel: +976 11 332 333 Fax: +976 70 117 023

PSD last updated

01 Feb 2019

Business opportunities

For business opportunities or procurement, contact the client company.

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Public Information Policy (PIP)

The PIP sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations. Please visit the Public Information Policy page below to find out how to request a Public Sector Board Report.
Text of the PIP

Environmental and Social Documentation is not available for this project.

Selected procurement notices related to this project may be shown below. Further procurement opportunities related to this and other projects, if available, maybe be viewed in the EBRD Procurement Portal.

The EBRD's Environmental and Social Policy (ESP), Access to Information policy (AIP) and Project Accountability Policy (PAP) enable sound and sustainable development in its projects. The Independent Project Accountability Mechanism (IPAM) deals with complaints about environmental, social and disclosure matters related to the Bank’s investments.

No complaints about this project have been made so far.

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