GCF GEFF Regional - Mongolia - XacBank

Location:

Mongolia

Project number:

53448

Business sector:

Financial institutions

Notice type:

Private

Environmental category:

FI

Approval date:

23 Aug 2022

Status:

Disbursing

PSD disclosed:

31 Aug 2022

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."

Project Description

The provision of a 3-year senior loan to XacBank LLC in the amount of up to US$ 25 million, of which up to US$ 18.75 million to be provided by the EBRD and up to US$ 6.25 million by 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 and services in line with the standards and reporting requirements for the 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 per cent 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 of climate technologies, particularly focusing on promotion of renewable energy, energy efficiency and climate resilient technologies. Another focus area will be energy efficiency measures in residential and commercial buildings.

Client Information

XAC BANK LLC

XacBank is the fifth largest commercial bank in Mongolia with total assets of US$ 1.1 billion, loan portfolio of US$ 657 million, and equity of US$ 138 million as of 2Q 2022. The bank is currently rated "B3" by Moody's and "B" by Fitch, both with a stable outlook. XacBank has a universal focus and a nationwide presence in the country through 78 branches. 

EBRD Finance Summary

USD 18,750,000.00

A senior loan of up to US$ 18.75 million.

Total Project Cost

USD 25,000,000.00

US$ 25 million, of which up to US$ 18.75 million to be provided by the EBRD and up to US$ 6.25 million by the Green Climate Fund ("GCF").

Additionality

The EBRD offers an innovative green finance instrument that integrates aspects such as climate and environmental, social and governance (ESG) standards, and/or climate and ESG risk considerations into the financing structure.

XacBank will benefit from the EBRD expertise in energy and resource efficiency and climate resilience financing via energy and climate audits, minimum performance standards of technologies, climate related strategies and policies, monitoring, reporting and verification (MRV) systems etc.

Provision of long-term funding. There is a very limited number of private sector lenders providing long term financial resources to financial institutions for climate change mitigation and adaptation investments, in a gender-responsive way, or with a specific focus on women's entrepreneurship. 

Environmental and Social Summary

Categorised FI (2019 ESP). XacBank's is an existing client of the EBRD has adopted an Environmental Policy and Environmental and Social Procedures that satisfied the requirements of Performance Requirements 2, 4 and 9 under previous policies. XacBank will need to comply with PRs 2, 4 & 9 and further comply with the EBRD's Environmental and Social Procedures for Corporate Loans, SME and Micro Loans, and TFP Environmental and Social Procedures; adhere to the updated the EBRD's Environmental and Social Exclusion List as well as Referral List introduced with ESP 2019 and submit Annual E&S Reports to the Bank. XacBank's borrowers will be required to comply with applicable national environmental, health and safety and labour requirements. 

Beneficiaries financed under the GEFF loan 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. These requirements will be confirmed by a Consultant engaged by the EBRD. 

Technical Cooperation and Grant Financing

The project will be supported under the GEFF Mongolia TC package of up to € 6 million, of which € 4.5 million is secured (funded by the EBRD Shareholders Special Fund, the GCF, and Japan), with the remaining € 1.5 million to be sourced at a later stage.

The objective of the TC is to assist XacBank with capacity building, implementation and monitoring of the 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.  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: XacBank will make a parallel contribution towards marketing and training costs connected with the implementation of the project in the amount of not less than € 5,000.

Company Contact Information

Mr Erdenebayar Ganzorig
erdenebayar.g@xacbank.mn
+(976) 7577-1888 (+826)
+(976-11) 328701
https://www.xacbank.mn/en
International Commercial Center /ICC/ Jamiyan Gun Street-9 Post Office No.20A, P.O.Box-72 Ulaanbaatar-14210, Mongolia

PSD last updated

31 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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