The European Bank for Reconstruction and Development (EBRD), an international financial institution headquartered in the UK, recently announced it has committed USD 5 million to co-finance up to 50 percent of loans issued by XacBank, a Mongolian community development microfinance institution (MFI). This “Medium-Sized Co-Financing Facility” (MCFF) is expected to allow XacBank to expand its lending capacity and to provide larger and longer-term loans to its small and medium-sized enterprise (SME) customer base.
Philip ter Woort, Head of EBRD’s office in Mongolia, said, “This facility is an important step in the further enhancement of our cooperation with XacBank, which will enable more businesses to access bank financing and facilitate growth of a medium-sized private sector in Mongolia.” EBRD holds a 10.5 percent stake in XacBank, which is a subsidiary of TenGer Financial Group, a conglomerate in Mongolia owned by a group of local and international investors. As of 2010, XacBank reported to the US-based nonprofit Microfinance Information Exchange (MIX) total assets of USD 380 million, a gross loan portfolio of USD 264 million, approximately 75,700 borrowers, return on assets (ROA) of 0.43 percent and return on equity (ROE) of 5.29 percent.
By Carol Kim, Research Associate
About European Bank for Reconstruction and Development (EBRD): EBRD is a development finance institution headquartered in London. The bank began operations in 1991 upon the agreement of 40 countries and is now owned by 61 countries as well as the European Investment Bank and the European Union. It aims to finance operations that are both commercially viable and assist development in 29 countries in Eastern Europe and Central Asia. It does this by providing loans, debt securities, equity investments, guarantees and technical assistance to micro- and small businesses via commercial banks and non-bank microfinance institutions (MFIs). Its operating assets for fiscal 2009 were reportedly EUR 6.1 billion (USD 8 billion).
About XacBank: XacBank is a community development microfinance institution (MFI) founded in 1998 that aims to become a commercial financial institution “providing inclusive and value adding financial services to the citizens and expatriates, institutions and enterprises of Mongolia, while maintaining its leadership in the global microfinance industry.” XacBank is a subsidiary of TenGer Financial Group, a regional family of companies that also include XacLeasing, XacSecurity, TenGer Solutions and TenGer Insurance. As of 2010, XacBank reported to the US-based nonprofit Microfinance Information Exchange (MIX) total assets of USD 380 million, a gross loan portfolio of USD 264 million, approximately 75,700 borrowers, return on assets (ROE) of 0.43 percent and return on equity (ROE) of 5.29 percent.
Sources and Additional Resources:
European Bank for Reconstruction and Development (EBRD) Press Release: “EBRD Steps Up Support for Mongolian Small and Medium Size Enterprises”, June 2011, http://www.ebrd.com/english/pages/news/press/2011/110624f.shtml
MicroCapital.org: “MICROCAPITAL BRIEF: Incofin VDK MFI Loan Portfolio Loans $5m to Mongolian Microfinance Institution XacBank”, June 27, 2011, https://www.microcapital.org/microcapital-brief-incofin-vdk-mfi-loan-portfolio-loans-5m-to-mongolian-microfinance-institution-xacbank/
MicroCapital.org: “MICROCAPITAL BRIEF: European Bank for Reconstruction and Development (EBRD), National Bank of Georgia, Georgian Ministry of Finance Agree to Promote Local-Currency Financing of Microfinance Institutions, Banks”, May 7, 2011, https://www.microcapital.org/microcapital-brief-european-bank-for-reconstruction-and-development-ebrd-national-bank-of-georgia-georgian-ministry-of-finance-agree-to-promote-local-currency-financing-of-microfinance-institutio/
MicroCapital’s Universe Profile: European Bank for Reconstruction and Development (EBRD), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=European+Bank+for+Reconstruction+and+Development+(EBRD)
MicroCapital’s Universe Profile: XacBank, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=XacBank
Browse the MicroCapital Universe and add your entry to the wiki at https://www.microcapital.org/microfinanceuniverse/
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