OREANDA-NEWS. Building on successful examples in other countries of operations, the EBRD has set up a financial sector framework for Mongolia, reported the press-centre of EBRD.

The $50 million-facility will provide much needed access to finance to local commercial banks, leasing, insurance and consumer finance institutions, pension companies and non-bank micro finance institutions. The EBRD is offering debt and equity funding to partners who will on-lend the proceeds to individual or commercial customers.

The framework is complemented by up to $9 million in technical cooperation funds to encourage the development of the local banking sector. Special emphasis will be put on the creation of appropriate institutional structures. Training and education programmes will be designed for local staff.

Khan Bank, one of Mongolia’s leading private financial institutions, will benefit from a $10 million loan. The finance will be on-lent to micro, small and medium-sized companies to promote and support their growth. Khan Bank has the largest branch network in Mongolia and is particularly strong in rural finance. In addition to the loan, the EBRD will provide Khan Bank with $1 million for trade finance to help the bank broaden its financial services.

Kurt Geiger, EBRD Business Group Director Financial Institutions, said support of the financial sector is a key priority for the Bank in Mongolia. The new framework has now created the conditions for close and beneficial cooperation. “The EBRD is looking forward to working very closely with partner institutions in Mongolia. Progress in the financial sector will benefit the development of the whole economy and that is exactly what we want to achieve”, he added.

The Mongolian banking sector witnessed serious crises in the 1990s but has now been consolidated. At present the country’s financial sector comprises 16 commercial banks, 150 non-bank financial institutions and around 500 savings and credit cooperatives. Experience has shown that a strong financial sector is a prerequisite for sustainable growth of the economy at large.