GCF GEFF Regional - Mongolia - KhanBank I

Location:

Mongolia

Project number:

53635

Business sector:

Financial institutions

Notice type:

Private

Environmental category:

FI

Approval date:

06 Sep 2022

Status:

Approved

PSD disclosed:

09 Aug 2022

Project Description

Provision of a 5-year senior loan to Khan Bank LLC of up to USD 60 million, of which up to USD 45 million to be provided by EBRD and up to USD 15 million by the Green Climate Fund ("GCF") under the GCF - Green Economy Financing Facility ("GEFF") Regional Framework.

Project Objectives

The proceeds of the loan will be used for financing investments in climate change mitigation and adaptation technologies by local private sector clients, in line with the standards and reporting requirements for GCF-GEFF Regional Framework.

Transition Impact

ETI score: 65

The project contributes to the objectives of the GCF-GEFF Regional Framework, supporting the Green TI quality, with 100% of the use of proceeds allocated to GET activities in line with the GCF-GEFF Mongolia Policy Statement. The GEFF loan will contribute to GCF-GEFF Mongolia objective of building a green economy in Mongolia by facilitating the accelerated market penetration by climate technologies, particularly focusing on promotion of renewable energy, energy efficiency and climate resilient technologies.

Client Information

KHAN BANK LLC

KB is the largest commercial bank in Mongolia with total assets of USD 4.7 billion, loan portfolio of USD 2.5 billion, and equity of USD 0.45 billion as of YE2021. The bank is currently rated "B3" by Moody's and "B" by Fitch, both with a stable outlook. The bank has a universal focus and a nationwide presence in the country through more than 547 offices. 

EBRD Finance Summary

USD 45,000,000.00

A senior loan of up to USD 45 million.

Total Project Cost

USD 60,000,000.00

USD 60 million, of which up to USD 45 million to be provided by EBRD and up to USD 15 million by the GCF.

Additionality

Combination of financing with technical assistance; medium-term tenor of the facility, otherwise unavailable in the market. Gender additionality will be achieved by ensuring gender considerations are reflected in the implementation of the transaction through KB's staff training and awareness-raising activities.

Environmental and Social Summary

Categorised FI (ESP 2019). KB is an existing client of the Bank and has adopted an Environmental Policy and Environmental and Social Procedures that satisfied the requirements of Performance Requirements 2, 4 and 9 under previous policies. KB will be required to continue to comply with their environmental and social procedures to all sub-loans funded out of EBRD funds, and ensure that sub-borrowers comply with national requirements for environment, health and safety and labour standards. KB will need to ensure an ongoing compliance with PRs 2, 4 and 9 and submit satisfactory annual environmental and social reports. 

Beneficiaries financed under GEFF will further be required to comply with the E&S eligibility criteria for Energy Efficiency, Resource Efficiency, Renewable Energy projects as well as other GET eligibility criteria as per the Policy Statement. Where these investments involve solar technologies, the client will be required to follow the Management Approach for solar.  These requirements will be confirmed by a Consultant engaged by the EBRD. 

Technical Cooperation and Grant Financing

GEFF loan will be supported under the GEFF Mongolia TC package of up to EUR 6 million, of which EUR 4.5 million is secured (funded by the EBRD Shareholders Special Fund ("SSF"), the GCF, and Japan), with the remaining EUR 1.5 million to be sourced at a later stage (likely in 2023).

The objective of the TC is to assist KB with capacity building, implementation and monitoring of the GEFF loan. The consultant will transfer know-how and raise awareness about climate change mitigation and adaptation technologies in commercial operations; provide project appraisal support and guide sub-borrowers to most optimal technology choices. There is no specific TC allocation for each participating bank under the GEFF Mongolia TC package. A separate gender TC assignment ("Implementation and Monitoring of the Gender Action Plan under the Green Economy Financing Facility") will also be implemented in parallel to help address gender-specific supply and demand obstacles related to the design and marketing of green lending products.

