Proparco and FMO support Khan Bank in Mongolia

The loan will contribute to the bank’s funding stability. The facility, which will be split into two tranches of a 5- and 7-year tenor, will help grow Khan Bank’s SME portfolio, while also significantly contributing to financing the green portfolio of Khan Bank’s end users, further solidifying Khan Bank’s position as a lead SME and retail bank in the country. FMO’s latest round of financing once again renews its long-term commitment to the Mongolian market.

As Mongolia’s largest commercial bank, which is celebrating its 30th anniversary this year, Khan Bank is also a digital bank leader in the Mongolian financial space. With nearly 550 branches across the country, Khan Bank provides comprehensive banking and access to finance services to individuals, small and medium-sized enterprises (SMEs) and corporate customers across almost all of both urban and remote Mongolia, reaching ~80% of all households. 

Green lending in Mongolia is still in its earlier stages; currently, Khan Bank’s green portfolio is primarily donor-funded, and the bank has ambitions to further grow its green portfolio throughout the country. Last year, Khan Bank launched its own green loan product to further bolster its green portfolio, but there remain certain barriers such as insufficient information and awareness and lack of capacity building, which will be mitigated through the financial support provided.

Marnix Monsfort, Director Financial Institutions at FMO, said: “We’re honored to once again extend our support to our trusted, long-term partner Khan Bank. With a clear focus on providing financial inclusion to even the most remote and marginalized parts of Mongolia, combined with a growing emphasis on green finance, Khan Bank is a clear case of our working together to reduce inequalities on a large scale.” 

Guillaume Barberousse, Director Financial Institutions at Proparco, added: “Proparco is proud to team up with other financial institutions under FMO’s leadership to support Khan Bank’s commitment to SMEs. Khan Bank has greatly contributed to financial inclusion in Mongolia and the growth of its green projects portfolio consolidates its position as a key partner for development.”

Martin Fankhauser, CEO and Dieter von Boddien, Deputy CEO of Atlantic Forfaitierungs AG, said: “Being engaged in Mongolia in the field of trade and import finance for around 20 years, we are very pleased to support our long-term partner Khan Bank in the transformation process towards a sustainable and green economy whilst reducing carbon footprint through the impact of this finance facility. We also greatly appreciate to continue our successful partnership with FMO, thereby strengthening small and medium enterprises in Mongolia, as previously achieved in other regions of the world.”

Georgy Potapov, Deputy Chairperson of the IIB Management Board, commented: “This transaction is a vivid example of what partnership is all about. A group of development institutions providing support for one of our long-standing esteemed clients that, in its turn, continuously contributes to the sustainable development of Mongolian economy and its priority SME sector.  The facility fully complies with our mission and mandate of a multilateral development institution and we are happy to be a part of it”. 

Petra Kotte, Senior Director Financial Institutions and German Business at DEG said: “DEG is delighted to continue the cooperation with our valued long-term partner Khan Bank. And we are proud to join forces with our partner institutions to create a strong positive development impact by supporting local SMEs as well as green finance in Mongolia.”

Munkhtuya Rentsenbat, CEO of Khan Bank added: “I am honored to express my gratitude, on behalf of Khan Bank and our Board of Directors, to all the participants to this ground-breaking syndication for their confidence in our bank and its future development. This financing is critical to support our SME business clients, preserve jobs, and strengthen their resilience for successful post COVID-19 recovery, all with the aim of contributing to building an inclusive and green economy. I’m pleased to strengthen our long-standing cooperation with FMO, Atlantic Forfaitierungs, DEG, and IIB, and for establishing a new, lasting relationship with Proparco."