The International Finance Corporation (IFC) has signed a partnership agreement with XacBank, one of Mongolia’s leading microfinance institutions. On January 16, 2008, the IFC invested USD 3 million for ten percent of XacBank’s outstanding shares and plans to invest a total of USD 15 million in the next three years. The IFC will have a representative seated on the Board of Directors to consult in the expansion of XacBank’s services throughout the region.
Through this partnership, the IFC and XacBank are developing a mobile banking service, a risk-sharing facility for mortgages, a global trade finance program, and cross-boarder expansion. The IFC will aid XacBank in extending their services to more low-income rural areas.
With a total loan portfolio of USD 50.3 million in 2006, XacBank is the second largest microfinance institution in Mongolia. XacBank has a strong rural presence through a network of 67 branches. Specializing in development finance, their products include herder loans, consumer loans, housing loans, and financial leasing. Their average loan size is about one thousand USD, with 29 percent of their clients living below the poverty line.
XacBank was the first microfinance institution in Mongolia, comprised of several NGOs merged to form a non-bank financial institution, before it was licensed in 2001 as a commercial bank. In 2006, XacBank was the first bank in Mongolia to be rated by Moody’s, given a credit rating of Ba2 and a stable outlook due to their 66 percent increase in net profits from 2006 to 2007 and strong asset quality.
Other major shareholders include: Triodos (15.06%), ShoreCap International (12.22%), Microvest (14.69%), and Mercy Corps (18.44%).
By Melissa Duscha
Additional Resources:
CGAP: http://cgap.org/mcm/files/12-07_xbank-PR.html
IFC summary of proposed investment in XacBank: http://www.ifc.org/ifcext/spiwebsite1.nsf/f451ebbe34a9a8ca85256a550073ff10/f4c9764df5e7026d852573640070e5a0?OpenDocument
The MIX Market profile for XacBank: http://www.mixmarket.org/en/demand/demand.show.profile.asp?ett=38&
Moody’s Rating Reports: http://www.mixmarket.org/en/demand/demand.show.profile.asp?ett=38&
XacBank: http://www.xacbank.org/index.php
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