Client contribution: KB will make a parallel contribution towards marketing and training costs connected with the implementation of the project in the amount of not less than EUR 10,000.

Company Contact Information

Erdenedelger B., Director of Treasury and Investment Banking
erdenedelger.b@khanbank.com
+976 11 332 333
+976 70 117 023
www.khanbank.com
Khan Bank LLC Seoul Street-25, PO.BOX-192, Ulaanbaatar, Mongolia

PSD last updated

09 Aug 2022

Understanding Transition

Further information regarding the EBRD’s approach to measuring transition impact is available here.

Business opportunities

For business opportunities or procurement, contact the client company.

For business opportunities with EBRD (not related to procurement) contact:

Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

For state-sector projects, visit EBRD Procurement:

Tel: +44 20 7338 6794
Email: procurement@ebrd.com

General enquiries

Specific enquiries can be made using the EBRD Enquiries form.

Environmental and Social Policy (ESP)

The ESP and the associated Performance Requirements (PRs) set out the ways in which the EBRD implements its commitment to promoting “environmentally sound and sustainable development”.  The ESP and the PRs include specific provisions for clients to comply with the applicable requirements of national laws on public information and consultation as well as to establish a grievance mechanism to receive and facilitate resolution of stakeholders’ concerns and grievances, in particular, about environmental and social performance of the client and the project. Proportionate to the nature and scale of a project’s environmental and social risks and impacts, the EBRD additionally requires its clients to disclose information, as appropriate, about the risks and impacts arising from projects or to undertake meaningful consultation with stakeholders and consider and respond to their feedback.

More information on the EBRD’s practices in this regard is set out in the ESP.

Integrity and Compliance

The EBRD's Office of the Chief Compliance Officer (OCCO) promotes good governance and ensures that the highest standards of integrity are applied to all activities of the Bank in accordance with international best practice. Integrity due diligence is conducted on all Bank clients to ensure that projects do not present unacceptable integrity or reputational risks to the Bank. The Bank believes that identifying and resolving issues at the project assessment approval stages is the most effective means of ensuring the integrity of Bank transactions. OCCO plays a key role in these protective efforts, and also helps to monitor integrity risks in projects post-investment.

OCCO is also responsible for investigating allegations of fraud, corruption and misconduct in EBRD-financed projects. Anyone, both within or outside the Bank, who suspects fraud or corruption should submit a written report to the Chief Compliance Officer by email to compliance@ebrd.com. All matters reported will be handled by OCCO for follow-up. All reports, including anonymous ones, will be reviewed. Reports can be made in any language of the Bank or of the Bank's countries of operation. The information provided must be made in good faith.

Access to Information Policy (AIP)

The AIP 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 following its entry into force on 1 January 2020. Please visit the Access to Information Policy page to find out what information is available from the EBRD website.

Specific requests for information can be made using the EBRD Enquiries form.

Independent Project Accountability Mechanism (IPAM)

If efforts to address environmental, social or public disclosure concerns with the Client or the Bank are unsuccessful (e.g. through the Client’s Project-level grievance mechanism or through direct engagement with Bank management), individuals and organisations may seek to address their concerns through the EBRD’s Independent Project Accountability Mechanism (IPAM).

IPAM independently reviews Project issues that are believed to have caused (or to be likely to cause) harm. The purpose of the Mechanism is: to support dialogue between Project stakeholders to resolve environmental, social and public disclosure issues; to determine whether the Bank has complied with its Environmental and Social Policy or Project-specific provisions of its Access to Information Policy; and where applicable, to address any existing non-compliance with these policies, while preventing future non-compliance by the Bank.

Please visit the Independent Project Accountability Mechanism webpage to find out more about IPAM and its mandate; how to submit a Request for review; or contact IPAM  via email ipam@ebrd.com to get guidance and more information on IPAM and how to submit a request.

 

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