FMO ARRANGES GROUNDBREAKING SYNDICATED LOAN FOR KHAN BANK IN MONGOLIA
May 16 (FMO) A 5-year USD 94 million combination of a subordinated Tier 2 (USD 32m) and senior (USD 62m) syndicated facility agreements arranged for Khan Bank by FMO (the Netherlands Development Finance Company) was signed by a group of participating development banks today. It is the first syndicated loan to a commercial bank in the country's history.
The transaction helps boost development of Mongolia's capital market and its SME sector. As the first-ever syndicated loan to a commercial bank in Mongolia, with medium-term tenor and a syndication of development finance institutions only, this is truly a landmark transaction.
The facility strengthens Khan Bank's capital position, further increasing its ability to meet loan demand from Mongolian SMEs and corporate clients. The largest private sector bank in Mongolia, Khan Bank has a strong focus on SMEs and retail customers and has a wide reach thanks to its extensive network of rural branches. In small provincial towns and rural areas, Khan Bank is often the only commercial bank active.
FMO's Chief Investment Officer Jurgen Rigterink said: "FMO is proud to have arranged this groundbreaking loan facility for Khan Bank. This long-term commitment is a boost for the Mongolian economy and a clear vote of confidence for the Mongolian financial sector in general."
"Khan Bank is committed to the effective execution of this capital. This is a genuine landmark transaction in Mongolia, and especially for Khan Bank," said Khan Bank acting CEO Mr. Norihiko Kato.
"DEG is pleased to be part of the first syndication of this magnitude in Mongolia, thus promoting the access to financing to local SME and exporting companies even in remote areas. With this transaction DEG contributes to closing this gap", said Dr. Michael Bornmann, member of DEG's management board.
"To participate in this landmark transaction is of great value to BIO. We look forward to the collaboration in this syndication, which aims at improving the access to finance for Mongolian small and medium enterprises", said Carole Maman, Manager of BIO's Financial Sector Department.
About the transaction
As mandated lead arranger and agent, FMO syndicated the transaction to three European development banks: FMO (USD 25 million), DEG (USD 24 million) and BIO (USD 20 million). In addition EBRD provided a USD 25m parallel senior loan aligned with the FMO syndicated senior financing.
About Khan Bank
Khan Bank's roots go back 80 years to the State Bank of Mongolia. When this monopoly bank was broken up in 1991, Khan Bank was formed to take over most of the State Bank of Mongolia's regional and local offices throughout the country. With 500 branches across all of Mongolia with more than 4000 employees now, Khan Bank is the largest bank in Mongolia. Khan Bank finances corporate, small and medium businesses, consumers, and individuals. Since 2009, 100% of its branches are connected on-line and operating on a real time basis providing customers with direct access to all banking services from everywhere in Mongolia. Khan Bank's headquarters is located in the capital city of Ulaanbaatar (UB).
About FMO
The Netherlands Development Finance Company (FMO) is the bilateral private sector development bank of the Netherlands. FMO invests in the private sector, which can serve as an engine of sustainable growth in developing markets. To this end, we provide capital, knowledge and partnerships to ambitious entrepreneurs. With an investment portfolio of € 5.9 billion, FMO is one of the largest bilateral private sector development banks worldwide. Our focus is on three sectors which create a high development impact: financial institutions, energy and agribusiness, food & water. This focus enables us to offer tailor-made finance solutions, based on real expertise. In other sectors, FMO teams up with renowned partners to combine local networks, knowledge and experience. We believe that our approach will lead to lasting economic and social development, which will empower people to employ their skills and improve their quality of life.
About DEG
DEG – Deutsche Investitions- und Entwicklungsgesellschaft, a subsidiary of KfW, has been financing the investments of private companies in developing and emerging market countries for 50 years. As one of the largest European development finance institutions, it promotes private business structures to contribute to sustainable economic growth and improved living conditions. DEG invests in profitable projects that contribute to sustainable development in all sectors of the economy.
About BIO
The Belgian Investment Company for Developing Countries (BIO) is a Development Finance Institution (DFI) established in 2001 in the framework of the Belgian Development Cooperation to support private sector growth in developing and emerging countries.
BIO supports financial institutions, investment funds, enterprises and private infrastructure projects. Endowed with capital of EUR 581.5 million, BIO provides tailored long-term financial products (equity, quasi-equity, debt and guarantees) either directly or through intermediary structures. BIO is also able to fund technical assistance programmes for client companies as well as feasibility studies. BIO requires its business partners to implement environmental, social and governance standards.
