MICROCAPITAL BRIEF: European Bank for Reconstruction and Development (EBRD) Loans $1m to Transcapital Financial Services (TFS) of Mongolia to Support Micro-, Small, Medium-sized Enterprises

The UK-based European Bank for Reconstruction and Development (EBRD) recently signed a deal with Mongolian microfinance institution (MFI) Transcapital Financial Services (TFS) to provide a local-currency loan of MNT 1.62 billion (USD 1 million) for on-lending to microenterprises throughout Mongolia. This loan is part of the EBRD Early Transition Countries Initiative, which aims to increase economic activity in Mongolia and 9 other countries in which approximately 50-percent of the population lives below the poverty line [1]. As part of the deal, EBRD will also provide training and technical assistance to TFS [1].

EBRD has invested USD 900 million in Mongolian projects since 2006, including USD 106 million for micro-, small, and medium-sized enterprises [2]. In 2012, EBRD invested EUR 8.7 billion (USD 11.4 billion) in 388 projects across 34 countries. In the same year, TFS reported to the US-based nonprofit data provider Microfinance Information Exchange (MIX) total assets of USD 5.75 million, a gross loan portfolio of USD 5.54 million, return on assets (ROA) of 17.26 percent and return on equity of 31.88 percent. TFS does not accept deposits.

By Megan McGowan, Research Associate

About Transcapital Financial Services (TFS):  Transcapital Financial Services Co. Ltd (TFS) is a privately-owned non-bank financial institution in Mongolia. It was established in 2001 with the permission of the Bank of Mongolia to provide micro- and small business loans. TFS also works to alleviate poverty through local and international projects such as the Sustainable Livelihoods Project II which supported small business owners to diversify income sources. TFS provided loans to approximately 14,200 clients at 11 branches in 2012. In the same year, TFS reported to the US-based nonprofit data provider Microfinance Information Exchange (MIX) total assets of USD 5.75 million, a gross loan portfolio of USD 5.54 million, return on assets (ROA) of 17.26 percent and return on equity of 31.88 percent. TFS does not accept deposits.

About European Bank for Reconstruction and Development: The European Bank for Reconstruction and Development (EBRD) is a multilateral institution headquartered in London. The bank began operations in 1991 upon the agreement of 40 countries and is owned by 61 countries as well as the European Investment Bank and the European Union as of 2012. It aims to finance operations that are both commercially viable and assist development in 29 countries in Eastern Europe, Central Asia and North Africa. 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). In 2012, EBRD invested EUR 8.7 billion (USD 11.4 billion) in 388 projects across 34 countries.

Sources and Additional Resources:

[1] European Bank for Reconstruction and Development: “First Microfinance Loan for EBRD in Mongolia with Transcapital” by Svitlana Pyrkalo, 2 September 2013, http://www.ebrd.com/pages/news/press/2013/130902b.shtml

[2] European Bank for Reconstruction and Development Country Factsheets, “Mongolia,” http://www.ebrd.com/downloads/research/factsheets/mongolia.pdf

MicroCapital article, September 3, 2013, “MICROCAPITAL BRIEF: European Bank for Reconstruction and Development (EBRD), Taiwan International Cooperation and Development Fund (TaiwanICDF) Lends $3.5m to TBC Kredit of Azerbaijan for Micro-, Small, Medium-Sized Enterprises,” https://www.microcapital.org/microcapital-brief-european-bank-for-reconstruction-and-development-ebrd-lends-2-5m-to-tbc-kredit-of-azerbaijan-for-micro-small-medium-sized-enterprises/#more-25440

MicroCapital article, June 18, 2013, “MICROCAPITAL BRIEF: European Bank for Reconstruction and Development (EBRD) to Guarantee $664m to Vnesheconom Bank (VEB) for Financing Micro-, Small, Medium-Sized Enterprises (MSMEs),” https://www.microcapital.org/microcapital-brief-european-bank-for-reconstruction-and-development-ebrd-to-guarantee-664m-to-vnesheconom-bank-veb-for-financing-micro-small-medium-sized-enterprises-msmes/

MicroCapital article, June, 30, 2010, “MICROCAPITAL BRIEF: European Bank for Reconstruction and Development (EBRD) Syndicates $185m Debt Facility for Turkey, Primarily for Microfinance, SMEs,” https://www.microcapital.org/microcapital-brief-european-bank-for-reconstruction-and-development-ebrd-syndicates-185m-debt-facility-for-turkey-primarily-for-microfinance-smes/

MicroCapital Universe Profile: Transcapital Financial Services (TFS), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Transcapital+Financial+Services+%28TFS%29

MicroCapital Universe Profile: European Bank for Reconstruction and Development (EBRD), http://microcapital.org/microfinanceuniverse/tiki-index.php?page=European+Bank+for+Reconstruction+and+Development+%28EBRD%29

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