The provision of a short-term senior loan of up to MNT 10 billion (€ 3.15 mln) to Transcapital Mongolia Non-bank Financial Institution ("TCMN") in two equal tranches.
This project was approved in the context of the Bank's response to the Covid-19 pandemic. To avoid delays to the delivery of this project, the Bank's President granted a deviation from the ordinary timelines for PSD disclosure, as contemplated by Section V of the Directive on Access to Information. Details of the Bank's response to CovidD-19, and this deviation, can be found on our website.
The loan will support TCMN's capital adequacy and will help Transcapital Mongolia continue commercial lending.
ETI score: 80
The project will contribute to the Resilient quality by reinforcing TCMN's lending capacity, and by helping it to maintain a sound funding profile that might have otherwise come under pressure in the current situation.
The project will support the Competitive quality by helping TCMN sustain portfolio growth at least in line with the market. The proposed project will channel much-needed liquidity support to micro and small enterprises at a time when other lenders are paralyzed by a lack of liquidity and/ or a thin capitalization.
TRANSCAPITAL NBFI LLC
TCMN is the largest non-bank FI lender to micro and small enterprises in Mongolia, with a market share of approx. 6.6 per cent in a highly fragmented market. It has 34 branches, of which 16 are in the regions outside of the capital. The loan portfolio of these rural branches accounts for 35 per cent of TCMN's total loan book.
EBRD Finance Summary
EBRD-Finance EUR-equivalent: 3.15 mln
Total Project Cost
EBRD-Finance EUR-equivalent: 3.15 mln
Additionality sources: COVID-19 crisis response: the EBRD financing effectively supports liquidity in adverse market conditions because of the COVID-19 crisis.
Additionality Description: the EBRD funding will contribute to unlock additional funding from other IFIs and impact investors which look at the IFIs for guidance, in particular at the EBRD given its long history of successful cooperation with TCMN.
Environmental and Social Summary
Category FI (2019 ESP). TCMN is an existing client and has been visited by ESD in 2018 to review their project appraisal processes, typical features of their lending portfolio, and their monitoring methods. They have EHSS risk management practices in line with PR9, and also apply labour and OHS practices to their own staff in line with PR2 and PR4. They will apply those PRs to the proposed credit line, along with the Bank's EHSS Procedures for Corporate, SME and Microloans.
Technical Cooperation and Grant Financing
Non-TC: A first-loss guarantee is provided by the SME Local Currency Special Fund to fund a first loss for the benefit of the EBRD.
Company Contact Information
Mr Batsuren Bat-Otgon
Transcapital Building, Partisan's Street, Sukhbaatar District, 4th khoroo, Ulaanbaatar 14250, Mongolia
The Project was the first loan to a Mongolian Financial Institution under the EBRD's Resilience Framework in the context of the Bank's response to the Global Pandemic. Irrespective of severe restrictions on in-person meetings, let alone business trips, the loan was prepared and eventually signed in 2Q2021, despite a very difficult first winter with Covid and extensive lockdowns, from which Mongolia was only re-emerging at that time. The second tranche of the loan, uncommitted at signing, was already committed in 3Q2021 and subsequently disbursed. While already the EBRD funding itself contributed to fuelling Mongolian MSMEs' recovery from the fallout of the Global Pandemic, it contributed to this goal well beyond the EBRD loan amount as it helped catalyse loans from other lenders. The Project also ensured adherence to strict environmental and social standards. As a part of Transition Impact, the Project has contributed to the Resilient quality by reinforcing TCMN's lending capacity, and by helping it to maintain a sound funding profile that might have otherwise come under pressure in the current situation. Moreover, the Project has supported the Competitive quality by helping TCMN sustain portfolio growth at least in line with the market. The project has channelled much-needed liquidity support to micro and small enterprises at a time when other lenders were paralyzed by a lack of liquidity and/ or a thin capitalization.
PSD last updated
24 Nov 2022
Further information regarding the EBRD’s approach to measuring transition impact is available here.
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