BIO operates as an additional partner to the traditional financial institutions and supports projects with a balance between return on investment and development impact.
The transaction helps boost development of Mongolia's capital market and its SME sector. As the first-ever syndicated loan to a commercial bank in Mongolia, with medium-term tenor and a syndication of development finance institutions only, this is truly a landmark transaction.
The facility strengthens Khan Bank's capital position, further increasing its ability to meet loan demand from Mongolian SMEs and corporate clients. The largest private sector bank in Mongolia, Khan Bank has a strong focus on SMEs and retail customers and has a wide reach thanks to its extensive network of rural branches. In small provincial towns and rural areas, Khan Bank is often the only commercial bank active.
FMO's Chief Investment Officer Jurgen Rigterink said: "FMO is proud to have arranged this groundbreaking loan facility for Khan Bank. This long-term commitment is a boost for the Mongolian economy and a clear vote of confidence for the Mongolian financial sector in general."
"Khan Bank is committed to the effective execution of this capital. This is a genuine landmark transaction in Mongolia, and especially for Khan Bank," said Khan Bank acting CEO Mr. Norihiko Kato.
"DEG is pleased to be part of the first syndication of this magnitude in Mongolia, thus promoting the access to financing to local SME and exporting companies even in remote areas. With this transaction DEG contributes to closing this gap", said Dr. Michael Bornmann, member of DEG's management board.
"To participate in this landmark transaction is of great value to BIO. We look forward to the collaboration in this syndication, which aims at improving the access to finance for Mongolian small and medium enterprises", said Carole Maman, Manager of BIO's Financial Sector Department.
About the transaction
As mandated lead arranger and agent, FMO syndicated the transaction to three European development banks: FMO (USD 25 million), DEG (USD 24 million) and BIO (USD 20 million). In addition EBRD provided a USD 25m parallel senior loan aligned with the FMO syndicated senior financing.
About Khan Bank
Khan Bank's roots go back 80 years to the State Bank of Mongolia. When this monopoly bank was broken up in 1991, Khan Bank was formed to take over most of the State Bank of Mongolia's regional and local offices throughout the country. With 500 branches across all of Mongolia with more than 4000 employees now, Khan Bank is the largest bank in Mongolia. Khan Bank finances corporate, small and medium businesses, consumers, and individuals. Since 2009, 100% of its branches are connected on-line and operating on a real time basis providing customers with direct access to all banking services from everywhere in Mongolia. Khan Bank's headquarters is located in the capital city of Ulaanbaatar (UB).
About FMO
The Netherlands Development Finance Company (FMO) is the bilateral private sector development bank of the Netherlands. FMO invests in the private sector, which can serve as an engine of sustainable growth in developing markets. To this end, we provide capital, knowledge and partnerships to ambitious entrepreneurs. With an investment portfolio of € 5.9 billion, FMO is one of the largest bilateral private sector development banks worldwide. Our focus is on three sectors which create a high development impact: financial institutions, energy and agribusiness, food & water. This focus enables us to offer tailor-made finance solutions, based on real expertise. In other sectors, FMO teams up with renowned partners to combine local networks, knowledge and experience. We believe that our approach will lead to lasting economic and social development, which will empower people to employ their skills and improve their quality of life.
About DEG
DEG – Deutsche Investitions- und Entwicklungsgesellschaft, a subsidiary of KfW, has been financing the investments of private companies in developing and emerging market countries for 50 years. As one of the largest European development finance institutions, it promotes private business structures to contribute to sustainable economic growth and improved living conditions. DEG invests in profitable projects that contribute to sustainable development in all sectors of the economy.
About BIO
The Belgian Investment Company for Developing Countries (BIO) is a Development Finance Institution (DFI) established in 2001 in the framework of the Belgian Development Cooperation to support private sector growth in developing and emerging countries.
BIO supports financial institutions, investment funds, enterprises and private infrastructure projects. Endowed with capital of EUR 581.5 million, BIO provides tailored long-term financial products (equity, quasi-equity, debt and guarantees) either directly or through intermediary structures. BIO is also able to fund technical assistance programmes for client companies as well as feasibility studies. BIO requires its business partners to implement environmental, social and governance standards.
BIO operates as an additional partner to the traditional financial institutions and supports projects with a balance between return on investment and development impact.
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