FMO arranges USD 100 Million syndicated loan to XacBank Mongolia
FMO has arranged a USD 100 million syndicated loan to XacBank, one of Mongolia’s leading universal banks. The five-year tenor of the loan will strengthen XacBank’s long-term funding base and allow the bank to further grow and expand in its focus areas in retail, micro and small and medium enterprises (“MSME’s). XacBank is actively engaging with the MSME sector with a focus on the ‘underbanked’ segment, which matches well with FMO’s strategy to support economic and diversified growth in the country. The funding contributes among others to Sustainable Development Goals (SDGs) SDGs 8: Decent Work and Economic Growth, SDG 10: Reduced Inequalities as well as SDG 17: Partnerships for Goals.
Established in 2001, XacBank is Mongolia’s fourth largest bank measured by total assets with a market share of 10%. XacBank has an extensive network of branches throughout Mongolia. The bank originally focused on providing microfinance loans in both rural and urban Mongolia, but over the past decade the bank has moved upmarket and now mainly focuses on MSMEs, Green Finance and retail lending. XacBank has been a client of FMO since 2007 and is an important partner in Mongolia.
FMO commits USD 65 million (out of which two of the funds that FMO Investment Management advises on commit USD 9.5 million: the ACTIAM – FMO SME Finance Fund commits USD 4.5 million and the NN-FMO Emerging Markets Loans 1 commits USD 5 million) and in addition mobilizes funding from diverse international financing partners: The OPEC Fund for International Development (OFID) commits USD 25 million and The International Bank for Economic Co-operation (IBEC) commits USD 10 million.
Tsevegjav Gumenjav, CEO of XacBank commented to the occasion:
“XacBank has a strong focus on MSMEs, Green Finance and retail customers as a part of its mission to create sustainable growth in the banking and financial sector of Mongolia. As we expect Mongolian economic growth to slightly decrease from 6.9% to 6.3% and despite facing challenging macroeconomic conditions in 2020, USD 100 million syndication loan to XacBank shows FMO’s high confidence and commitment to Mongolia and XacBank. Also, I would like to extend my appreciation to FMO, OFID and IBEC for fully supporting us on this transaction.”
Linda Broekhuizen, Chief Investment Officer of FMO commented:
“The financing signals FMO’s long-term commitment to the Mongolian market and we are proud to collaborate in this large syndicate with our international financing partners OFID and IBEC. XacBank fulfils an essential role in providing finance to the underserved Micro and SME segments in Mongolia contributing significantly to job creation as well as diversification of the Mongolian economy.”
XacBank provides integrated banking and financial solutions to consumer and MSMEs throughout its 80 nation-wide branches. In 2017-2019, XacBank successfully signed a loan agreement with international financial organizations and investors to support SMEs access to fund and as a result of it, loan portfolio of the bank increased from MNT 1.4 trillion to MNT 2.0 trillion. About 60% of the loan was purely granted to micro and SMEs to expand their business operation and support new job creation. As of today, XacBank serves approximately 800,000 customers.
For more information about XacBank, please visit their website: www.xacbank.mn
FMO is the Dutch entrepreneurial development bank. As a leading impact investor, FMO supports sustainable private sector growth in developing countries and emerging markets by investing in ambitious projects and entrepreneurs. FMO believes that a strong private sector leads to economic and social development and has a close to 50-year proven track-record of empowering people to employ their skills and improve their quality of life. FMO focuses on three sectors that have high development impact: financial institutions, energy, and agribusiness, food & water. With a committed portfolio of EUR 9.7 billion spanning over 85 countries, FMO is one of the larger bilateral private sector developments banks globally.
For more information: please visit www.fmo.nl