MICROCAPITAL BRIEF: Khan Bank of Mongolia Borrowing $120m from FMO, Atlantic Forfaitierungs, DEG, IIB, PROPARCO - Part for MSME Loans, Green Capacity

Khan Bank, which serves individuals and companies of all sizes in Mongolia, recently agreed to accept a borrowing package of USD 120 million arranged by Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden (FMO), a Dutch public-private partnership. FMO is funding half of the package directly, with the remainder to be supplied in unspecified portions from Atlantic Forfaitierungs, a Swiss member of Germany’s Oetker Group; the German government’s Deutsche Investitions-und Entwicklungsgesellschaft (DEG); the multilateral International Investment Bank (IIB); and the French government’s Société de Promotion et de Participation pour la Coopération Economique (PROPARCO).

An unspecified portion of the loan package is to fund Khan Bank’s micro-, small and medium-sized enterprise (MSME) lending and “green activities.” The latter includes raising client awareness and institutional capacity relating to efforts to reduce carbon emissions.

Established in 1991, Khan Bank provides microfinance and traditional banking services to 2.5 million clients via online channels and 547 branches across Mongolia. Its service menu includes deposits, international transfers, escrow services, payment cards and various types of loans. The bank is privately owned by Sawada Holdings of Japan and Tavan Bogt Trade of Mongolia. As of March 2021, Khan Bank reported total assets of MNT 12.3 trillion (USD 4.3 billion), customer savings of MNT 7.58 trillion (USD 2.66 billion) and loans to customers totaling MNT 5.32 trillion (USD 1.87 billion).

Established in 1970, FMO is 51-percent held by the Dutch government and 49-percent by private investors. The institution works toward the UN’s Sustainable Development Goals by funding capacity development and placing debt and equity investments in sectors such as agribusiness, financial institutions and energy. For the first half of 2021, FMO reported a net profit of EUR 200 million (USD 230 million) on a portfolio valued at EUR 12 billion (USD 14 billion).

By Adhya Singh, Research Associate

Sources and Additional Resources

FMO press release on $120m syndicated facility for Khan Bank
https://www.fmo.nl/news-detail/0f59efcc-f883-422c-ab16-a797b7d4abdc/fmo-supports-khan-bank-through-arranging-usd-120-mln-syndicated-facility

FMO project profile – part one
https://www.fmo.nl/project-detail/59780

FMO project profile – part two
https://www.fmo.nl/project-detail/59781

Khan Bank homepage
https://www.khanbank.com/

Atlantic Forfaitierungs AG homepage
https://www.atlanticforfaiting.com/

DEG homepage
https://www.deginvest.de/

International Investment Bank homepage
https://iib.intt/

PROPARCO homepage
https://www.proparco.fr/

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